#1175 – Immersive Future Feels Pressure!

The continued investment and innovation in the immersive technology business sees both ups and downs across the market. This collection of developments, happening during July and August, is covered to offer a snapshot of the state of play in the industry.

Immersive Gallery Growing Pains

The immersive art experience (Artainment) scene has proven a difficult market to define. Along with numerous openings, there have been bumps along the road. The latest warning sign came with news that Lighthouse Immersive, the Canadian developer and operator of immersive experiences, had entered into bankruptcy. Lighthouse is known for the creation of the original ‘Immersive Van Gogh’ light show – which has seen installations such as in Paris, Chicago, Las Vegas and Toronto, along with other shows. The company was reported to have filed Chapter 15 bankruptcy on July 28th, to protect its assets. It was revealed that the timing for the move was linked to the $16m dispute with its Californian partner, forcing the filing for creditor protection. 

The company has created several immersive experiences operated with their Lighthouse immersive gallery installations – but has also seen numerous imitators of their Van Gogh experience. The Lighthouse marketing had boasted over seven million tickets having been sold to experience their various light shows – but at this point, there is no news on the next plans for the corporation, following the Chapter 15 procedure. The company was founded in 2019 and, at its height, operated 20 light shows, but has found expansion difficult and impacted by immersive-art competitors. Several operated attractions were abruptly closed in June as the buildup to the filing started (including the ‘Immersive Disney Animation’ attraction in Dallas), forcing the payment of ticket refunds.

Immersive Art installations and exhibits have become a boom operation, offering a new way to consume artwork – such as immersive installations using the latest Video Projection Mapping (VPM) and those which incorporate XR technology. One such example is seen with the latest installations from Enklu, developers of the ‘Verse Immersive’ experience, with installations in the States. The company is famous for its ‘The Unreal Garden’ AR experience, using see-through AR headsets and, predominantly, Microsoft Hololens systems – offering a mixture of physical fantasy exhibit set in a mysterious garden, overlaid with AR imagery supplied through the headset. The company announced their latest new chapter in their AR experience, called ‘The Unreal Garden: Rudolfo’s Discovery’, featuring the new character of a baby dragon that appears through the experience, and guests being able to interact with characters to unlock puzzles. 

Possible Impact on Haulage Costs

The news that the Yellow trucking company had fallen into bankruptcy has sent seismic shocks through the haulage industry – and its reverberations are being felt in the amusement scene. With some 30,000 jobs at risk, the third largest haulage giant in North America had been suffering financial difficulties, even after pandemic loans (reported at $700m), compounded fuel prices, supply-chain-crises, and by union action from the Teamsters. Now the executive board is involved in attempting to create a salvage plan to keep the operation afloat or find an interested buyer. Those industries that depend on shipping at their heart, have been seriously impacted by this situation.

The amusement trade in North America is such an industry, with many FECs and entertainment operations dependant on distribution of their machines and supplies shipped to them from amusement distributors. Those very amusement distributor warehouses are increasingly dependent on external shippers, with many having forgone their own fleet of vehicles for a third-party, cheaper, shipper like Yellow.

When asked how they feel this situation will impact amusement members, the AAMA proffered that they expected it would likely result in an uptick in shipping rates – as Yellow was depended on by some in the industry as a discount carrier. The impact will be the same on amusement as for the rest of the US economy, with inconvenience and higher freight rates. However, the AAMA affirmed they were not anticipating any kind of major disruption in the industry’s ability to move products. 

London Casino Show

Regular readers of The Stinger Report will be familiar with the ongoing coverage from well-placed leaks, concerning the future of the London International Casino Expo (ICE). Exhibition owners Clarion Gaming had attempted to draw a veil over the ongoing negotiations to find a new European home for the popular trade event, after a series of demands from key groups. The 1st of August would see the show organizers confirm that private negotiations had successfully concluded, with agreement to hold the event in Barcelona, in Spain, starting from 2025, in a five-year contract. This means the 2024 London event will be the swan song for the event’s UK operation.

