By Aki Jarvinen, Digital Catapult
Artists and creatives are embracing Immersive technologies, such as augmented reality, virtual reality, projection displays and haptics to create unique experiences for audiences: The tradition of media art installations has continued in forms of virtual art and immersive theatre, escape rooms, and experience centres have brought various subjects to life with these technologies. Besides content creators, creative technologists have sought to harness immersive technologies for new production tools and workflows for the creative industries.
Creative immersive companies share many traits with others in the creative industry, especially those operating in audiovisual media. However, they are also characterised by a heightened focus on emerging, and therefore possibly risky, technologies; related proprietary research; and development and/or orchestrating complex experiences in physical locations. They operate fundamentally at the intersection of media arts and technology, and audiences perceive their productions as different from more traditional outputs.
As part of UKRI’s Audience of the Future programme, we studied creative immersive productions. With the research, we sought to uncover approaches that would help current and future creative entrepreneurs in the immersive space to thrive. We approached the topic through four topics, each targeting a specific aspect of operating a business in the immersive creative space:
- Revenue: We were interested in how immersive producers approach generating revenue and what are their growth strategies.
- Creative business models: We wanted to understand how creative goals are reconciled with budgets and revenue expectations, and how creative aspirations shape business models.
- Technology: We wanted to gain an overview of which technologies immersive producers harness for their creative aspirations, and what it takes in terms of skill sets and resources to use these technologies.
- Distribution: Finally, we focused on how immersive productions are made accessible to the public, and what does it take, in types of partnerships, collaborations, and business development activities to bring an immersive production to audiences.
While the findings can be found in full in the report The UK Creative Immersive Landscape 2020.
Revenue: in search of the elusive IP
We found that small immersive producers operate on the premise that initial grant or client-funded projects will eventually generate enough profit to invest into building their own IP, whether it is creative (a product or service) or a distribution model. This ambition is motivated by creative aspirations first, profit second. Revenue-driven thinking (making a profit from day one of launch) is not a widely adopted strategy or mindset and some creators might not be content in converting their artistic ideals to business model needs.
In terms of audience insights or market research, immersive studios tend to rely on assumptions rather than actual data. This can lead to ineffective marketing, unrealistic expectations, and a superficial understanding of who the paying audience is and what motivates them to pay.
Business models: in perpetual flux
Immersive innovators are driven by a belief that the technologies they are focusing on are transformational. They believe that immersive technologies open up opportunities to create unique experiences and/or ways of creating content or services. Therefore, their start-up business models are in constant flux because the technologies that enable this new creative space are not mature.
As content producers or distributors, innovators need to constantly explore new solutions to their creative problems, abandoning, adapting, and compromising as they go. Practical necessities, such as engaging in co-productions, while potentially deal-breakers for success, can also produce a lot of communication overhead, and may surface differences in culture, priorities, and ways of working between the collaborating teams.
Technologies: a moving target
Creative immersive productions employ real-time technologies, such as game engine software, often pushing the boundaries to achieve their creative goals. This can lead to a skills gap that makes it difficult to establish stable production teams that learn from one project and technology to the next.
The learning curve for new technologies also makes it difficult to estimate budgets and schedules, which can lead to ad hoc technology choices that will not carry over to future productions, requiring the learning cycle to begin anew. Between funding cycles, an immersive studio’s survival generally tends to depend on contract work or licensing technology solutions developed in previous projects.
Distribution: lack of support systems
Creative immersive teams’ skill sets do not necessarily include thinking about distribution opportunities in a revenue-driven manner or carrying out business development to solve distribution issues. Relationship building with platform or venue owners is time-consuming but would provide access to key advantages for revenue generation, such as ticketing and payment systems.
Often, immersive studios have needed to handle distribution and exhibition themselves, whereas in more established cultural sectors producers have been able to rely on existing infrastructure – although the pandemic has had an impact.
There is still a lack of understanding of immersive experiences that can make it difficult to convince potential partners of their value. This leads to innovators exhibiting, where possible, without a strategic approach for seeking the distribution channels that offer the best possibilities for generating revenue or visibility, short and long-term.
The pandemic effect
Finally, in 2020 most immersive companies operating in the location-based context had to pivot to online and/or change their offering. Among these was Darkfield, whose audio-based experiences in physical containers have transformed into ‘Darkfield Radio’ on a mobile app.
While Darkfield’s case exemplifies the kind of lean thinking needed, it should not be assumed that producers who have been building their immersive profile around location-based experiences will be content to translate their creative visions into the confines of at-home opportunities. Even if they are, the cost of conversion (both in purely financial but also in creative terms) from one platform and technology to another is not insignificant and is only likely to be covered if there is budget available, or existing revenue to reinvest in growth through another distribution opportunity.
While Covid-19 has delivered further industry setbacks for location-based distribution, companies on digital platforms, such as FitXR are on a path to grow from a viable niche product to broader success, similar to Gravity Sketch on the enterprise market. In these cases, the answer to the headline question is a resounding yes. Figuring out how to improve the success ratio needs to be the next step.
Towards proven business models
Business models and innovation researchers have argued that unpicking the interdependencies between business model choice, technology development, and success leads to a better understanding of what types of business models can perform in a given market.
However, carrying such analysis out is especially difficult for practitioners who aspire to tame emerging technologies and workflows to serve their creative visions, while translating skills from one domain (such as screen-based linear storytelling) to another (3D, real-time interactive immersive environments), as is the case with the immersive space.
While success criteria do not always need to be directly tied to revenue, they are ultimately what would establish the creative immersive landscape as a viable one for both present and future creators to pursue. Therefore, we argue that it is important to understand thinking around business models as a tool to reinvent ways of operating and paths towards sustainability and growth.
Going forward, the goal has to be to transition from perpetual R&D and prototyping to executing evidence-based business models. If you are a producer in the creative immersive space, we encourage you to engage with analysing and rethinking business models – our research provides tools for that. By doing that, you will become more aware of how the various choices at the intersections of art, creativity, and technology influence your ability to create sustainable blueprints for operation.
July 2021