XR Industry Pivots to Location-Based Entertainment as Consumer VR Stalls
High-fidelity out-of-home attractions are leveraging major film and TV IP to find a sustainable path to profitability.
The extended reality (XR) industry is shifting its focus toward location-based entertainment (LBE) as the consumer VR gaming market faces ongoing instability. By moving experiences out of the home and into dedicated venues, developers are utilizing a B2B2C model to reach wider audiences with technology that exceeds the capabilities of home hardware.
This strategic pivot is characterized by a surge in high-profile intellectual property integrations. Zero Latency, in collaboration with Sony Pictures, is set to launch "Jumanji: The Lost Levels" on December 4, 2026. Similarly, Sandbox VR—which currently operates approximately 85 venues—has integrated major Netflix properties into its offerings, including "Squid Game Virtual" and "Stranger Things: Catalyst." Beyond cinematic worlds, the sector is diversifying into mixed reality sports; HADO, a competitive virtual sports platform, has already reached over 3.5 million players globally, with particularly strong adoption across Asia.
The Shift to Shared Experiences
The move toward LBE represents a fundamental change in how XR companies view monetization. Rather than relying on the volatile cycle of individual hardware ownership, the industry is betting on shared, social experiences. The sector uses the B2B2C model to surpass the expectations of consumer gaming and present XR technology to a broader demographic that may never purchase a headset for home use.
This evolution is further evidenced by the rise of hybrid, traveling attractions. The "Black Mirror Experience," produced by Banijay Live Studio and Univrse, operates as a 50-minute hybrid adventure, demonstrating that XR can be packaged as a touring theatrical event rather than a static installation.
Market Implications and Risks
The growth of LBE suggests that the path to XR profitability may lie in high-fidelity, curated environments where the cost of expensive hardware is absorbed by the venue rather than the user. This allows for a level of immersion and scale that is currently impossible in a living room setting. However, the transition is not without significant operational hurdles.
While the integration of IP from giants like Sony and Netflix provides a built-in audience, the physical nature of LBE introduces risks that digital-only software avoids. High operational costs and the complexity of guest acquisition remain primary concerns for venue operators. The gap between technical achievement and the financial viability of maintaining a physical footprint continues to be a critical point of failure for some projects.
The Road Ahead
As the industry continues to build out its out-of-home infrastructure, the focus will likely shift toward refining the operational side of the business. The success of upcoming launches like "Jumanji: The Lost Levels" will serve as a bellwether for whether high-end IP can consistently drive the foot traffic necessary to sustain expensive physical venues. For now, the industry is watching to see if the social, shared-experience model can provide the stability that the consumer market has so far failed to deliver.