Virtuix hit an unfortunate roadblock with international shipments of its highly-anticipated virtual reality treadmill, Omni, which forced the company to discontinue its plans to sell the Omni outside of the U.S.
Virtuix introduced the Omni virtual reality (read: omnidirectional) treadmill on Kickstarter in 2013. At the time, Virtuix’s founder, Jan Goetgeluk needed $150,000 to develop his wooden Omni into a viable consumer product. The Kickstarter campaign offered Omni treadmills for as little $299 for a DIY setup, which provided the base and shoes but no support system, and full kits for as little as $349. The idea of the Omni caught the attention of the tech world, and by the end of the campaign, 3,249 backers pledged $1.1 million dollars.
In the three years following the campaign, Virtuix refined the design of the Omni for safety and reliability, which added considerable complexity to the system. The Omni treadmill consists of more than 200 custom parts, which are costly to produce. Goetgeluk said that final production cost turned out to be more than three times his original estimate.
Geotgeluk’s shipping estimates were equally off base. The FAQ on the Kickstarter page indicated that domestic shipments within the United States would be in the range of $60-90. International shipments were to range between $100-$150 for Canada, anywhere from $100-350 for Europe, and up to $600 for South Africa and the Middle East. Those prices proved to be untenable and became the straw that broke the camel’s back.
The final production model of the Omni is a large and heavy peripheral. The package that Virtuix ships to its customers includes multiple boxes and comes strapped to a pallet. The main unit fits in a large 48 x 43-inch box, and the extra accessories and shoes come in additional boxes. The whole package, pallet and all, tips the scales at 230 pounds.
Shipping an item that heavy and large is costly, and the problems only compound when you realize that Virtuix would also require warehouse space internationally to service its overseas customers. It’s a lot for a small company to maintain.
“In the last few months we have explored cost effective options to get the Omni distributed and serviced worldwide, which has become increasingly difficult and expensive given the Omni’s transformation to a high-end entertainment device,” wrote Goetgeluk on the Virtuix blog. “After much internal debate and soul-searching, we have concluded that as a small U.S. based startup, we, unfortunately, do not have the resources to deliver and service units in every country. Our dream of shipping the Omni to customers all over the world has proven naive and unfeasible.”
Virtuix said it hasn’t given up the dream altogether. The company is currently shopping for distribution partners that can handle sales where Virtuix cannot, but the company can’t predict how long it will take to secure partners, so Virtuix decided not to hold onto customer funds any longer. Virtuix is issuing full refunds to every international Kickstarter backer and pre-order customers and adding 3% interest (compounded monthly) for every year that Virtuix held their money.
In addition to issuing full refunds to all international customers, Virtuix is extending the same offer to any domestic customer that wishes to cancel their order.
“We understand that circumstances change and our product has changed as well, wrote Goetgeluk. “The Omni is quite heavy, comes in a large box (230lbs / 105kg) on a wooden pallet, and delivering the unit to your home will cost around $200, which is much higher than we initially estimated. Therefore, feel free to contact us at email@example.com if you’d like to request a refund of your pledge.”
We have to wonder what this dramatic distribution change will do for game support. Virtuix recently sent Omni units to multiple developers so they could add native Omni support to their games. How many developers will have an interest in supporting a product that has such a limited install base? The Omni began as a niche market, and now Virtuix has but a fraction of the market potential it previously had.
The limited market potential is surely a red flag for investors, too. Virtuix spent the better part of the year shopping around for investors for its mini-IPO to help fund further development.
The above is also unfortunate because using the Omni is a great deal of fun.