ICE can trace its history back to being split from the previous Amusement Trade Exhibition International (ATEI), outgrowing the show to become a standalone in 2009 (then known as the International Gaming Expo). In 2019, rumors swirled that leading exhibitors applied pressure to have the ICE show organizers move the event to Amsterdam, a move that failed, but started the process of forcing serious consideration regarding a change of location. London was felt to be unsuitable for a growing event which was attracting some 35,000 attendees, also seeing predominantly international exhibitors. Some sources alluded to the move being linked to some exhibitors wanting to accelerate the exploration of other European cities, following the UK’s move towards Brexit. ICE, along with its trade conference iGB, presented this move to its stakeholders for approval, which was given – ending the trade’s worst kept secret, as Paris, Madrid and Barcelona were all rumored to have been in a bidding war to hold the event. 

For the London ExCel Convention center, the loss of the ICE following, next year, will come as a bitter pill, with the venue first holding the event in 2013. This after having to weather the cancellation of the event (along with others) during the Global Health Crisis, seeing several impacted gatherings as stakeholders boycotting the event and staying away as they applied pressure towards a move to a European location. ICE represented one of the biggest shows for the London convention site, that has recently benefited from new investment including new train services. Questions regarding if the UK will consider holding an alternative London casino trade event of its own, to appeal to the local trade, have not yet been ruled out. Or the possibility that the successor to the ATEI trade show (EAG) will expand its gaming component in 2025. 

Investment Growth for Entertainment

While many would feel this period of the year is normally quiet, the reality is that there have been massive developments across the amusement, park, and Social Entertainment sectors. Merger, acquisitions and investments have been making themselves felt during this phase of the industry’s growth.

HOLOGATE closed a Series A funding round of €8.3m ($9.1m), supported by Bolero Holdings and Vester Partners – building on the success of the company that states 450 locations across the globe employing their VR hardware, and following on from the successful opening of their new HGXR division, focused on commercial simulation. Investment is going towards supercharging this growth, with a planned global expansion. This follows Virtuix, who also announced a crowd investment round has raised some $5m, but in this case, the raised investment is for their home entertainment ‘OMNI One’ omnidirectional treadmill VR peripheral, going towards shipping some 1,000 of the new treadmills by the end of the year. 

Further developments were seen following the merger acquisition by Dave & Buster’s and Main Event. It was reported the Dave & Buster’s was moving on redefining its future roadmap and looking to grow its “Eatertainment” business. This was led by the news of a partnership with the Malpani Group, towards opening 15-stores in India. At the same time, it was announced that the company also signed a second deal with NightOwl Entertainment to open some five D&B stores in Australia. This is all part of a global expansion plan started in 2022 for D&B, which represents some 151 locations in the States and Canada.

At the same time, it was revealed that the existing portfolio of stores will be receiving a scaled-up level of refreshment, categorized as either ‘light-touch’, ‘base’ or ‘potential upside’ remodelling (as reported by FSRMagazine). These will range from refreshing interior or exterior designs, increasing F&B services, and expanding entertainment. This is part of an ongoing process which has already seen 40 sites updated to the new branding. The corporation is looked to redefine its brand offering, with Dave & Buster’s launching its new brand platform and tagline, “You Know You Want To” (retiring its previous moniker, “Ding, Ding, Ding!”), and focusing on an audience in their “Adulthood” – away from the previous “Eatertainment” approach. As part of a new branding approach, including the global expansion, there is a massive restructuring of management, and now a new branding focus, towards the key audience of young adults and with a sports bar and amusement approach.

One aspect of this D&B refreshment moves away from traditional amusement and sees the corporation deploying a brand-new segment. This is with the creation of their new “Social Bays”, offering space to play AR darts (called the ‘High- tech Darts’ area), and a space to play AR shuffleboard (called the ‘Social Shuffle’ area).  This marks a major departure for the brand from its traditional redemption and video amusement space – now being one of the first Eatertainment operations to fully embrace “Competitive Socializing”. It is expected that D&B will be evaluating its audience’s reaction to this inclusion towards greater expansion.

At the same time, it would be expected that, in the coming days, a statement about the plans regarding brand positioning and further facility openings will be coming from Main Event, as they undergo their own restructuring, following 2022’s $835m acquisition by D&B of the 53-store FEC chain. The whole operation is now looking at a growth of 16-new-stores across the chain every year. This is a reflection of the surge in growth across the sector, following the well-publicized privations of the Global Health Crisis on the corporation. 

