Throughout the last few years, we have seen a plethora of news posts about the way virtual reality was about to save the timeless arcade. The idea goes that the VR equipment is too expensive for home users, therefore it creates an chance for operators to pony up the big dollars to purchase it and then make their money back by charging per game to play with it. Much Nolan Bushnell, the inventor of Pong, is trying to hype the technology as the industry's savior.
"While several high-end cans were released annually which may bring virtual-reality adventures to your living space, adoption of the technology is still in its first days to get a bunch of reasons--it is still bulky, expensive, and there isn't all that far to do as soon as you've got it on your face. More than two million cans were shipped worldwide in 2016, according to an estimate from market researcher Canalys, yet this figure pales in comparison to the popularity of, say, video game consoles (sales of their top one, Sony's PS4, topped six million throughout the 2016 holiday season alone). Consumer virtual reality will likely catch on as costs come down and cans improve. Meanwhile, though, a variety of businesses are betting that consumers may be pleased to pay a much smaller sum to try out the technology with their buddies at, say, an arcade, theme park, or even bowling alley."
It is tempting to fall into this trap, but in the operator's perspective VR is a terrible thing. Operators are being asked to pay top dollar for technology that is all but guaranteed to plummet in value within the very short term. Aside from purchasing a brand-new vehicle and driving it a mile, I can not think about a way that you could lose money faster between what you pay and what you will be able to get for it down the road.
Another limit for operators is that while you might be able to provide a room for VR people to roam around in now, as fresh VR tech is unveiled, we're likely to see the stage expanded from 100 square feet to the entire world. Rather than viewing just the games from your headset, you will realize the real world with game play overlayed. Children can visit the park and relive the knights of the round table or parking garages to take aliens. Since the tech allows more real world areas to be explored, it is going to earn a cramped arcade look pretty feeble in comparison.
VR is heading for mass market acceptance, but it's demand is not being pushed by players who want to pay big buck to play with video games, but like the BETAMAX that came before it, by individuals who wish to watch porn in their houses.
Even if an operator can make a bit of money for the next few decades, once VR achieves critical mass, then it will crush whatever earnings flow that operators're dreaming of. Don't believe me? Just check out what's going on in China.
A year later 22,000 of them have closed.
That is an unbelievable failure rate over this short period of time and one that should serve as a sharp warning to anyone considering investing in the VR games. Perhaps Dave and Busters is able to take losses on the games more than Chinese startup arcades, however I doubt that most North American operators will fare much better using the technology in their game rooms and will only wind up in debt at the close of the day.
The issue essentially boils down to customers not being willing to pay a premium to the experience. Tech In Asia, clarifies the problem perfectly in their own article, on that the Chinese VR boom and bust.

"Enterprising shop owners leaping into VR are finding it impossible to bill fees comparable to cinemas or bowling alleys to get a VR experience. 1 VR arcade proprietor told iHeima he saw excited queues when charging US$1.50 for a 30-minute session, but everyone vanished as it climbed to US$5. From that kind of revenue it is not possible to cover the lease."
Even if the match was sold out daily, at $1.50 per half hour they're just earning $30 per day. Together with retail rents in North America running $1 -- $2 a square foot, there's no way to make the math work, even if you suppose that Americans will pay more to play the matches.
The real world data flowing in from China must serve as a canary in the quarter plantations of North America. Operators who invest considerable amounts of money on elaborate VR setups will soon find their small VR rooms being substituted by the whole world for a stage. Since the setups get more expensive, smaller and more mobile, the digital arcades will seem more costly, bulky and kids indoor playground restricted. I would love to be proven wrong on this one, but I feel the arcade VR trend is more hype than hope.