#1119 – Experience Entertainment’s Growth

The developments across the entertainment landscape were reflected in a very hectic few weeks for the industry. This sees the convergence of the market regarding mergers and acquisitions – along with the defining of new technology trends and the opportunity for the market to grow into new areas of business.  

Acquisition, Mergers & Restructuring

The big developments still come thick and fast, as the whole of the entertainment landscape is restructured under the continuing pressure of change sweeping the markets.

One of the new trends that The Stinger Report has charted is that of “Live Play”. The growth in UFO Online services has continued apace, and one of the originators of this trend found themselves in the crosshairs. Rolling out their first internet operated crane machine (Online UFO Catcher) platform back in 2015, Netch Co., with the ‘Net Catcher’ smart device platform, has been emulated by many Japanese and American amusement and game studios – but still represented the gold standard. But, in news that rocked the market, it was announced in April that all the shares in Netch were to be acquired by Cyberstep Inc., their largest competitor (with their ‘Toreba Live’ app). This acquisition will make Netch a subsidiary of Cyberstep, and there are hopes to strengthen in-house development and services with this acquisition. It is expected that the two platforms will eventually be combined into a single player app.

This consolidation of the market will strengthen both positions – the Japanese mobile app stores are populated with over 30 different Online UFO Catcher platforms to select from, and the numbers continue to grow. Only recently, SEGA, who had sold their original online catcher app to GENDA (‘Goton’), announced that they would be returning to the market with a new app (‘SEGA UFO Catcher’).

During April, news was revealed that the latest Chinese JOYPOLIS LBE facility had opened. ‘Guangzhou SEGA JOYPOLIS’ opened in the province in a self-contained 11,000-sq.m. two story facility (part of the Junming Happy World retail district). This represents the largest CA SEGA JOYPOLIS run operation in the territory, comprising some 22 different attractions. Following the opening of the first two Chinese JOYPOLIS venues, the SEGA chain operation was sold to Hong Kong based Chinese Animation (CA) Group in 2015. The operation is now ramping up its plans to open more facilities and build on the property chain. The venue had been expected to open in 2021 but was pushed back to April 2022. Well-placed sources suggest that the corporation is looking at a possible European locality for a JOYPOLIS venue – this would be only the second time that an indoor amusement-them-park (ATP) concept has been tried in this region, since the failed opening of ‘SEGA World’ in London during September 1996 (closing just over three years later). 

Regarding the sale of the SEGA amusement venue business to GENDA, this operation was in the news. The rebranded GENDA GiGO Entertainment announced their latest acquisition with the merger with Treasure Island. The intention was announced in March, and was completed at the end of April, seeing the 24 Treasure Island Japanese amusement sites merged into the 200-strong GENDA operation. This is expected to be followed by further facility acquisitions, as the GENDA operation looks to expand their market share.

Speaking of the Japanese amusement factory scene, it was announced in April that Japanese amusement, casino, and consumer game giant KONAMI was looking to follow several announcements from fellow corporations and rebrand the operation. It was announced that they would be rebranding the operations to KONAMI Group Corporation – which is planned to be ratified in June. This move was to reflect the new focus for the corporation in its 50th anniversary year. KONAMI has involvements in the amusement and gaming scene, but also runs a chain of sports venues and has invested heavily into the eSports scene. 

Continued investment in the eSports field saw the announcement in April of the grand opening of Japan’s largest eSports eSports park. Called ‘RED – Tokyo Tower’, the 5,600-sq.m. large-scale eSports entertainment space is located in the iconic tower, which was painted red with light during the week of opening. The space is being operated by Tokyo eSports Gate (TEG), a specialist in the organization of leagues and events, taking on the Tokyo Tower as their new home. The space is not just an eSports venue, but is also a Mixed-Use Leisure Entertainment (MULE) complex, centered around the eSport (supported by Netgear). Across multiple floors of the tower are VR attractions (from VR Nerds, VAR Live, and Taito), some amusement, and MR experiences (from meleap and Valo Motion), even robot drone competitions. Part of a rollout of similar styled facilities is planned from the operation. The TEG operation has gaming experiences online and offline, and those unique points (‘RED TOKEN’), collected while playing their games online, can be used to pay to play on attractions at the venue. The venue also includes its own eSports streaming studios, and casino-style card gaming tables. 

