#1158 – The Social Entertainment Explosion – Part 2

Following on from the first part of our coverage of this aspect of the market, we continue to investigate the crossover between venue-based entertainment and hospitality. Never has the location-based entertainment industry seen such a multitude of new venue openings, seeming to reflect a spike in social entertainment interest from an audience hungry for local-entertainment.

In this second part, we look at the wider international dimension, as well as the trends and issues shaping the deployment of technology, along with innovation in this sphere of the market. 

US Eatertainment Consuming the Players

The amusement and FEC sector saw a major shot in the arm over 2022, with many of the leading entertainment venue chains reporting strong numbers. Dave & Busters’, the “Eatertainment” venue chain, reported store sales rising to 13-percent, slightly lower than expected, but still strong, and with the company’s earnings and revenue surpassing estimations. This, however, saw the company looking at implementing major cost-cutting and restructuring in the current conditions, following the acquisition of the Main Event operation. Meanwhile, the US arm of the Round 1 entertainment facility operation reported a 20-percent increase in sales. This, however, contrasted with the Japanese parent’s operation that saw their venues still hit by the COVID conditions in the country, only seeing 12-percent sales increase. 

Those established “Eatertainment” operations are now having to take a cold hard look at their future, includes the newly merged Dave & Buster’s and Main Event chain of operations – following the 2022 $835m acquisition from Ardent Leisure. As seen on the show floor of IAAPA’22, major restructuring of the management teams within the operations had taken place, as would be expected in bringing together the two chains under one roof. Following some changes, it has become clear that a fundamental rethinking of the brands is underway, and duplications of business are being addressed, as well as new ways to look at the market.

Main Event has been seen by many as the quintessential FEC bowling operation, following many years of redefining itself. Aimed at a young family audience, the some 40-odd venues dotted across the States comprise bowling, lasertag and amusement, in many cases supported by a ropes course, and extensive F&B. Meanwhile, at the same time, Dave & Buster’s has defined itself as an “Eatertainment” location, with sports bar and a much older focus on the fun across the chain’s some 140-odd locations.

An example of the restructuring of the traditional food-‘n’-fun model saw the announcement of the launch of ‘Peter Piper Pizzeria’. This is a new “Piper Express” concept for the Peter Piper Pizza chain, part of the CEC Entertainment operation. This new “Fast-Casual” restaurant is opening in Kansas City, at the beginning of 2023. The concept includes an amusement component, part of their branded “Game On” arena, in the artist’s rendering, that sees upright style amusement cabinets incorporated into the 60-seat restaurant area, supported by flatscreen displays. The Peter Piper Pizza core chain has already rolled out the “Funpass” digital play card platform at selected locations, as part of their “Game On” arcade arena business on site – so removing paper ticketing. Representing some 120 Peter Piper Pizza locations in the US and Mexico, the chain is about to celebrate its Fiftieth anniversary, launched back in 1973. Recently, the company filed for bankruptcy (in 2020), but it emerged in June 2022 that the company has already started an extensive restructuring of its offering.   

The CEC Entertainment operation announced they had successfully remodelled their 200th family entertainment venue – embracing the new technology enhanced business model for the “Eatertainment” chain. The improved guest experience now includes the use of tap-to-play game card systems, offering a more convenient way for players to play. The game floor now embraces full E-Tickets, replacing the traditional paper ticket redemption system, for an automated contactless platform supporting their ‘Play Pass’ and ‘Play Band’ systems. Along with the card and band system, the new infrastructure supports “Frictionless” with smartphone payment through Apple Pay and Google Pay. All this is supported through touchscreen kiosks, and mobile table ordering. These elements streamline the entertainment experience and are also supported by party hire services. The move to more technology-enhanced experiences, for entertainment customers, is a distinction in the re-emergence of social entertainment. 

Speaking of the “Eatertainment” and social entertainment mix, it was revealed that Round 1 Entertainment had seen major restructuring of its international and local businesses. Currently operating 99 centers in Japan, the operation announced they would be reducing their facility opening hours – although the amusement departments will continue as normal. This is hoped to reduce utility and personal costs. Reflecting that restructuring earlier last year, Round 1 announced the closure of their only Russian facility (opened in 2020 in Moscow), citing a re-evaluation of their growth strategy, returning the management back to Japan. While at the same time, the operation confirmed continued plans to open another eight new stores in China, as well as Southeast Asia countries. 

