Header photo source: Eclipso.
In 2024, 36Kr examined room-scale virtual reality (VR) setups across China, revealing a quiet yet profound transformation within the VR industry.
The shift from compact, personal VR devices to expansive experiences within 100-square-meter spaces has ushered in a new era of offline entertainment. Room-scale VR is rapidly gaining traction as an alternative to popular activities like murder mystery games, escape rooms, and movie theaters.
Imagine stepping into a digitally enhanced open space, putting on a VR headset, and being transported to ancient Egypt. Guided by a virtual host and a mythical cat deity, you explore a life-sized replica of a pyramid, witnessing vivid recreations of burial rituals and mummification. This describes Horizon of Khufu: A Journey in Ancient Egypt, a recent VR sensation.
Room-scale VR offers a new level of interactivity by allowing users to physically navigate designated spaces. By combining location-based entertainment (LBE) technology with highly immersive visuals, these setups transcend traditional VR experiences, which often confine users to stationary interactions, enabling dynamic exploration and a heightened sense of presence.
Produced by French company Excurio and distributed in China by VRAR World, Horizon of Khufu has set a benchmark for the industry. Its success has spurred interest among aspiring players in the room-scale VR market.
Following its 2022 debut in Paris, Horizon of Khufu premiered in Asia in May 2023 in Shanghai, where it captivated over 190,000 visitors during three extended runs. The production then toured major Chinese cities, including Beijing, Chengdu, Xi’an, and Guangzhou, continuing to draw enthusiastic audiences. Media reports estimate its revenue has exceeded RMB 30 million (USD 4.2 million).
This evolution in VR technology and the growing popularity of room-scale experiences underscore the potential of immersive entertainment as a transformative force in the global leisure industry.
For many participants, room-scale VR offers a cost-effective and convenient alternative to international travel. “It’s not that I can’t go to Egypt,” one visitor said, “but Horizon of Khufu is much more accessible.”
The success of immersive productions like Horizon of Khufu has spurred rapid growth in China’s room-scale VR market, attracting new players eager to capitalize on the trend. Among these entrants is OpenWorld, which joined the space during its recent boom and has quickly made a name for itself.
Wang Meng, vice president of OpenWorld, shared with 36Kr that the company pivoted toward room-scale VR in July 2023. Inspired by the success of flagship projects such as Horizon of Khufu, OpenWorld declared room-scale VR a strategic priority by early 2024. Since then, the company has focused on developing engaging content for this segment.
In just one year, OpenWorld has launched two major projects. Galactic Rhapsody: Verse One, a collaboration with Suzhou Museum West, premiered in June 2024 and has since attracted over 60,000 visitors, generating RMB 5 million (USD 700,000) in revenue. Its second project, Back to the Jurassic, debuted the same month, amassing over RMB 6 million (USD 840,000) in sales.
Building on this momentum, OpenWorld announced its third project, Panda’s World, on November 25, 2024, signaling its ongoing commitment to room-scale VR.
Peng Junxi, founder of Configreality, described his first encounter with room-scale VR as transformative, likening it to “living the story.” He compared the leap from traditional video formats to room-scale VR to the shift from black-and-white to color films, underscoring its profound impact on his dedication to the industry.
Founded in 2017, Configreality initially gained traction through immersive real estate showcases. By 2019, the company had shifted its focus to room-scale VR cinemas. Although the pandemic temporarily slowed its expansion, Configreality adapted by collaborating with brands like Ikea and UOB to create virtual spaces.
Today, the company is on the cusp of significant growth, preparing to launch over 20 VR cinemas across China, with additional expansions in the pipeline. Operating with a lean team of just 30 staff members, Configreality anticipates generating over RMB 10 million (USD 1.4 million) in profit this year.
On October 25, Huaxin Securities released a report forecasting a resurgence in China’s immersive entertainment industry. After a period of stagnation between 2020 and 2022, the sector regained momentum in 2023. Market projections estimate the industry will reach a valuation of RMB 2.5 trillion (USD 350 billion) by 2026.
