Virtuality Group Plc is hoping the reality of its financial position is only virtual, as it attempts to turn its business through 180 degrees, away from the entertainment business. The Leicester-based company, which became one of the top five players world-wide within months of its foundation, has been a pioneer in the arcade games market ever since, but is now suffering from what it calls the severe downturn in the entertainment business. Virtuality has seen its first half revenues plummet 44% to 3.5m British pounds, with losses up to 3.8m pounds from 583,000 pounds last time. The company says much of this was due to production delays in launching new products. This did considerable further harm to the company’s high end products, because customers were already beginning to delay orders in anticipation of cheaper, three-dimensional personal computer products on the way, the company said in a statement. Now Virtuality is changing direction and is planning to exploit its intellectual property portfolio and license its technology, chairman Denis Ohryn said, hoping that he can draw his company back into the future. He believes that the three-dimensional and virtual reality industry is coming of age, with new three dimensional- enabled personal computers from the likes of Compaq Computer Corp, game systems from Sega Enterprises Ltd, Sony Corp and Nintendo Co Ltd which are aiming themselves towards being virtual reality-capable, and the Internet moving toward three-dimensional visualization or virtual reality. The company therefore believes that it will be able to exploit its three-dimensional graphics technology. It also says that it will shortly announce a major licensee for its low cost tracking and three-dimensional navigation devices, on which it holds several patents. Virtuality’s DynoVisor headset, developed with its Japanese partner Takara Co Ltd, went into full production in September, it said, and Takara expects to exceed its sales forecast of 50,000 units this year. Ohryn believes the virtual reality market will shift this year from being an early adopter market to a mass market, and says as a result that the company’s peripherals and software will be widely adopted by consumers. In the shor t term, the company has had to cut costs by getting rid of 15% of its staff, and farming its assembly and manufacturing operations out to third parties. It says it intends to concentrate on higher margin business, such as licensing. As a result of the restructuring, it said it expects charges that will impact the second half of the year. In spite of the short term problems, Ohryn insists that Virtuality’s prospects are better today than at any time since it floated in 1993. The company will again pay no dividend.