Regarding the Japanese amusement scene, news broke of the latest in the reinvestment in the venue business in the territory, from the amusement factory sector. December saw the announcement of ‘namco Tokyo’ scheduled to open in April of 2023 – the new facility brand is aimed at a young adult nightlife market, offering a neon-light amusement venue styling. Developed and operated by BANDAI NAMCO Amusement, the concept is called a “amusement arena” using much of BANDAI NAMCO Group IP, such as PAC-MAN. This concept borrows heavily from the “Eatertainment” scene, including a café bar serving alcoholic beverages, inspired from the likes of D&B, as well as the previous US PAC-MAN Entertainment branded venue. It is unknown if this is a standalone venue, or the beginning of a move to modernize the extensive NAMCO chain of amusement venues in the territory, supporting their extensive capsule machine operation.

Regarding the chain of venues, the latest BANDAI NAMCO Amusement location sees the return of an amusement venue to the Akihabara area. Previously a famous ‘SEGA Akihabara’ venue that was turned over to GENDA as a short-lived rebranded GiGO location, before closing in August last year. Now it was announced that the location will once again be an amusement center, with the opening now as ‘namco Akihabara’, that is scheduled to open in March 2023 and will be the latest in the operation’s amusement chain, taking over the famous space. Contrary to popular misconception, the number of new amusement venues in Japan has grown, as operators restructure and refurbish.

The mixture of bowling, dining and entertainment is also reflected in chains stretching into new territories. It was recently announced that UK operation Hollywood Bowl was expanding its Canadian operation, with the acquisition of three bowling centres in Calgary – growing the chain in this area to nine Canadian sites. This is an overall growth strategy by the group, currently with 63 UK bowling centers. Along with UK, US chains are expanding their reach – Supercharged announced their second and largest indoor kart facility in Edison, NJ. The 131,000-sq.ft. entertainment center comprises the world’s largest multi-level indoor go-kart track. This represents their latest “kart-n-gaming” establishment and an exuberant opening event saw crowds of eager patrons queue round the block, waiting for the doors to open.

The mixing of the social entertainment experience with an “Eatertainment” component has grown in popularity. We have covered, previously, the Competitive Socializing experience ‘TOCA Social’ – combining an immersive football system with hospitality, and regarding an operation that has recently announced their own expansion plans. Owned by TOCA Football – famous for their football tracked kicking technology-based training system – the company announced they had signed a franchising agreement with Ventura Entertainment. This will result in a new ‘TOCA Social’ dining entertainment experience in Monterrey, Mexico. This will be the first of a planned 20-venues for the territory over the next ten-years. As part of this agreement, Ventura will invest some $100m over that period into these venues. 

TOCA Football announced the first US ‘TOCA Social’ venue in Dallas for a 2023 opening. This is part of a grand plan by the operation to open some 75 venues globally over that period. Along with growing the social entertainment platform, the company has focused on its sports training operation – with October’s announcement of a ten-year-partnership with Major League Soccer (MLS) to grow the number, linked to raising previously in 2021 to some $40m in Series E funding to grow its 28 sports centers (separate to the plans for the new Eatertainment chain).

The ever-increasing number of new entertainment venues saw the addition of one of the first Active Entertainment spaces. Developer Valo Motion, famous for their range of physically active platforms, opened their first venture into facility operation. Called ‘ValoHalli’, the venue comprises a selection of the latest products from the company, including ‘ValoClimb’, ‘ValoArena’ and ‘ValJump’. This marks a new investment in immersive entertainment venues for the operation and will prove a valuable test center for new developments going forward. The growth in the operation’s business is seeing other manufacturers looking to include a flagship space to their line-up. Valo Motion is celebrating, in the first year on the market, sales of some 28 of its ‘ValoArena’ platforms.  

Marking its first year, the ‘IAAPA North America Trade Summit’ is scheduled for 20-23 March in San Diego. The summit will include expert sessions covering Service Economy into an Experience Economy, and how the popularity of Virtual Reality is shifting, in a session titled ‘Authentic Reality’. Along with a gathering of specialist and industry professionals, the event will offer access to attendees to the Birch Aquarium at Scripps Institution of Oceanography, the San Diego Zoo, SeaWorld San Diego, Belmont Park and the USS Midway Museum.  This year’s event will be marked by a partnership with the AAMA amusement trade association, seeing the IAAPA team planning to exhibit at the AEI’23 trade gathering that is held in Las Vegas a few days after the summit. IAAPA is expanding the reach to its vast international membership, with summits in the UAE and EU over the coming months, as well as the support of its dedicated expo gatherings.

Restructuring at the House of Mouse

Just as we went to the wire and following the coverage of the “Tech-Jobs Apocalypse” hitting the sectors, Walt Disney Company added their name to the growing roster of major corporations undergoing restructuring and executing stringent layoff measures. 

