Virtual Reality Software Financial Model

This 3-Statement Excel Virtual Reality Financial Model covers revenue and expenditure streams from development, subscriptions, banner advertising, affiliates etc. With cost structures, and financial statements to forecast the financial health of your company.

Financial Model for a Virtual Reality Software Company

What Do You Get? 2 Versions In 1 Zip File

Version 1: 5-Year, 3 Statement financial model wth 5 revenue inputs for tracking and reporting of your Virtual Reality Software, or consulting fee financials.

Version 2: 5-Year, 3 Statement 5 PAYG project-based consulting revenues, plus 6 Tier Subscription Tracking for software sales. ‘Managed Service Agreements’. Build Your MSA book as quickly as possible.
You would typically sell your services at tiered 12-month agreements that increase in price as SLAs (Service Level Agreements) and monthly consulting hours scale upwards.

Software Development: Software Development as a Service (SDaaS)
Benefits of MRR Subscription service in software development and distribution:
Flexibility: Teams in different regions can work around the clock, leveraging the expertise of team members during their peak hours
Scalability: The flexibility in scaling resources aligns with non-traditional workflows
Cost-effectiveness: Customers only pay for the result, without the need to assemble a team, pick technologies, or pay for idle time or overtime.

Here’s a six-tier subscription model for a Virtual Reality Software Company (focused on content creation, immersive experiences, and media production):

1. Free / Trial Virtual Reality Tier (Entry-Level)

Limited access to sample VR experiences
Basic VR content player (ad-supported)
Access to community forums
Watermarked VR previews
Monthly newsletter with industry insights

2. Enthusiast Virtual Reality Tier ($10-$25/month)

Full access to a library of VR experiences
Offline playback for select content
Early access to new experiences
No ads
Basic customer support

3. Creator Virtual Reality Tier ($50-$100/month)

Access to VR creation tools (limited export options)
Use of pre-made assets & templates
Licensing for non-commercial projects
Cloud storage for VR content
Standard customer support

4. Professional Virtual Reality Tier ($250-$500/month)

Advanced VR production tools & software
Commercial licensing for VR content
High-quality export options (4K/8K support)
Collaboration tools for teams
Priority customer support

5. Enterprise Virtual Rality Tier ($1,000+/month)

All Professional features
Custom VR content production services
Dedicated cloud hosting for VR projects
API integrations for business applications
Dedicated account manager

6. Partner / Studio Virtual Reality Tier (Custom Pricing)

Co-production & funding for VR projects
Exclusive distribution & marketing support
Revenue-sharing on VR content sales
Custom-built VR solutions for specific industries
Personalized 24/7 support

Virtual Reality Financial Model Income Statement (Profit & Loss Statement)

The Income Statement shows the company’s profitability over a specific period, including revenue sources, operating expenses, and net income.

Revenue Streams

Direct Software Sales – Sales of VR games and applications via platforms (SteamVR, Oculus Store, PlayStation VR, etc.).
Subscription Revenue – Recurring revenue from different subscription tiers (Gamer, Developer, Studio, Enterprise, etc.).
VR Content Licensing – Licensing VR experiences to third parties (businesses, educational institutions, healthcare, etc.).
Esports & Competitive Gaming Revenue – Sponsorships, tournament fees, advertising, and revenue share from competitions.
Custom VR Development – Revenue from businesses commissioning custom VR experiences.
Advertising & Partnerships – In-game advertisements, brand sponsorships, and affiliate marketing.
Asset & Marketplace Sales – Selling VR assets, environments, or modding tools to developers.

Expenses (Costs & Operating Costs)

Cost of Goods Sold (COGS)
- Server hosting costs for online VR content & multiplayer games
- Revenue share with distribution platforms (Steam, Meta, etc.)
- Licensing fees for third-party engines (Unity, Unreal Engine)
- VR asset creation & acquisition costs
Operating Expenses (OPEX)
- Development Costs – Salaries for developers, designers, and engineers
- Marketing & Advertising – Promotions, influencer partnerships, esports sponsorships
- General & Administrative (G&A) Expenses – Office expenses, software tools, legal, HR
- Customer Support & Community Management – Salaries for support staff and forum moderators
- Research & Development (R&D) – Investment in new VR technology and innovation

Profitability Metrics

Gross Profit = Revenue – COGS
Operating Profit = Gross Profit – Operating Expenses
Net Profit = Operating Profit – Taxes & Interest Expenses

Virtual Reality Financial Model Cash Flow Statement

The Cash Flow Statement tracks cash movements in and out of the company and ensures financial sustainability.

Operating Cash Flow (Cash Inflows & Outflows from Core Business)

Cash Inflows

Revenue from VR software & subscriptions
Payments from licensing deals
Revenue from esports sponsorships and ticket sales
Upfront payments from enterprise clients

Cash Outflows

Salaries for employees and contractors
Server and hosting costs
Marketing expenses
R&D and content production costs

Investing Cash Flow (Asset Purchases & Investments)

Cash Inflows

Sale of old equipment or intellectual property
Investment income from acquired companies

Cash Outflows

Purchase of new VR equipment & motion capture tech
Development of proprietary VR engines or tools

Financing Cash Flow (Funding & Debt Management)

Cash Inflows

Venture capital investments
Loans or government grants for VR innovation
Crowdfunding campaigns

Cash Outflows

Loan repayments
Dividends paid to investors
Buyback of company shares

Key Cash Flow Metrics

Free Cash Flow (FCF) = Operating Cash Flow – Capital Expenditures
Cash Burn Rate = Monthly Operating Expenses – Revenue
Runway = Cash Reserves / Monthly Cash Burn Rate

Virtual Reality Financial Model Balance Sheet

The Balance Sheet provides a snapshot of the company’s financial position at a given time.

Assets (What the Company Owns)

Current Assets

Cash & Cash Equivalents (cash in bank accounts)
Accounts Receivable (payments due from customers & platforms)
Inventory (VR assets, game licenses, digital products)

Non-Current Assets

Intellectual Property (VR game licenses, proprietary engines)
VR Equipment & Hardware (motion capture tools, VR headsets)
Software Development Costs (capitalized software expenses)

Liabilities (What the Company Owes)

Current Liabilities

Accounts Payable (outstanding payments to suppliers)
Short-Term Loans (bank loans due within a year)
Deferred Revenue (prepaid subscriptions, esports entry fees)

Non-Current Liabilities

Long-Term Debt (venture capital loans, corporate bonds)
Lease Obligations (office & studio space leases)

Equity (Owner’s Share of the Business)

Shareholder’s Equity

Paid-in Capital (funds raised from investors)
Retained Earnings (profits reinvested into the company)

Key Balance Sheet Metrics

Current Ratio = Current Assets / Current Liabilities (Liquidity Check)
Debt-to-Equity Ratio = Total Liabilities / Shareholder’s Equity (Financial Leverage)
Return on Assets (ROA) = Net Income / Total Assets (Profitability Efficiency)