Virtual Reality Gaming in Southeast Wisconsin

Social entertainment in the United States has experienced a significant transformation and resurgence since 2020.  While the pandemic initially forced the closure of many in-person entertainment venues, it ultimately accelerated consumer demand for shared, out-of-home experiences once restrictions were lifted. 

Today, entertainment activities designed for groups to interact, compete, and socialize have become one of the fastest-growing segments in the leisure industry and Southeast Wisconsin has two virtual reality (VR) arcade startups ready for real action.

Both founded in late 2025, The Basement VR and True Echo VR represent gaming that’s done in a social setting with groups of friends.  The Basement VR owner, Keith Johnson, opened the business to bring the gaming fun he and his son Henry have in their basement to thePort Washington, WI community and beyond.  “I wanted to create a place where people of all ages can interact in a real social setting. Dads, moms, grandparents, kids, old friends, and new friends can all play together, have fun with games, compete, and build friendships. A VR arcade is the perfect place to do that, ” said Keith.

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Early VR Market (2017- 2021)

The VR arcade market prior to the pandemic was primarily experimental.  The commercial VR ecosystem began taking shape with the launch of consumer headsets and early commercial VR venues.  Growth was modest but promising, with the broader VR gaming market growing from about $400 million in 2017 to $1.1 billion by 2020, demonstrating the rapid, early adoption.

Since 2020, the U.S. has seen a noticeable expansion in VR arcades and free-roam arenas. Several macro drivers have supported this growth:

• Falling headset prices and improved wireless tracking
• Strong consumer curiosity about immersive entertainment
• Increased venture funding into “metaverse” and immersive startups

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Arcade Reality

True Echo VR owner Mitchell Schweda, a mechanical engineer by trade, has always been fascinated by VR, especially treadmill VR systems and making them better and more realistic.  “Opening a VR arcade has been a great experience for me and my customers.  Groups come in and have a more dynamic and interactive experience than they anticipate,” says Schweda.  True Echo VR offers walk-in gaming but over 50% of their business comes from groups booking a time slot online.  Groups of two to six people can book a 45-minute slot and typically play three 15-minute games.  According to Schweda, “It is similar to an escape room but you can switch the game, environment, and the number of players instantly and as needed to fit the group.”  

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Current Market Dynamics (2024–2026)

Globally, the virtual reality arcade market is projected to grow at about 17.8% Compounded Annual Growth Rate (CAGR) from 2025 to 2033, reaching roughly $9.2 billion. 

Growth drivers include:

1. Demand for social experiences
   Consumers increasingly seek group entertainment outside the home, benefiting free-roam VR.
2. Hardware improvements
   Better, lighter headsets and wireless systems reduce friction and improve throughput.
3. Enterprise and events revenue
   Corporate team-building and birthday parties provide higher-margin bookings.
4. Content diversification
   Experiences now include education, simulation, and esports-style competition—not just games.

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Growth of local VR Arcade Start-Ups

Both The Basement VR and True Echo VR are experiencing rapid growth in their first 90 days of operation.  However, they are the first VR arcades in the greater Milwaukee area and are finding it a challenge to educate the market on what they do and how to best advertise their services.  Both are experimenting with various marketing tactics to find what works best before committing significant dollars.  Keith from The Basement VR has used Facebook to attract local families as well as flyers, coupon placement and partnership with a local pizza restaurant.  He has gained traction by offering children’s birthday party packages and is currently pursuing a partnership with two local Culver’s franchises.  The arcade is within sight of a Culver’s drive-through, which has helped bring in business.

True Echo VR started out as a mobile, event-based business and has evolved into a permanent space inside the Third Street Market in downtown Milwaukee.  They have used TikTok videos effectively and are now offering discount codes for customers who have experienced the arcade to give to their friends and family.  Schweda says, “customers have such a great time here.  They are the best possible advertising for us so I want them to talk with others and offer them the discount codes.”  

Both VR arcade owners are surprised about how well people of all ages pick up VR. The controls are intuitive and natural, without a ton of buttons to learn and press.  For this reason, both arcades are also targeting corporate groups for team building events as a way to build their business and increase their profitability.  

They’ve also both decided to open their own operations rather than a franchise location with a company like Sandbox VR.  Both owners have founded and managed other businesses and feel more comfortable running their own shop.  They say it helps them feel more in control of their growth path, costs, and profitability, as well as enjoying the creativity associated with an independent business approach.  

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Virtually Together

Having fun with video games is not just something you do at home and mainly alone.  With the latest VR arcades we have here in Southeast WI it can be a night out with friends, a corporate team building event or a way to get the family connected.  Keith from The Basement VR says “I’m seeing three generations of families coming in and having a total blast as they work a virtual hamburger production line together and see how many hamburgers they can make in 15 minutes.”          

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‍James W. Hermann is Lead Curator at Midwest Founders Community. Based in Milwaukee, he’s spent the majority of his career working on the commercialization of and business development in the health industry, most notably founding two healthcare software businesses, TherapEase Cuisine and PatentTrak. He holds MBA and engineering degrees from Marquette University.