False Positives

The continued investment into Artificial Intelligence (AI) and the abilities of chat and image engines to create work based on machine learning and data mining was seen to have direct implications for the future of the theme park and entertainment landscape.

It was revealed that The Walt Disney Company has created a task force to study artificial intelligence, launched earlier this year. Established just before the Hollywood writers’ strike, the group was created to look at how AI technology can be applied across the entertainment conglomerate. Concerns were voiced that this endeavour would see AI injected into screen writing creation – especially during the heightened situation fuelled by the ongoing writers’ and actors’ strike. But it was also revealed that Disney had already employed AI-based technology within their park projects.

One aspect of the failed ‘Star Wars: Galactic Starcruiser’ hotel, under reported, was the successful deployment of one of the first AI-powered attractions. Called the ‘D309’ attraction, this saw the creation of a droid that was claimed to run the Starcruiser. Guests could talk with the computer droid, employing speech recognition and natural language understanding, to create a display panel, in every room, that guests interacted with, feeling like they were having a real interaction with a character – one which would remember their preferences, and grow over the course of interactions, shaping the conversation naturally.  Six years in development, the project has benefited from the growth in speech recognition and AI tools to shape a project like this. It is unknown how much this one spark of innovation can crawl back credibility within the team, responsible for what is seen as a colossal failure, which is reported to have resulted in a $250m hit on accelerated depreciation for Disney (with some suggesting a vast $1b loss in costs). The hotel is closing its doors next month, after barely over-a-year of operation.

The argument regarding the ethics of AI-powered language applications (such as ChatGPT) has continued to boil over, as more and more examples of these new platforms failing start to materialize. The sudden hysteria for all things AI-language based saw search engine providers fighting to be the first to implement them into their platforms. But recently, concerns regarding the legality of the algorithm’s employment have surfaced. Demands by authors and research archives to have their data removed from the Large Language Models (LLM) used to train the AI algorithms has raised questions on the efficacy of mining other people’s work. 

Some are seeing these Machine Learning tools not as examples of “Artificial Intelligence”, but more accurately as “Accumulated Intelligence”. So, opening more questions regarding the breaking of copyright of the accumulated data/works. This “harvesting” of other people’s work, be they written pieces, research, or created artwork and images, has cast a shadow over the AI revolution promised – and the failure of some of the AI-powered chat-engines to supply accurate information has derailed the investor hype train.

There has been a rebellion within the customers and content creators, to having their work used without proper recompense. LLM sources mined by AI developers have started to fight back – with one example being the forum website Reddit. Running millions of discussion boards, it has been known as a source that has been mined of language models. Some users of the service have started to post masses of AI-generated content. So, feeding AI generated language models back to the AI algorithms and creating a feedback loop. Chatbot results are thus showing worse and worse degradation of replies and errors. This is called a “Model Collapse” and happens when the pool of training data the algorithms feed off is corrupted. The collapse can shut down an AI search tool – as well as cause expensive embarrassment to the owning corporation. Many AI developers are now looking for untainted sources of LLM, thus to avoid collapse.

Adding to the concern of “Accumulated Intelligence” – and where exactly these AI-powered language applications accumulate their LLM from – the Social Media scene was rocked by the announcement that Zoom, the popular video conferencing application, had changed their Terms of Service, and now included a critical section that stated Zoom would be employing “…AI-powered language applications…” In other words, the company was giving itself the right to harvest all communications on their app for the training of AI-engines on customer content. The backlash from users exploded onto the internet, with many pointing to the issue that Zoom had not even offered a “opt out” option but was forcing this on the installed base of some estimated 13m users.

Zoom gained notoriety and become a near ubiquitous video conferencing app during the Global Health Crisis. Especially during the lockdowns across the globe, with many schools, universities and corporations reverting to holding “Zoom-meetings”, the platform’s name became a verb and added to the lexicon of terminology – to “Zoom”, such as to “Twitter” or to “Google”. Zoom has obviously wanted to join the AI revolution and has access to a treasure trove of customer generated content. However, if they are going to be able to mine this data is yet to be seen, following the reaction from user-groups to this change in the terms. Could the customer rebellion to AI be enough to collapse this new application?