To capitalize on this growth, Configreality has introduced a franchise model aimed at lowering entry barriers for new operators. According to Peng, franchisees are only required to cover essential costs, including rent, equipment procurement, and staffing. Excluding IP licensing fees for revenue sharing, the initial investment can be as low as RMB 300,000 (USD 42,000), with a potential return on investment within three to six months—similar to the recovery rate of short theatrical productions.
Despite these favorable conditions, Peng warned that the current boom presents a fleeting opportunity. “This phase is an opportunity, but as competition grows, it will only get tougher,” he said.
Despite over a year of development, room-scale VR remains in its infancy. The value chain for this emerging industry spans upstream content creation and hardware production, midstream distribution, and downstream marketing and venue management.
Among these segments, upstream content development is the most critical and resource-intensive. High-quality productions like Horizon of Khufu can take years to develop and cost millions of yuan—on par with budgets for major visual effects-driven films. Yet, such investments can yield substantial returns. Horizon of Khufu is projected to generate RMB 200 million (USD 28 million) in total revenue through its international tours and showcases.
The importance of compelling content is widely acknowledged by industry professionals, who frequently compare room-scale VR to cinema. They argue that content is the foundation of success. The cinema model, validated over the past century, ensures a steady content supply while amplifying revenue streams. However, the current catalog of room-scale VR titles in China is far from achieving the scale and maturity of the film industry.
As with many emerging industries, room-scale VR has attracted opportunistic players producing low-budget, low-quality projects. Some titles developed in mere months, costing as little as six figures in RMB, fail to deliver compelling experiences. According to 36Kr, over 100 room-scale VR titles were launched in 2024 alone, but the offerings vary widely in distribution channels, collaboration models, content types, and user experience. Beyond the shared feature of walking around with a VR headset, little consistency exists.
Consumers have voiced dissatisfaction with the current state of room-scale VR. One user told 36Kr that after trying it out of curiosity, they were disappointed by crude visuals, technical glitches, and unoriginal content. Even highly praised projects failed to inspire a return visit. “It’s not as fun as playing games on my computer,” they said.
Configreality’s Peng echoed these concerns, noting that of the roughly 200 room-scale VR titles available in China, most suffer from poor quality and homogeneity. “Nearly two years have passed, and the only project people still talk about as a benchmark for good content is Horizon of Khufu. Few, if any, domestic productions have matched or surpassed it,” Peng said.
A major issue plaguing room-scale VR venues is low repeat visitation rates. Many users try the experience once or twice but rarely return for a third visit. “A room-scale VR venue cannot rely on just a handful of titles. Audiences need variety to compare and choose from,” Peng said. This lack of content diversity and quality stifles the industry’s potential to establish itself as a mainstream entertainment option.
Additionally, the revival of cultural tourism has led local governments to integrate VR experiences into tourism initiatives. While this approach has generated significant revenue during peak seasons—some projects earned over RMB 1 million (USD 140,000) monthly in July and August—off season revenues in third- and fourth-tier cities have plummeted to as low as RMB 10,000–20,000 (USD 1,400–2,800). “LBE experiences generally have very low repeat rates,” OpenWorld’s Wang said. “Most users will only try it once, maybe a second time, but almost never a third.”
The room-scale VR trend is the latest in a series of VR booms. A white paper reviewed by 36Kr revealed that over 3,000 offline VR venues were established across China by 2016, offering gaming, education, and virtual tourism experiences. However, with profitability rates below 30%, many venues closed as the hype waned.
Although the metaverse has rekindled interest in VR, it is seen as more of a conceptual framework than a solution to the industry’s challenges. To achieve lasting success, the industry must prioritize building content-focused ecosystems and creating practical, commercially viable applications.
As the industry navigates its early stages, the longevity of the room-scale VR trend depends on its ability to overcome content quality issues, improve user retention, and establish a sustainable business model. Only then might it evolve from a novelty to a staple of modern entertainment.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Lan Jie for 36Kr, with contributions from Feng Min.