Dave & Buster’s will deploy a proprietary virtual reality (VR) platform in some machines in its arcades in 2018, using “very well known” properties, Dave & Buster’s CEO Steven King told analysts. King didn’t identify the IP that will be part of the VR effort.

The company’s amusement-related revenue rose 11.8% to $142 million in Q3 ended Oct. 29, driven by games featuring Spider-Man, Despicable Me, Pac Man, Alien and Space Invaders. It also launched an “Injustice Arcade” game in November in advance of the release of the Justice League film.

Dave & Buster’s has been testing VR-based systems for more than two years, having started in 2015 at a Milpitas, Cal. store with VRStudios’ wireless head-mounted display and “pistol” controller along with optical tracking technology. The new platform will “enable us rotate content and capitalize on emerging opportunities for several years,” King said.

The new platform comes as the company prepares to launch its first 15,000-20,000-sq. ft. small format stores including one in Rogers, AR that is due to open in January. The new format, which replaces an earlier 20,000-25,000-sq.-ft. “small” store design, will generate about $4-$5 million in annual revenue against the average of $10.9 million at larger, 30,000-40,000-sq.ft. locations, King said. The new smaller format also nearly doubles to 10,000-sq.-ft. the size of the arcade versus the earlier version.

Dave & Buster’s is planning to open 20-40 of the smaller locations during the next several years as it expands into markets with populations of 200,000 or less. Overall, it expects to open 14-15 stores in 2018, including two in the small format. The chain currently operates 105 locations and is targeting having 211 by 2024.

Meanwhile, Q3 net income increased to 13% to $12.1 million as revenue rose 9.3% to $250 million despite a 1.3% same-store sales decline.

Contact:

Dave & Buster’s, Steve King, CEO, 214-357-9588