During Disney’s Q1 earnings call for investors, Walt Disney’s returning chief executive and leading board members revealed their plans towards some $5.5b in costs savings, planned across the business, that will involve streamlining of the corporate structure. Part of this process will see 7,000 layoffs across the corporation – representing some 3-percent of the global workforce. There is speculation that excessive and poor theatrical showings would be addressed, with plans to build more on proven Disney movie properties (sequels planned for ‘Toy Story’ and ‘Frozen’, along with others). 

The corporation attempts to place a positive face on the measures needed, going forward, promising the reinstating of shareholder dividends in a year, as well as other measures to defuse an activist investor revolt (nullifying a brewing Proxy War). The company also reported it intends to build a new “experience” at Disneyland (California), based on ‘Avatar’, cashing in on the phenomenal success of the sequel. The corporation’s other park, Disney’s Animal Kingdom (Florida), already has a dedicated land based on the property (‘The World of Avatar’), and this will mark the second E-Ticket experience of this IP across the park operation. 

Disney Parks and Resorts’ business saw a 21-percent rise in revenue to $8.7b in the first quarter. This increase was across the US park operation, while the European, Japanese and Chinese holdings saw a rise to a lesser extent, as the impact of ongoing COVID measures is hurting the Chinese operation. The increase was seen across ticket sales and spend on frictionless attractions passes (such as Lightning Lanes, and Genie+). The restructuring is expected to be felt across the parks – freeing up capacity, while at the same time addressing problem elements, such as the troubled ‘Star Wars Galactic Starcruiser’ hotel project, along with other problem projects being suggested by sources. Much of the marketing focus now hopes to support the ‘Disney100’ anniversary celebrations. 

In other developments, it was revealed that the corporation’s streaming service has posted a $1.5b quarterly loss, but Disney asserted this would reduce by $200m, and was working on plans to address the falling subscriber numbers, and would be reorganizing its operation comprising ESPN Plus, Hulu, and Disney Plus (seeing the first drop in subscribers since its launch in 2019). In a major development following the investor call, it was reported by CNBC that the Disney CEO was open to selling Hulu and was positioning to find a buyer, rather than continuing its investment to buy the remaining stake from ComCast.

The corporate reorganization is focused across the three core groups – ‘Disney Parks, Experience and Products’, ‘Disney Entertainment’, and ‘ESPN’ – with creative leaders receiving more accountability. With all this, Walt Disney revenue rose by 8-percent to $23.5b in the quarter. News that was better than expected and saw a rise in share prices on the day of reporting, but then returned to their low soon after.  

The Return of Regional Entertainment

The news of the current global recession’s impacts across the business landscape has seen the return of the term “Staycation”, as families look towards managing their budgets and saving where possible. Lavish international vacations and trips to major theme park resorts may be lessened in this climate. The term staycation refers to the support of entertainment closer to home and will be familiar to those who have weathered the 1991 and 2009 global recessions. But this explosion in new venue business has also been fuelled by a hunger from an audience emerging from lockdown and seeking social entertainment.

In this new economic climate, another term seems to be gaining traction, that of the “Regional Park”. Often used to describe small mid-scale theme park developments, but also including the new generation of indoor entertainment facilities. The concept has already gained traction with the development of properties such as the Merlin Entertainments ‘Legoland Korea Resort’, or the announcements of the new ‘Falcon’s Resort by Melia’ brand from Falcon’s Creative, looking at establishing a new “Resortainment” brand. The use of prominent properties, from movie to toy brands, is being included in the mix of these new kind of mid-scale venues. As seen with Hasbro and their development of ‘Hasbro City’ in Mexico, following on from the other facility projects such as ‘Nerf Action Xperience’, planned to open in Manchester, UK. Or the plans by Mattel for ‘Mattel Adventure Park’ in Glendale, AZ, and their partnership with Epic Resort Destinations.

On the backs of these developments, we see other corporations looking to position their properties to be best able to grow in this emerging sector. Most recently, Universal Parks & Resorts announced their plans to build ‘Universal Kids Frisco’, Texas. This is a regional park aimed at an audience aged between six-and-nine and their families, supported by a 300-room hotel, and developed to incorporate attractions and areas of the park based on Universal movie properties such as ‘Minions’ and ‘Shrek’. This development comes close behind the news of the development of a ‘Universal Horror Unleased’ indoor attraction and hospitality venue, as part of the expansion plans for AREA 15 in Las Vegas.

