Virtual reality (VR) allows for a close approximation of the real world, but interacting with VR differs from experiencing the real world in some key elements, one of which may be the perception of time. The main goal of the current experiment was to determine whether a time compression effect exists for VR and if so, to examine whether this is the result of the medium of VR itself, or the content used in VR. Participants viewed movie clips in either a real-life cinema or a VR replica of this cinema and were asked to rate the arousal and emotional valence they experienced during each clip. They estimated the duration of each clip in seconds. Results indicate that both level of arousal and valence as experienced by the observer positively contribute to the observed time compression effect, regardless of the viewing condition. Our data suggest there is no difference in the perception of temporal duration between VR and real life, and that the time compression effect that takes place is most likely the result of the materials displayed. So, even though VR has been claimed to result in time compression, for instance in clinical contexts, this may be caused more by the emotional content of the materials used, rather than the medium of VR itself.