Zoom Parties Are So Five Weeks Ago: Hello Virtual Reality

(Bloomberg) -- Like millions of small businesses, Kenneth Dunning’s company crashed last month. His main offering—renting out virtual-reality equipment for events like team building—didn’t make sense during social distancing, and corporate customers cancelled en masse.

But thankfully for Dunning, the pandemic has also bored millions. With coronavirus mitigation making gatherings and travel taboo, his company, Philadelphia-based Virtual Reality for Rent, is staying afloat by filling the growing demand for entertainment beyond Netflix. He’s now mailing out about 60 VR Oculus headsets (made by Facebook Inc.) a week to individuals, a seven-fold jump from before the outbreak. The technology allows kids to visit carnivals, while twenty-somethings can dance at a club with strangers from around the world.

“Kids don’t go to arcades anymore, but they can go to VR arcades,” said Dunning, who is now offering rentals as low as $35 a day.

The tech industry has struggled for years to generate wider adoption of virtual reality. A major reason is that setting up a high-end home experience still costs well above $1,000. But the prospect of millions staying home for months during the pandemic and additional renting options might be just what it needed.

Alex Gerasimov, owner of the VR Zone DC, is seeing a new wave of interest, too. His company operates virtual-reality play spaces that are temporarily closed because of the virus. That pushed him to pivot to a new rental model. Gear, including wipes and masks, is dropped off via contactless delivery. Setup is done over video chat. Its social distancing party package (“Stay 7 ft. apart and have fun”) starts at $299.

Consumers have adopted all kinds of new behaviors during the shutdown, and some will no doubt stick. There are Zoom happy hours. People are cooking more and realizing they like it. Millions have evolved into work-from-home experts. A whole movement around DIY nail salons has emerged.

And VR has a good shot to win more fans. One big reason is birthday parties. Gerasimov’s company is now working on a new offering for them in which VR headsets are sent to as many as 10 homes. Attendees then create avatars and compete in multi-player games, like bowling and dodgeball. The event could end with singing “Happy Birthday” and some virtual cake. 

It’s easy to see why Gerasimov is doing this. More than 800,000 Americans turn a year older every day. Before the virus, they were increasingly spending more on making their special day special (and then sharing it over social media, of course). Even non-milestone birthdays could mean a destination celebration in a sunny locale. And kids’ birthdays, once confined mostly to backyards and basements, have their own ecosystem of play spaces, gyms and eateries to host parties.

Birthday bashes, a major part of America’s $5.4 billion party and events market, have taken a big hit with most of the country in lockdown. But the desire to celebrate hasn’t waned, and has likely only intensified with isolating stay-at-home orders in the U.S. stretching into a second month. 

In response, companies are getting more creative by pushing beyond generic Zoom calls, which may help online celebrations live past the outbreak. It’s not hard to imagine a future where two birthday parties are the norm; one in person and another online.

Camp, a toy retailer with a handful of locations, is now hosting daily free virtual birthday parties. Over videoconference, the company’s “camp counselors” lead sing-alongs, story time and magician shows. More than 350 kids, as well as some adults, have participated. It’s also hosting private virtual birthday parties with entertainers and is developing an e-commerce gift registry.

Seri Kertzner, founder of New York City-based Little Miss Party, used to throw a handful of functions a month before coronavirus struck. Now she’s leaning on a smaller part of her business that lets customers purchase ready-made packages for as little as $39, complete with themed cups, napkins and decorations. Her party boxes, some packed with accessories like capes and garland, are selling like never before, she said.

On Etsy, birthday party-in-a-box options include “18 & Quarantined” for $15 and a Cheerios-themed package with a personalized cereal box for $140.

In a sign of how this is taking off and might stay around, Kertzner said some customers told her birthday parties were a rarity for them before social distancing.

“Something I really wanted to do was keep people happy and find a way to be able to celebrate without actually having anyone to celebrate with,” Kertzner said. She offers plenty of advice on how to put on a spectacular event at a distance. One example: throw a rainbow theme virtual party and ask attendees to log on wearing a different color.

Even after social distancing measures end, the workarounds may bring permanent change to parties because people will want to keep including out-of-town friends and family, according to Jamil Zaki, associate professor of psychology at Stanford University and author of “The War for Kindness.”

“Necessity being the mother of invention,” Zaki said, “We invented a new way of connecting that I hope we keep.”