These mid-scale entertainment resorts can offer more compelling entertainment on a smaller scale, supporting the expected audience generated regionally. Also, these venues can experiment with the latest technology towards creating big experiences in smaller spaces. The implementation of new Social Entertainment elements to the hospitality on offer at these venues is one aspect, as well as the use of new Immersive Adventure attractions. This can be seen with the announcement of the acquisition of entertainment company Two Bit Circus by Alpine Acquisition Corporation – and their plans to redevelop conference venue hotel properties into the new ‘Revelers Resort’ brand of interactive, immersive adventure properties; the first of these hotels is purchased in Denver, Colorado.

It is expected that further announcements, later in the year, will see major IP holders throwing their hats into the ring, launching a mixture of new resort and location-based entertainment properties. This is a marriage of indoor entertainment with regional proximity, all linked to a need to address the abandonment of retailing in some areas, making available suitable spaces, in retail locations that can now be re-purposed as entertainment anchors. 

Changing of the VR Guard

Another VR installation was also revealed to be reorganized, this time from the Thorpe Park resort in the UK. It was announced that, this Spring, the park would be replacing the ‘Derren Brown’s Ghost Train: Rise of the Demon’ VR attraction for a new experience named just ‘Ghost Train’. The divisive original attraction was first opened in 2016 and was one of the first theme park attractions to use the latest phase of VR headsets (HTC VIVE Pros), in a large audience experience. The original VR attraction mixed a dark ride walkthrough with VR simulator. However, the installation proved difficult, and the experience underwent at least one overhaul, reopening in 2017, redeveloped to better appeal to the visiting audience. 

Now the Merlin Entertainment owned theme park has made the decision to revert to a wholly physical scare attraction approach and announced that, opening in Spring, will be ‘Ghost Train’, which will have no VR elements and will be “a petrifying experience” – according to the park’s web page. The operator’s experience with the project was reported as having cost, originally, some £13m to develop. Issues with the headsets, and the overall quality of the experience, received criticism from guests. Meanwhile, at the same time, the limitations of the technology to adequately cater for the large audience through-put, also played its part. Since then, there have been other parks that have tried to install VR attractions but have found them a challenging proposition. 

In another development surrounding VR reorganization, it was announced that veteran developer VRstudios has moved to new product ownership. The company FOD Capital, the majority shareholder of the operation, has acquired the entire technology and product portfolio. This will include the ‘FLEX’, ‘ATOM’ and the ‘AMP’ (Attraction Management Platform). This will also see the departure of the current management team, as the new owners focus the operation on strategic partnerships or acquisition agreements. VRstudios first started in 2016 (after changing its name from VRcade) and is well-known for its work with Dave & Buster’s on ‘Virtual Attraction’, as well as the work on the ‘Halo: Outpost Discovery’ free-roam attraction with 343 Industries and Microsoft, along with a list of amusement VR releases over the years. The company had previously worked with Creative Works on the representation of their latest VRstudios Sports releases (‘FURY: Hoops Madness’ and ‘FURY: Football Frenzy’).  

Regarding the continued investment into VR and following the launch by Immersive Gamebox of their ‘Squid Game’ license, another developer follows with their own interpretation of the popular streaming series. It was revealed that Sandbox VR will be launching a VR game experience based on the Netflix sensation. This will be the latest major licensing deal by the free-roaming VR chain since their licensing of ‘Star Trek Discovery’. The ‘Squid Game’ VR experience will have six players within the free-roam space taking part in competition for their very lives, taking inspiration from the demonic tests of skill seen in the South Korean streamed series. This is the latest move by Netflix in the VR scene, following on from their ‘Army of the Dead’ pop-up VR experience. Sandbox VR will be rolling the new Squid Game experience across their over 30 venues from May onwards.

Another VR entertainment space moving into new territories is The Park Playground. The European location-based entertainment venue operator recently announced their first UK facility, part of their 12 operated VR entertainment spaces. The operation also recently announced their partnership with Arena 21, a local Brisbane, Australia based family entertainment venue operation. With this partnership, this will mark the opening of the first Park Playground VR venue in this territory, part of a process to expand the VR entertainment brand’s presence internationally.

The development of immersive attractions to promote properties was illustrated in our recent coverage of the Universal Studio Japan park ‘Doraemon XR Ride ~ Nobita and the Utopia of the Sky’, based on the popular anime and film series. Another corporation following this path is iQiyi – China’s largest online streaming service (sometimes called the Netflix of China). The corporation revealed they were launching ‘Luoyang VR Project’ – an immersive entertainment experience based on the television costume drama series of the same name. The 50-minute VR experience is a ticket-based attraction, located in a 300-sq.m. arena space, in downtown Shanghai. This is what the corporation calls the first all-immersive entertainment experience, developed by an internal studio of the company that has been developing fully sensory interactive experiences, with plans to release other attractions, under what they have labelled “VR+”.