Immotion Group is pleased to provide a trading update. In particular, the Company has grown its installed headset base to 302. The split of headsets is currently as follows:
Based on our visible pipeline, we expect to see a significant acceleration in new installation activity as we go into the New Year. We believe that our existing estate, combined with expected headset installations, will result in an installed base that should deliver monthly underlying EBITDA breakeven (based on our forecasted operating costs) by or around the end of Q1 2020.
As previously announced on 30 July 2019, we are now focusing on our Partner model and more particularly, in the short term, in the aquarium sector. We have found that higher-yielding opportunities are offered by “edutainment” verticals, and have shied away from the more general family entertainment centre market, which we believe is too crowded.
We have seen significant interest from large numbers of aquaria, in both the USA and Europe, and we expect the majority of our installations in the short term to be in this segment. As we anticipated, this segment has outperformed the overall Partner segment, with average weekly revenue per headset, in the year to date, of £442, compared to an overall Partner average of £305. We expect the average Partner revenue per headset to grow strongly as we increase the number of aquaria installations in the overall blend.
Whilst the initial appeal of our offering for partners has been ancillary revenue from a small footprint (2-4 headsets), we are beginning to see demand from very high traffic destinations for larger installations. These could become key exhibits in their own right and become more integral to the visitor experience. We will update the market as these opportunities develop.
Consequently, we are very pleased to announce that following a successful trial at Sea Life London Aquarium, we will be increasing our installed headset base there from four to eight headsets to accommodate demand, creating a mini-themed cinema.
We will also look to build on the early success of our location tailored Tower Coaster offering. We have been able to design a 400-foot VR roller coaster ride over individual cityscapes, giving us the ability to provide a unique product to high footfall locations. This product has already been successfully deployed in Blackpool, at the iconic Blackpool Tower, operated by Merlin Entertainments. We are currently in discussions with a number of other landmark destinations about this product.
Our nine own operated and staffed locations, trading as Immotion VR, have operated profitably, and whilst we do not intend to open further locations, preferring the Partner model, we will continue to seek to optimise the performance of these operations.
We expect 2019 full year underlying EBITDA loss to be in line with expectations and revenue to be in the range of £3.6-£3.8m, (towards the lower end of expectations).
On a pro forma basis, the current average Partner weekly revenue per headset (£305) across the 185 installed partner headsets would generate annualised revenue of circa £3m. For 2020 we will focus on the higher-yielding installations such as aquaria (£442 average weekly revenue per headset, year to date) and other “edutainment” verticals which we believe could offer similar returns.
To this end in Q1 2020, we expect to launch exciting new “edutainment” experiences aimed at family-focused, high traffic destinations such as zoos; science centres and museums.
Martin Higginson, Immotion Group CEO, said:
“We are pleased with the increasing momentum of interest in and uptake of our Partner offerings. We remain of the view that this is the right path in order to scale our business rapidly and to build a market-leading position in the ‘out of home’ VR market.
We have seen really strong traction in the Aquarium sector and it is clear we have a compelling offer that is delivering strong results for ourselves and our partners. Take-up in this sector continues to be growing and we are also beginning to see interest in larger more ‘integrated’ installations.
Our Tower Coaster experience is proving extremely popular and we now have this operating in three UK cities with more enquiries coming through. The ability to be able to offer a tailored roller coaster experience 400 feet above a particular cityscape is a unique offering with global potential.
We also have some really exciting new experiences in development, which will allow us to open up other large global markets, such as zoos, science centres and museums.
Q1 2020 should be extremely busy and exciting for the Group. We move towards 2020 with growing confidence in our strategy, which is designed to allow us to scale rapidly. We look forward to updating the market further.”