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Virtual reality is one of the popular emerging technologies that offer businesses both large and small alike to see the world with a new perspective.
If reports were to be believed, the total valuation of the virtual reality market was $5.12 billion in 2017 and it is predicted that the market will grow to a whopping $34.08 billion by 2023 with a compound annual growth rate (CAGR) of 33.95%.
Albeit this emerging technology could be threatening to some traditional businesses. Yet nobody can’t deny the fact that virtual reality is a fascinating way to view the content. And the circumstances favoring VR are endless.
This may be the key reason why businesses of different industry verticals are not only embracing the VR technology but also making every possible effort to unlock its potential in order to boost their business profits.
Today, people of all age groups have shown their interest in this promising technology. Particularly millennials, and this is something that businesses should keep in mind. Instead of paying little or no heed to the virtual reality’s potential and growth. Businesses should actively employ it to harness the benefits.
Though many of us have had an opportunity to witness the fascinating experience of virtual reality in real life. Hardly a few of them are familiar with the lucrative business side of this popular technology. And how embracing it in business can improve their bottom line.
Now, the million-dollar question is how businesses can use virtual reality and improve profits? To solve this dilemma, all you have to do is walk through this insightful post until the end.
#1 Freemium (Free-To-Play)
Freemium monetization strategy is quite popular among businesses wherein they provide basic services to their customers for free of cost. However, in order to unlock the additional features or services, customers have to shell out a fixed amount determined by the company.
This is commonly called a “premium” subscription. In other words, you get the application with basic services for free. However, you will be charged to access the advanced features. Through this freemium approach, businesses get an opportunity to build a rapport with their customers.
Moreover, the freemium method enables businesses to monetize VR based applications, games, etc. and rake in some profit.
Angry Birds, the popular game developed by Rovio Entertainment was the best example. How the company managed to do monetization and draw in $200 million in revenue. And a whopping base of 260 million users in just two years after the launch of the gaming application.
When the application was in its initial growth phase, consumers were not aware of how to consume content. Since they were new to the smartphone gaming application, yet they were ready to pay for it.
You would be amazed to know that Angry Birds made around 1 million US dollars. From running advertisements in the free version of the application and around six times that from the paid download of the application.
#2 In-app Purchases (IAP)
In-app purchase is another popular monetization strategy adopted by businesses in the virtual reality world.
In this model, you can offer customers to opt for a multitude of additional paid services including virtual goods, premium content, and subscriptions — directly from your mobile application. Owing to this reason, this model is often clubbed with a freemium or subscription model, though it can be a standalone monetization model.
Since 2017, the popular way of monetizing VR based applications is allowing your customers to download the application for free and charge them for additional services via in-app purchase. In short, in-app purchases (IAP) is the best money-making monetization strategy for VR based applications.
The key thing that needs to be noted here is that this monetization strategy needs to be carried out with the utmost care and attention.
If done incorrectly, it may not only leave bad user experience but also encourage users to leave negative reviews and ratings for your application in the app store, resulting in attracting penalty or suspension from Google Play Store or Apple App Store.
Ergo, it is strongly recommended to weigh all the pros and cons of in-app purchases before you consider this method of monetizing your application.
To earn a steady amount of revenue from your freemium VR mobile applications you can consider the subscription monetization model. Wherein users are bound to pay a recurring amount in order to access exclusive (premium) content, services or functionality.
In this monetization business model, app users are charged on a monthly, quarterly, or yearly basis for the subscription. The best part is that users have unlimited access to your premium services, content or functionality during this tenure.
Unlike other monetization business strategies, the subscription model has not enjoyed the same popularity but that doesn’t mean that it lacks potential. In fact, if leveraged aptly, it can surely drive significant revenue to your business.
This monetization strategy is generally seen by businesses that offer music or video services. Let’s consider a virtual reality YouTube 3D example, which enables users to bring the videos into a VR space.
The application has over 5 million downloads and offers a paid subscription to users with exclusive content and unlimited views.
Subscription is a powerful monetization strategy but it will generate a steady source of income for your business only if your application offers fresh content, such as videos, music, news, etc. on a regular basis.
#4 Location-based Virtual Reality
Location-based VR is one of the promising, profitable, and straightforward paths for monetization. This popular strategy works well for unique places such as theme parks, movie theatres, shopping malls, museums, cafes, etc.
By investing in the emerging technologies for location-based VR, businesses can offer unmatched virtual experiences and drive their profits to the next level. According to research, spending on VR content, software, hardware, and services will grow up to $1.2 billion by 2021.
Virtual reality is one of the emerging technologies that businesses of all industry verticals are embracing with open arms. In this insightful and informative post, I have discussed some of the popular ways that businesses use for monetizing.
Now, the ball is in your court. You have to choose the right monetization strategy that will convert your mobile application into a money-making machine. Before you choose any of these strategies, I would like to give a quick recap of all the business models discussed in this article.
The In-app purchases monetization has been a fruitful strategy. It works tremendously well for most businesses particularly educational, entertainment, and navigation apps.
On the other hand, freemium and subscription business models build a constant source of revenue for businesses. It offers unique and fresh content such as video, music, and news.
Last but not least is the location-based VR that is beneficial for businesses like cafes, theatres, malls, museums, and theme parks, etc.
I hope this article has solved all the dilemmas popping up in your mind related to the different ways of monetizing virtual reality applications.
You can comment down below. I would love to clear all your queries. Thanks for your time, XoXo 🙂