Matterport is a 3D imaging company that sells 3D cameras which capture depth data and build virtual models of physical spaces. Common use cases include using the camera to build models of residential properties, hotels, event venues, and construction sites. These models can then be viewed online in a browser or in virtual reality through a VR headset, like Samsung Gear VR.
The camera is a large, bulky device that is operated via an iPad (through Matterport’s proprietary iPad app). It takes a series of 360 degree images which Matterport then processes in the cloud to stitch together a navigable 3D model (see below).
The company’s mission is to enable anyone to experience a physical space without needing to be there. As a result there are numerous use cases for the product. Real estate agents can list homes online which their customers can view in a VR headset without conducting multiple house visits. Architects can show their customers progress on a construction site from across the globe. Everything from museums, travel destinations, wedding venues, hotel rooms and war zones can be visited virtually. The NYTimes even launched its VR app to put readers in the center of news stories, including showcasing bombed sites and war zones using Matterport cameras. Click here to check out some of Matterport’s 3D models on your browser.
Matterport’s value proposition has potential as more and more people are collaborating from remote locations or working on projects across multiple regions. Given the multitude of applications of this technology, Matterport has a compelling case to build a business around the product, and has raised $61M in Series C funding to date. The video below shows how they are using VR.
Matterport operates a B2B2C business, enabling its business customers to serve their clients more effectively by using this camera to create immersive content. The company currently runs on a Hardware + SaaS model. They sell a camera for $3600. Along with the camera, customers must buy a “Cloud Plan” which is a subscription to process and host a set number of 3D models per month. The basic subscription starts at $49/month and includes processing of 3 new models a month, and storage of 100 models in the cloud. If a customer wants to build additional models, they must pay $19 per model. All of Matterport’s models can be viewed in VR and there is no cost to make your 3D model for the web compatible for VR (until June 2017 after which Matterport may start charging extra for VR functionality).
Challenges and Opportunities
I spent my summer internship at Matterport and noticed a number of challenges with this young business. I provide some insight into what they must do in order to gain traction in the business.
Lack of industry focus:
Matterport is spreading itself thin across clients in real estate, travel and hospitality, media, and architecture and construction. As a result, its pricing and business model are not well defined for a given industry and product features are disparate based on varied requests from large customers. This is a common problem faced by emerging technologies that have multiple use cases, particularly when a business is founded based on a product innovation instead of a customer pain point. However, the only way to resolve it will be if Matterport starts with a given industry and gradually expands to ancillary industries in that sector. This is so that their value proposition will be well defined for a given industry and they can build features for a particular segment of customers. Moreover, for an emerging technology like VR, it is important to gain a critical mass of early adopters that can serve as a model for later adopters. Currently, Matterport’s early adopters are spread across industries and there isn’t a critical mass of adoption in any given sector.
Hard to define ROI:
Given that this is a B2B2C model, Matterport needs to convince prospective customers that they’ll see an ROI on their relatively large investment (~$4K in upfront costs). As an independent real estate agent, I am not convinced that more customers will buy a house if they can view it in VR first, and Matterport doesn’t have the stats to prove the business case for this investment. I think the issue here goes back to the fact that this business was founded on a product innovation instead of a customer need. This makes it harder to close a sale if all you have to sell is an “exciting product” or an “experience your clients will love” . Matterport will need to establish a specific pain point for the end user and prove to their B2B customers that this can be resolved through this product and will show them a return.
Need for content creation:
Like all VR businesses, a key challenge lies in creating content for consumption. The process of scanning 3D models is cumbersome, especially for large spaces, which creates a real barrier to adoption. Matterport has tried to circumvent this by creating a network of “Matterport Service Providers” (MSPs). These are individuals who are building their entire business around scanning spaces in 3D on behalf of companies, much like a professional photographer does in 2D. Matterport provides its MSPs with webinars and training on how to build their business. If they can build a strong network of MSPs, the MSPs can market to businesses and a two-sided marketplace could develop for 3D scans. This would have strong direct and indirect network effects in promoting wide scale adoption of this technology.
Business model challenges:
Lastly, Matterport is clearly unsure of their business model. They are currently offering VR conversion for free but may charge for it after June 2017. They have also made various changes to their pricing structure. I believe this uncertainty stems from the fact that their isn’t clarity on what exactly the value is (customer ROI). Until that is established, Matterport cannot decide what and how to charge for their service, and is instead stuck experimenting with a variety of business models (MSPs, direct to SMB, direct to Enterprise, partnerships etc.).
Adoption is a challenge with any new technology and VR is no exception. Matterport needs to establish a really clear focus in order to build a business around their product – starting with a single customer segment, to a clear pain point, to a quantified value creation in order to figure out the right business model.
Matterport Company Website
Personal work experience