EVR Holdings: turning virtual insanity into virtual reality

EVR Holdings shares soared earlier this year after it launched its MelodyVR app, bringing live music into our homes by harnessing the power of virtual reality. As more consumers pick up their VR headsets to immerse themselves in new worlds, what has EVR got to offer?

Data
Source: Bloomberg

In virtual reality, we’re placing the viewer inside a moment or a story… made possible by sound and visual technology that’s actually tricking the brain into believing it’s somewhere else,’ – Chris Milk, founder of Within. 

It has struck deals with the three biggest record companies in the world, teamed-up with the likes of Microsoft and Jay-Z, launched in partnership with Facebook, and reportedly has Adele as an investor. No, it isn’t Spotify, Apple or Amazon, but a company named EVR Holdings, an AIM stock that boasts a value below £150 million. 

EVR’s business operates out of its subsidiary MelodyVR. In just four short years MelodyVR has managed to turn its ambition of bringing live music events to the world through virtual reality (VR) to what is today an innovative, revenue-generating business with friends in all the right places.

Having launched its mobile app earlier this year in partnership with Facebook’s release of its new affordable VR headset the Oculus Go, MelodyVR now allows consumers in the US and across Europe to immerse themselves in live performances by their favourite artists using their headset, bagging any virtual seat in the house: in the pit, at the front or even on stage next to the likes of UB40, Jess Glynne and Cypress Hill.

EVR Holdings launches MelodyVR app

MelodyVR launched its mobile app in May of this year at Facebook's F8 conference in San Jose, featuring in the promotional launch of the Oculus Go. Customers can download the app and access previews of hundreds of live performances within MelodyVR’s library that can be viewed on third-party VR headsets, encouraging them to pay to download their favourite performances in full.

The story of EVR Holdings and MelodyVR so far…

  • April 2015: MelodyVR is formed by Anthony Matchett and Steven Hancock to develop technology that allowed music performances to be recorded and streamed to users via virtual reality headsets
  • May 2016: Armstrong Ventures buys MelodyVR for £5.1 million in shares, adding the founders of MelodyVR to its board. Begins trading in London under the new name EVR Holdings
  • Sept 2016: Signs a deal for a ‘lite’ version of its MelodyVR app to be used with Samsung Gear headwear in Telefonica stores in Germany
  • Dec 2016: Launches beta version of the MelodyVR app to be used with Samsung Gear as a trial over the Christmas period to gain feedback in order to optimise the product. Signs deal to create content of Warner Music artists, giving the record label an option to invest in EVR
  • Mar 2017: Signs deal to create content of Universal Music artists, giving the record label the option to invest in EVR
  • June 2017: Signs global deal with Microsoft to bring MelodyVR app to the software giant’s Mixed Reality Devices, securing funding and advice
  • July 2017: Signs deal to create content of Sony Music Entertainment artists, giving the record label an option to invest in EVR.
  • Aug 2017: Signs a string of licensing deals in Europe, striking what it believes to be the first deal ‘to license a virtual reality music service’
  • Feb 2018: Matchett takes up the role of executive chairman in addition to his role as chief executive. Another deal is signed in Europe with Warner/Chappel
  • April 2018: Signs licensing deals with a string of companies in the US.
  • May 2018: Full launch of the MelodyVR app in the US and the UK at Facebook’s conference in San Jose, in conjunction with the Oculus Go
  • June 2018: Launches MelodyVR app in eight European countries and officially declares itself as a revenue-generating business

The other prong to the business model is creating virtual environments that do not exist. When recording live performances and working with artists on content, MelodyVR’s attitude is ‘anything’s possible’, and it sees no reason why it should limit this to the music side of the business.

MelodyVR: downloading performances is just the start

For MelodyVR, its market-leading position twinned with its formidable partnerships gives it limitless opportunity to expand. The company’s next step is big: streaming live gigs to paying customers through their headset. This will represent another huge change for the music industry, which has already evolved rapidly in recent years as people transitioned from downloading music to streaming through the likes of Spotify. It technically means artists can sell unlimited ‘virtual seats’ to their performances, possibly presenting a new and highly valuable revenue stream, and could prove to be the springboard for new products such as a VR music album.

Read more about Spotify shares being tested as it learns the lessons of going public

Revenue will be shared between the company, the artists and the record labels. In January, Matchett told Wired that he expected a single 360 degree music track to cost customers around £1, with a concert priced at between £8 and £15. 

