Pricing & Distribution Guidelines

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December 05, 2019 19:21

Content Pricing Suggestions and Distribution Channels

The purpose of this article is to provide content creators insight and clarity around the pricing landscape for out-of-home VR, as well as the pricing options available on the SpringboardVR platform.

In short, we help you answer the question "What should I charge for my content?"

Pricing Options

Currently, the most popular licensing method in the Location Based Entertainment sector is per minute pricing.

You could use something like this for EDU - However, per minute pricing is much too variable for educational institutions as they need to know exactly how much they are spending for their strict budgets. Therefore, monthly and/or annual pricing is the standard.

Price Per Minute (PPM)
- Operators are charged per minute of gameplay.
Monthly
- A per station, non-transferrable, monthly licensing fee.
Yearly
- A per station, non-transferrable, yearly licensing fee.

Can I pick all three? - YES. We recommend you take advantage of all three of these pricing models.

Distribution Channels

Currently we are distributing content in two main channels, Entertainment and Education.

You have a choice to distribute to one or both channels. We recommend you opt to distribute to both channels for more licensing opportunities. Entertainment content is oftentimes used at EDU locations and vice versa (e.g., Beat Saber is being used on college campuses, and Number Hunt is being used in VR Arcades).

Entertainment

Overview:

The out-of-home entertainment industry, also known as the “Location Based Entertainment” industry or “LBE” is a broad category that includes everything from small arcades, movie theaters, bowling alleys, to massive amusement parks.
A growing number of the LBE operators are offering VR.
We’ve seen some wildly inflated numbers by industry analysts, but we have names and contact info for 1800 locations that offer some form of VR.
Of this 1800, approximately 1200 are indie VR arcades while the remaining 600 are Family Entertainment Centers, escape rooms, LAN gaming lounges, etc.

Preferred Pricing Option: All of Them!

Although a large percent of operators in the out-of-home space prefer Per Minute Pricing as it allows them to offer a range of titles and to pay for actual usage, the majority of them need both per-minute and flat monthly licensing as their decision making depends on the popularity of each specific title. By setting a flat monthly price you are also giving them the option to opt into floating licensing. The more options/flexibility you give to operators, the wider adoption of your content you can expect to see!

Education

Overview:

A variety of Educational institutions are adopting VR and using SpringboardVR to access content. These include everything from universities, junior colleges, K-12 schools, museums and libraries.
One thing that is important to note is that TODAY, many of these EDU organizations are not looking for deep curriculum integration or ONLY “educational” titles. EDU orgs are putting in a few headsets, or small labs and are looking to expose their faculty and students to this new technology. Oftentimes they are as interested in licensing traditional entertainment titles like Beat Saber as they are in licensing more subject specific titles.

Preferred Licensing and Pricing Option:

Due to organizational rules and restrictions, EDU institutions find it difficult to use per minute pricing and most require monthly or annual licensing and pricing options.

Best Pricing Practices

PPM Pricing

The price point that operators are charging end users has started to stabilize at around $25 USD an hour. This price point allows operators to compete with other location based entertainment options and helps bring repeat customers. Operators are also realizing that paying more than 15% of revenue towards content is difficult with their margins. The average PPM on our platform today is about 6.2 cents. This gives context for our pricing recommendation of $.06 USD**. ($25 * .15 = $3.75 an hour / 60 minutes = $.0625)

Monthly Pricing

You can choose to license your title(s) at a flat monthly rate on a per station basis. Each title is of course unique, so it’s difficult to make a universal recommendation. Our overall recommendation is to price at a monthly rate similar to what you are charging for a one-time home purchase and/or at around $20-$30 USD a month.

Yearly Pricing

Additionally you can choose to license your title(s) at an annual rate, that is based on a 12 month rolling term. Our current recommendation is to price an annual license at a discounted rate compared to if they paid for 12 months of licensing on a monthly basis. How much you want to incentivize them to purchase an annual license is of course up to you. We recommend at least 10%-20%. So if the monthly licensing was $20, 12 months of licensing would be $240. 80% of that would be $192. (So a $48 discount).

Market Context

Operators are also realizing that they can’t pay more than 15% of revenue towards content. This gives context for our pricing recommendation of $.06. ($25 * .15 = $3.75 an hour / 60 minutes = $.0625)

We’re seeing titles priced much over that start to drop off the charts.

**The average PPM on our platform today is right at 6.4 cents and the majority of our top 20 titles are at the 6 cents mark.**

When does a price change take effect?

For PPM and Monthly, price changes will take effect on the 1st of the month, depending on when it was changed. We require a minimum two week notice before price changes go into effect. Price changes made in the first half of the month will be reflected on the 1st of the next month, and changes made in the second half half of the month will be delayed to the 1st of the following month.

For example, if you change the price of your title on September 10th, the new price will go into effect starting October 1st. If you update your price on September 23rd, the price will not change until November 1st.

Yearly price changes will happen when the license is set to renew.

Promotional Pricing

Consider launching your title with a promotional window to help boost interest and increase your initial install base. If this is an option you are interested in exploring further, ping the content team at content@springboardvr.com.

What kind of volume/revenue can we expect for our title?

First, it's of course very hard to give projections as we can't guarantee the percentage of adoption among locations/HMDs. Over time with better curation on our part, marketing on our part, and better content (more native to LBE), and overall market volume, revenue will improve.

What we can say is that we have an industry-leading 2500+ headsets, 500+ locations and have grown to 4 million minutes a month.

Like most platforms, our top 50 titles represent a bulk of the minutes. Our very top titles generate approximately 10-15% of total minutes and the lower end of our top 20 generally range about 3-4% of total minutes. The long tail is relatively long, we've got 150+ titles receiving paid minutes monthly.

Revenue accordingly varies widely. The current LBE market is small. The out of home VR space TODAY is a supplemental one for most content creators.

That said, top titles can bring in 5 figures monthly and for some of our big indie studio partners, the LBE revenue accounts for over 50% of their monthly/yearly income and supports a whole team.

Also, it's important to note how fast the out-of-home VR space is growing. Two years ago it barely even existed as an industry. We're seeing rapid growth that we expect will continue.

If your team requires an estimate, you could try and get a ballpark by guesstimating what % of total minutes you might be at and then multiply it by your price per minute less the platform fee (25% total platform fee).