The Potential of Virtual Reality Gaming in Vehicles

Gaming is not new to vehicles; Tesla paved the way for the automotive industry with the Tesla Arcade platform in 2019 and Steam gaming library integration in 2022, and other automotive manufacturers have followed suit, mostly through partnerships with other game libraries such as Antstream, AirConsole, and NVIDIA’s GeForce NOW cloud gaming platform. While these initiatives featured some niche innovations in their use of the car as a gaming space, such as Tesla’s racing game that uses the steering wheel as a controller, a showcase at IAA 2023 displayed a unique player in the industry.

holoride is an Audi spin-off that offers traditional backseat Virtual Reality (VR) experiences such as video streaming and classic games, as well as immersive, motion-synced VR games that adjust to the vehicle’s movements in the real world. It offers a retrofit solution that can be fitted to any vehicle, which consumers can purchase for €699 and includes the HTC VIVE Flow headset, a handheld controller, and the retrofit required to capture the vehicle’s movements. The haptic feedback of the real-world drive is translated by the technology to create a unique virtual experience every time, which holoride has dubbed “elastic content.”

This new media format is one of few innovations that have truly transformed the vehicle into a space for entertainment by using its unique environment. The automotive industry is constantly looking for ideas like this to fuel new revenue potential, and gaming presents a market that automakers can tap into as leisure becomes more relevant to the in-car experience. The consumer VR market, in particular, is expected to grow rapidly over the next few years, increasing from approximately US$5 billion in 2023 to US$20 billion by 2026, as forecast by ABI Research’s Augmented & Virtual Reality Research Service. The use of VR also circumvents the need to address the problems that other in-vehicle gaming products must, such as driver distraction, because only the users of the VR headset experience the visual and audio effects of the content.

Currently, most in-car gaming revenue models have involved automotive Original Equipment Manufacturers (OEMs) paying a licensing fee to game libraries to feature in their vehicles, with splits being paid only to developers and the game libraries from sales of games, or subscriptions to the service. This model allows OEMs to offer their customers an expansive suite of games without undertaking the development process to build it themselves, which is ideal for the nascent state of this market to show consumers what in-car gaming has to offer. holoride operates with a business model that can circumvent the OEM entirely. The end consumers purchase the retrofit solution and subscribe to the service, and they build a content library of their own with one of holoride’s investors, Schell Games. However, these models mean that OEMs don’t see a recurring revenue stream from this feature, which is an issue some have tackled by building their own content library and paying developers to create games exclusively for their platform.

Elastic content also has the potential to appeal to audiences beyond gamers due to its application beyond entertainment. For example, in addition to creating a new in-vehicle entertainment experience, this new media format has also been shown to act as a remedy to motion sickness. A study with 44 participants found that despite 82% of the cohort reporting they usually experience some form of motion sickness, after using holoride technology, 53% had no symptoms. Benefits like this can attract customers who aren’t interested in gaming at all. OEMs can, therefore, appeal to a variety of consumers by introducing VR gaming to their vehicles, from families to gamers to those with motion sickness, an affliction that affects roughly 25% of the population.

Other OEMs are already exploring both VR and Augmented Reality (AR) (i.e., Extended Reality (XR)) in vehicles for creating fun passenger experiences, such as BMW partnering with Meta to research how XR can be integrated into smart vehicles, but secondary benefits like motion sickness prevention hint at the true potential of VR in vehicles. Therapeutic and health applications should be kept in mind as innovators continue to create new and interesting experiences using VR, especially as autonomous driving proliferates and the “25th hour” for drivers and passengers becomes more of a reality.

Crucially, OEMs must find a way to gain value from these innovations. Many in-car gaming revenue models either circumvent the OEM or involve them paying a fee to game libraries or services. While some have tried to build their own content libraries to overcome this, these solutions lack the large selection of games that existing gaming companies have built. To take full advantage of the growth of in-vehicle gaming, OEMs can dedicate more resources to building more expansive content libraries, or focus on the other applications of VR in vehicles to differentiate themselves from already established gaming companies that are building a foothold in the automotive space. Additionally, OEMs can decide to focus on building relationships with existing content providers to provide their customers with exclusive experiences, which avoids the time investment it would take to do so themselves, and still allows them to offer unique games to differentiate themselves from other OEMs.

Furthermore, ease of use can be an important determining factor for the success of these gaming experiences; holoride requires only a VR headset, controller, and their retrofit to enable consumption of its elastic content. Its compatibility with an existing VR headset, rather than requiring the purchase of its own standalone headset, improves holoride’s competitive standing, especially as shipments of standalone VR headsets are forecast by ABI Research to increase from 15 million in 2023 to more than 50 million by 2026.

By recognizing the potential of innovative gaming solutions, the automotive industry can offer unique and immersive experiences to consumers and build another revenue stream to sustain investment in new experiences in the future. As the age of the software-defined vehicle approaches and the lifecycle of vehicles increases, building more revenue streams like this is key to the success of OEMs.