If music proves popular with VR fans then MelodyVR’s model could expand further: why not sell virtual seats to sold-out sporting events, theatre plays or even TV shows like Britain’s Got Talent? Companies like NextVR are already broadcasting the likes of football to VR users, allowing customers to root from the stands from the comfort of their own homes. 

The real potential of VR is only just being discovered and new applications are still being found. London-listed SimiGon and Pennant International both use virtual reality for simulation training, Jaywing uses VR to bring data to life, and ProPhotonix has recently released a new IR laser diode (used in sensors) designed for virtual reality applications being deployed by firms looking to optimise their packaging and sorting operations. Newly-listed Immotion Group has seen its share price rise since joining the London Stock Exchange (LSE) this year as investors buy into its ‘out of home’ VR experiences that sees it combine its own content with simulation hardware.

Virtual reality headset sales rise as they become more affordable

Many of today’s groundbreaking technology starts out as nothing more than ideas dreamt up in sci-fi films and fantasy novels, and virtual reality is no exception. But now, much like holograms, smart speakers and flying cars, virtual reality has now become reality. 

Read about the guide to smart speakers and virtual assistants 

It has been a slow process, partly because it took time for those producing the VR content and those manufacturing the VR headsets to harmonise. However, MelodyVR’s timing has been spot on. After Alphabet launched its first ‘head-mounted display’, the Google Cardboard, and Facebook splashed out $2 billion to buy garage start-up Oculus VR in 2014, the founders of MelodyVR identified there was a lack of VR content in the pipeline despite growing adoption of VR by the big players.

Facebook, Alphabet, Samsung, Sony and HTC all have their own VR headsets and their adoption has helped spark consumer interest. Yes, the Google Cardboard was as cheap as the name suggested, requiring you to put your phone inside a box and then strapping it to your head, but the standalone VR headsets that have followed have understandably been pricey. That means VR has largely remained an expensive investment for customers with little reward; the price of headsets is high and the quantity and quality of VR content that is available is low. But this is gradually changing. MelodyVR has demonstrated the possibilities that VR brings in terms of content, and the fact it was launched in tandem with the Oculus Go – selling below $199 – shows VR is becoming more affordable. Still, sales of VR headsets was rising before the Oculus Go was released, supporting the view that the entry of more affordable models will accelerate adoption:

(Source: Statista, figures are rounded)

The fact EVR and MelodyVR have not only developed their own technology but struck the major deals needed to gain access to artists and then coincided their own launch with that of Facebook is nothing short of impressive. This has been because it has stayed ahead of the curve, with the quality of its content running ahead of the quality of the hardware.

EVR Holdings and MelodyVR: partnerships that anyone would envy

MelodyVR’s job is to create or stream content that customers want to watch. But in order to gain access to the musicians that are at the heart of its productions MelodyVR has had to knock on the doors of the world’s three biggest record companies to have any hope of surviving, with Warner Music, Universal Music and Sony Music controlling the rights to the majority of the world’s biggest music superstars. When MelodyVR had returned it not only had access to the libraries of the world’s record giants but a possible investment from all three on the cards.

MelodyVR struck essentially the same deal with all three record companies that allowed it to record performances of their artists and distribute them through its app, giving all three the option to buy 43.2 million shares in EVR over a five-year period. However, the company also leveraged the growing interest in its platform and showed it is more than capable of negotiating at the big boys table. Warner Music was the first to sign a deal with MelodyVR and secured the option to invest in EVR for just 4.25p per share, whereas Universal Music would have to pay 12.375p and Sony 14.2p. 

It has struck a wave of other licensing deals to cover both the US and Europe, including what it believes to be the first agreement ‘to license a virtual reality music service’. Agreements have been signed with Jay-Z’s Roc Nation, Warner/Chappel, and the Anglo-American Rights European Service Agency, to name a few. 

Elsewhere, MelodyVR has secured other invaluable partnerships to ensure the distribution of its content can reach its full potential. This has been spearheaded by the deal signed with Microsoft in 2016, which saw the MelodyVR app rolled-out on to all Windows Mixed Reality devices and valuable technical expertise and funding from the world’s largest software company. 

The joint-launch of the MelodyVR app with Facebook’s new headset is a further demonstration of how the London-listed company is becoming the content partner of choice for the biggest manufacturers. For example, one of its first deals was signed with Telefonica to use a ‘lite’ version of the MelodyVR app in demonstrations of the Samsung Gear VR headset that were sold in stores across Germany. The app has also been included in the marketing of various headsets, and Facebook include the MelodyVR app in its entertainment bundle to put it alongside kingpins like Netflix

This all enforces the idea to the consumer that the headset, whichever one they purchase, and the app goes hand-in-hand.