The impact of Metaverse investment has continued to become all consuming in the tech-investment scene. The latest example of this was seen from sandbox massively multiplayer online (MMO) game developer, Playable Worlds. Following a Series B raise, the company has secured over $25m in funding led by Kakao Games Corp., a Korean video game publisher. This follows a 2020 Series A investment of $10m. This investment is towards funding an MMO game currently in development, that will hope to offer many of the elements touched on regarding the Metaverse, including support of blockchain commerce and being a persistent environment. 

Consolidation and acquisition seem to be the watchwords for many operations during this period. In our IAAPA’21 coverage, we reported on RWS Entertainment Group announcing their acquisition of JRA – the attractions design and services operation, leading to the merging of the two operations. RWS continued this consolidation with the announcement in April that they would be acquiring The Experience Department (ted) – a company known for their project design and development in the entertainment and leisure sector, including retailtainment, live theatre work, and cruise line entertainment, stated as the world’s largest leisure and attraction experience provider. The combined operation will offer their live performance and experiences skills across the location-based entertainment scene (ranging from Escape Room, Live Experience theaters and beyond). No word was supplied on the price of the acquisition, or the terms, at this point. 

These developments kept coming and, coinciding with the April Themed Entertainment Association (TEA) Californian Summit, news was shared that The Hettema Group and Themespace had signed an agreement to merge their two operations to form a single entity branded THG. These two international independent experiential design companies for the theme park and attraction market, have both worked with leading brands such as Walt Disney Company, Universal Creative, Sony, Paramount and Dreamworks, to name a few. The new operation will focus on acting as a creative agency. In reporting on the JRA merger previous, Themespace had also been associated with design work on the ill-fated London Resort project, which was abandoned last month. Again, no word of the financial or business positioning this merger will see – although it is another example of the restructuring to adapt to the changed market space. 

Could Artainment be Cinema 2.0?

Recent coverage of the ‘Van Gogh: Immersive Experience’ and other immersive gallery attractions has started a discussion regarding the separation of “artainment” and “educatinment” as concept to generate ticket sales, and their actual validity in comparison to traditional art exhibitions.

The recent interest in touring immersive experiences, based on popular artists and musicians, has seen criticism from some media for being expensive, and fixated more on creating “Instagrammable moments” than offering a serious value for money (as reported in The Guardian). The reality is that the gallery and museum sectors have been desperate for revenue generation, suffering the hardest from the absence of audience numbers during the lockdowns. The creation of ticketed experience that can travel cities and offer an art appreciation element, suitable for the interests of the modern audience, is an opportunity that cannot be dismissed.

The current crop of artainment installations seem to follow a profitable formula. First offering recreations of the artist’s work, along with a retrospective of their history and influences. Then the inclusion of AR or VR elements (usually as an additional cost item to the main ticket), and then finally offering an “immersive gallery” – a space where the work of the artist can be projected, offering a compelling saturation of colour and light, placing the audience into the digital recreation. Also roll in some art appreciation courses and an intensive merchandising store, and you have an exhibit. This is a formula best illustrated by the ‘Van Gogh: Immersive Experience’ touring installation, which we recently reviewed while in London.

The dependence on technology has been an aspect of artainment that has been glossed over by many. It is thanks to the latest laser projection systems that the immersive gallery can be created. Also, the deployment of projection mapping on objects, and as decoration of the space, is vital to setting the scene. The most up-to-date installations also see the need for inclusion of a virtual reality (VR) installation, as with the Van Gogh immersive experience from Fever. The separate ticketed VR element has guests using Meta Quest 2 headsets, seated in swivel chair experience, walking alongside the artist and understanding the composition of some of his most famous paintings. This VR element of the edutainment experience can be operated separately, as we saw with its pop-up installation at AREA15 (see recent report).

But where many have seen artainment immersive experiences as a new addition to the gallery and exhibition scene, others are looking at this approach as a brand-new aspect of location-based entertainment. This has been personified by the $100m funded Illuminarium Experience. We have reported on the rollout of this immersive walk-through experience chain, which saw Atlanta, GA launch the first opening back in July 2021. The venue introduced their ‘WILD: Immersive Safari Experience’ – an Africa cinematic tour, lasting over 45-minutes, costing some $50 a ticket for adults (or an all-inclusive family package at $145). The safari spectacle is stated to have cost some $10m to produce, by RadicalMedia.

