The ultra realism of first person shooter (FPS) gaming could take on a whole new level with virtual reality entertainment company ISA Group (ASX: IDZ) acquiring VR production studio Red Cartel with the intent of developing VR for use in military and defence operations.
Unlike ISA whose primary VR tech is designed for consumer entertainment under their FREAK Entertainment and Indoor Skydive brands, Red Cartel has an enterprise focus for their leading virtual and augmented reality tech. Past clients that have used Red Cartel’s VR products include e Shell, Red Bull, eBay, Qantas, Cadbury, KPMG and TAFE.
With the acquisition of all assets under the Red Cartel banner, ISA has plans to leverage the intellectual property and existing tech to develop ‘turn key’ training solutions for the Defence industry where the VR would simulate combat scenarios.
“The acquisition of Red Cartel unleashes some major opportunities in both the consumer and enterprise markets,” said ISA Group CEO, Wayne Jones.
“The ability to custom build content and specific equipment to military grade positions us to engage direct with military and law enforcement units around the world.”
In parallel with development of the VR for the defence industry, ISA Group will look to also use it for entertainment purposes in its FREAK gaming venues. The free roam game would essentially be a snippet of the VR’s full capabilities where gamers can undertake their own military combat simulations at the venues, or be licensed out for set up at theme parks and festivals.
The consideration for the Red Cartel acquisition is $609k but will have no impact on ISA’s balance sheet with just $12k paid in cash and the remainder in IDZ shares over the next three years issued at the 15-day VWAP price when each of the three tranches are due.
“The Red Cartel team are very excited to be joining ISA Group. ISA Group is an exceptional fit for us as the vision, goals and culture of the 2 businesses align perfectly,” said Red Cartel Founder and Managing Director, Landon Curry.
“Our 20+ years of experience in 3D production and expertise in VR development, combined with ISA Group’s extensive military background, are a perfect combination of skills to produce world-class military training applications.
““In addition to the military training applications, we are looking forward to developing custom VR game content for the FREAK arcades and continuing to grow as a production studio for our existing clients.”
Despite lockdowns through the pandemic forcing closures to the entertainment centres, ISA Group has made a strong recovery by expanding its tech capabilities to rely less on venue foot traffic. This has included the launch of FREAK Education which is currently undergoing a pilot program launch with two Sydney-based schools.
Alongside other initiatives such as VR gaming delivered to your door, ISA Group reported $1.2 million in positive cash flow for the 12 months ended 30 June 2021 from $8m in customer receipts.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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