EVR Holdings delivers reliable and consistent progress to shareholders

Like many revolutionary tech firms EVR’s next job is to prove it can be profitable. The £20 million equity raise it conducted in May, coinciding with the launch of the app, was the biggest fundraise to date but the issue price of 16p was also the highest it has demanded, and double the last placing price of 8p. Overall, EVR has raised over £40 million in the past three years and has grown the company from a market cap of just £3 million to one fast-approaching £150 million.

(£, millions)
2015 2016 2017
Pre-tax loss
£0.3 £2.6 £6.2
Closing share price (pence)
1.28p 6.05p 8p
Market cap
£3 £57.2

£92.6

Net operating cash outflow
£0.2 £1.5 £4.9
Proceeds from issuing shares
£2.3 £3.3 £14.2
Proceeds from warrants
£0.4 £0.3
Shares in issue (billions)
23.35 1.12

1.33

Cash
£2.4 £3.4 £12.4


Shareholders have already have had much to cheer as the launch of the app means the company is now officially generating revenue, but they will be keen to discover exactly how much consumers are willing to spend on MelodyVR’s library. Considering its ambitions to stream live events to enormous worldwide audiences, spending on research and development will have to remain a high priority and the next thing investors will be keen to see is how far away EVR is to balancing its books and becoming self-sufficient in terms of funding and cash flow.

EVR Holdings shares rocket as MelodyVR app is launched

EVR Holdings shares climbed to an all-time high of 18p around the launch of the MelodyVR app, before giving back most of the gains it had achieved over the previous couple of months.

EVR Holdings: could MelodyVR be a takeover target?

With the world’s leading technology companies now knocking at MelodyVR’s door for the vital content needed for their newly launched headsets, and the largest record companies eager to jump on what might just be the next big thing for the music industry, EVR’s biggest challenge may be to stay independent and getting the time it needs to grow.

Striking deals with such a wide variety of market players and avoiding tying down its service to one headset will help it prevent it being swallowed up and added to one of the tech giant’s VR divisions, and if one of its many partners or another player did decide to try to takeover EVR then you could bet your lucky star it would kick-start a bidding war. The list of potential bidders is long: it would be a natural addition for Spotify, and Amazon could probably find a place for it in its VR software division.

Read more about where’s next for Amazon

Whether or not a takeover is on the cards and whether or not it would be in the best interests of the company and its shareholders is not known, but with tech giants willing to splash out on making similar high-tech, bolt-on acquisitions, EVR is likely to demand a pretty price should any offers be laid on the table.

Matchett and Hancock have both cashed in on their holdings over the past two years, each booking at least £5 million through two secondary placings, but they have both remained substantial shareholders in EVR. Matchett still holds a 13.1% stake while Hancock holds 10.2%, making them the company’s two largest individual shareholders.

EVR Holdings looks to ride ‘fourth wave’ in technology shift

‘Over the next few months, MelodyVR will begin to announce its launch schedule for additional VR devices, such as PlayStation VR and Google Daydream, as well as detailing our worldwide release plans for additional geographies throughout Europe, Asia and Latin America. We will also announce our first live concerts, which will enable music fans to purchase digital-tickets to sold-out real world events, in VR, via the MelodyVR platform,’ – Matchett, May 2018.

Allowing customers to download live performances by their favourite artists is one thing, but streaming live events could be a game-changer for the music industry. Live performances are a massive money maker for musicians and MelodyVR is allowing them to smash through the limitations set by stadium capacities. Ticket prices have soared over the past decade and getting your hands on the hottest tickets is proving more difficult than ever. Selling another way in to the gig at a considerably lower price seems like the perfect solution.

While MelodyVR is currently focused on producing music-related VR content its ambitions go much further as it explores new immersive technologies like interactive advertising and augmented reality. This is one key reason why any takeover of EVR at this early stage would be a shame, as it could stop the company finding its true potential and confine it to making VR music videos.

While the company has laid the perfect foundations to thrive as VR grows in popularity and becomes a vital tool for businesses, much of its immediate success is tied to the adoption by consumers for entertainment purposes and their appetite for 360 degree performances by their favourite artists. The uptake of VR has been slow so far and, while it will almost certainly accelerate, it will remain a slow-burner rather than explode like smartphones, regarded as the ‘third wave’ in technology.

Learn more about how to invest in VR technology

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