Illuminarium sees its second venue opening in Las Vegas, and a third in Miami, with an aggressive 30 facility rollout scheduled for the next few years. But this is dependent on audience reactions. Already the shine has come off the promised level of audience engagement, with harsh TripAdvisor reviews, criticising the expense and level of immersion, along with suitability for audiences of certain ages. New experience productions, such  the soon to launch ‘SPACEWALK’, are hoped to address the initial concerns. Readers will be familiar with the already discussed immersive venue developments, such as Madisen Square Garden (MSG) Sphere, or Outernet – all examples of immersive gallery style complexes turned into permanent venues. More contenders for the crowded immersive artainment and edutainment business.

An example of the growth in immersive experiences with an “Experiential” element (beyond merely being an art installations), can be seen with ‘THE INFINITE’. This is a large arena experience, broken into seven dedicated zones, taking the audience through the birth and future of space exploration, immersing the guest in becoming an astronaut. The guests navigate the zones wearing their Meta Quest 2 headsets, exploring the International Space Station (ISS), and even the surface of the moon, within this full-on virtual experience. Developed by Infinite Experience, a LBE partnership between Felix & Paul Studios and PHI Studios, the 60-minute experience costs around $45 for adults, and has been on the road, extending its stay in Houston, and about to open in May in Seattle-Tacoma. 

Some critics question the line separating an edutainment informative experience, and the more attraction-style immersive approach. Some curators are concerned that the information elements are being dumbed down in some artainment installations. How much of the new investment is part of the drive for Live Entertainment experiences, which was gathering momentum before the Global Health Crisis? While these installations may not be a surrogate for museums and galleries, some see them as a future incarnation of the cinema experience, as the modern audience thrives a more immersive experience.

Cinema and Streaming Developments

Just as the cinema industry readies for their big trade event (CinemaCon – report coming soon), the drive for new technology in this scene sees the deployment of more and more improved projection technology taking hold in the market. For example, the projector manufacturer Barco, through their cinema joint venture Cinionic, recently signed an agreement with cinema chain AMC that will see the installation of the latest laser projectors in 3,500 auditoriums throughout the USA, by the end of 2026. This will bring the latest cutting-edge projection technology to the business, in a move that they have named “Laser at AMC”. The whole undertaking is being valued at a quarter of a billion Dollars. Cinionic is a joint venture between service and technology solution providers Barco, CGS, and ALPD, formed in 2018, and with an estimated 100,000 projectors installed globally.

The importance of Live Experiences, and Out-of-Home Entertainment in general, was underlined with the developments in the consumer streaming business. During Global Health Crisis and the global lockdowns, consumer entertainment streaming services and consumer game providers saw a major increase in users. But there were  about how sustainable the model would be. This was brought home with a bump with the news that Netflix, industry leader in streaming entertainment, has seen, in the first quarter of 2022, a loss of 200,000 subscribers – the first time the service has shed such number of subscribers since 2011. Obviously, this had a major impact on the stock price of Netflix, with shares plunging 35-percent which, in turn, removed $54b from the value of the company.

Netflix advised that they expected to see their customer base shrink by some 2m customer in the quarter (this against their current 211m subscriber-base). This started a dominos effect throughout the streaming industry, with Disney and HBO Max owners Warner Bros. Discover, all seeing declines in stock. Industry estimates indicate that streaming service subscriptions are at a 37-percent decline across the board in the US. As an impact to this, cost-cutting measures were started within Netflix, who commenced with the restructuring of their animation division, sacking the chief executive, and cancelled several planned shows. Another victim was new streaming service CNN+. Only launched three weeks previously by cable news giant CNN, the media service had only managed to attract some 100,000 subscribers. As such, it was ignominiously shuttered by parent company Warner Bros. Discovery – after spending some $300m in the process (this beating the record for speed of failure set by Quibi and lasting only six-months). Further ripples of the declining audience base are expected to be felt soon across other services.