How is that brave new world of musical virtual-reality doing? The latest financial results from startup MelodyVR offer some clues, as well as news of the company’s plans to shift from a a-la-carte pricing to a subscription model later this year.
Financials first: MelodyVR generated £128.4k of revenues ($160.1k) in the first six months of 2019, but its cost of sales of £352.4k plus administrative expenses of just under £7m resulted in the company posting a first-half net loss of £7.1m. A reminder that the costs of creating a decent catalogue of VR content are still – if you’re not one of the more popular VR games – daunting compared to the likely returns on that investment.
Or, as executive chairman and CEO Anthony Matchett put it in his chairman’s statement: “Billions have been spent on VR research and development to-date, yet dedicated VR devices have been slower than anticipated to reach consumers and are still to reach mainstream consumer adoption.” That’s why MelodyVR is placing a bigger bet on smartphones as the distribution platform for its content, via its recently-launched non-headset app. “In the first two months of release alone, smartphone installs of the MelodyVR app, surpassed the entire first year install-base of our VR applications, across all VR devices, cumulatively.”
Now to the new model. “Our company intends to transition to a subscription model later this year, which will provide unlimited access to our on-demand content library in exchange for a monthly fee, and will deliver recurring revenues to the business,” wrote Matchett. “We also intend to make subscriptions available to consumers via a number of high-profile partners, which will be announced over the coming months.” This won’t be the only string to MelodyVR’s bow though: it will continue to livestream some music concerts on a pay-per-view basis too.
The company is also preparing to launch its MelodyVR viewer – a Google Daydream-style headset that a smartphone slots in to – bundled into the price of subscriptions and virtual concert tickets. “The device delivers a comparable or better experience than Oculus Go, yet will be available to consumers for about 10% of the cost of a dedicated VR device,” wrote Matchett. As a guide, the Oculus Quest all-in-one headset costs $399, whereas the entry-level Oculus Go starts at $199.
It may seem a little strange for Music Ally to devote a lead story to a startup that’s making barely $27m a month, but MelodyVR is an important canary in the mine of musical VR – or at least musical VR beyond games. It’s furthest along the road of building a commercial offering around VR music experiences, and at some point (if not just yet) is likely to offer the strongest evidence yet for whether this category’s slow start is merely tied to the rollout of headsets, or (less optimistically) for whether there’s actually any demand for music concerts in virtual reality in the first place.
Music Ally’s next Learn Live webinar will help you understand what’s required for artists to thrive in new international markets!