#1245 – The Location-Based Entertainment Dilemma

AI Constructed Brief

As autumn approaches, investors are eyeing the resurgence of Location-Based Entertainment (LBE), yet echoes of the 1990s boom and bust are unmistakable. Historically, large-scale urban entertainment centers and immersive attractions—ranging from early digital arcades to blockbuster branded venues—faced cyclical overinvestment and market saturation. Today, the sector is experiencing a similar pattern, with a surge of new ventures built on franchise models, immersive experiences, and transmedia integrations like Netflix House and Sony’s Wonderverse. While the global immersive entertainment market is projected to reach £351bn by 2030, many current offerings risk repeating past pitfalls—overreliance on technology, poor entertainment quality, and debt-laden operations—potentially leading to a second bust. Notably, some brands, such as Pinstripes, are already in decline, highlighting the importance of authentic, engaging experiences over hype. The sector’s future hinges on balancing innovative content with sustainable business models, especially amid economic pressures and evolving consumer preferences.

Full Stinger Report

Entering Autumn and the post vacation market looks towards continued investment, further new openings and the reporting from leading entertainment chains. But along with these developments, there is a growing realisation that some market indicators looked kind of familiar.

Location-Based Entertainment Repeats

Here we go again!

Some wise individuals have said that “history does not repeat it just rhymes” – whatever the case, anyone who lived through the 1990’s boom and bust in Location-based Entertainment (LBE) developments and catastrophic closures will be excused for feeling some pangs of déjà vu. For those that were not around for the last rush of LBE excitement, what some at the time also dubbed “urban entertainment centers” – we will try an encapsulate the whirlwind.

Brief History Lesson

In this highly condensed overview, the first inkling that this was to become a boom back in the early 1990’s was the investment in large department store sized entertainment venues. This first phase personified by ‘Discovery Zone’ (1989-1995), or ‘Q-ZAR’ (1989-1997), the ‘Foxwood Cinetropolis’ (1994-2002) and ‘United Artist Starport’ (1995-1997) virtual theme park. These and other investments along with interest from the retail store business such as the growth from Toys ‘R’ Us, fuelled the migration into urban entertainment centers.

We also had in Japan the explosion in the Mid-Scale Amusement venues, large mixed-entertainment locations that included unique digital interactive attractions. A fusion of scaled down theme park and upscale arcade. Launched with TAITO’s ‘Cannonball Express’ (1993-1999) and followed by NAMCO’s ‘Wonder Egg’ (1992-1999) and the still operational ‘SEGA JOYPOLIS’ – now owned by CA SEGA Joypolis. The momentum from this amusement styled wonder domes would fire greater interest with Western attempts to emulate the Japanese palaces, such as with NAMCO’s ‘XS Entertainment’ (1999-2001), ushering in the next phase.

In this phase, we would see the big guns throw their hats into the ring, Walt Disney, Dreamworks / Universals Studios, and Sony respectively with their ‘DisneyQuest’ (1997-2016), ‘GameWorks’ (1996-2004*) and ‘Sony Metreon’ (1999-2002). The eventual cratering of the business plans behind these grandiose urban entertainment concepts would sour the rest of the market to the idea of LBE, and it would be sidelined until we see the current explosion in investment. First ignited through the VR venue boom (such as with ‘IMAX VR Experience Center’ (2017-2018)), and now by the pivot once again to LBE.

Modern Day

We have seen much interest in a recent Gensler Research Institute‘s 2025 Immersive Entertainment & Culture Industry Report – claiming that the global market for immersive entertainment was valued at £98bn – and was projected to reach £351bn by 2030. Phenomenal numbers and obviously music to those investing heavily into LBE.

The reality seems that the Gensler report was lumping many aspects of “immersive entertainment” into a single pot. The inclusion of the ‘Crystal Maze Live’ – mission rooms, the ‘Mamma Mia! The Party’ – live dining. The Secret Cinemas’ live screening events, or the soon to be opened ‘Grease: The Immersive Movie Musical’, were just some of the examples charted in recent coverage of the report. The interactive immersive experience was relegated more towards an audience (“Shared Reality”) approach.

Outside of the audience engagement experience, the LBE sectors aspirations in immersive experiences has been personified by the announcement of ‘Nextflix House’. With the three planned 100,000-sq.,ft., venues in Philadelphia, Dallas and Las Vegas planned to be immersed in multiple rooms, building on Netflix’s streamed properties turned into attractions. Immersion represented through the Virtual Room attraction to be developed by SandboxVR; along with mini-golf and mission rooms based on popular properties and themed dining. Many of these elements have been trailed in popup deployments over the years now to be placed in a permanent venue.

Not receiving the same level of fanfare and we have seen another major media service enter the LBE space with the launch in 2024 of the 45,000-sq.,ft., Sony Pictures Entertainment ‘Wonderverse’ immersive multimedia experience. We have previously reported on this Illinois-based fusion of movie properties wrapped round bumper cars, escape rooms, pop-up bar, and amusement. Along with the venue’s resurrection of The VOID VR arena experience, to relaunch ‘Jumanji: Reverse the Curse’. What Sony dubbed at launch the studio’s first immersive entertainment destination. Obviously, the Sony executives making these statements were oblivious to the last immersive destination” the corporation had opened with their ‘Sony Metreon’, project from the last LBE bonanza.

It is this very ignorance towards what has gone before, the lessons learned, and the need of entertainment within an immersive experience that has made many worried that we are about to fall into another period of boom-n-bust in this sector – a second phase of LBE confusion.

Franchise Bonanza

One of the key differences from the 1990’s LBE implosion is how many of the new LBE plans of 2025/26 are built on the deployment of their chain through franchise partnerships. Rather than taking on the burden of opening their own venues, an initial roll out of flagship venues is then supported by extensive international partnerships.

This best illustrated by the venerable Chuck E. Cheese brand. While the core US offering of the property has been a family fun center approach, supported by limited menu hospitality. Following the exit from Chapter 11 due to the privations of the COVID environment, the group has accelerated. Reinvesting in its entertainment offering at home, defining a new approach to its franchise business. This witnessed with the opening of the first Australian ‘Chuck E. Cheese’ “eatertainment” venue in the suburbs of Perth, South-Western Australia. The venue is 60-percent larger than a conventional US site and includes from the ground up an ‘Chuck’s Adventure Zone’ active play area.

Funnily enough this is not the first time the Chuck E. Cheese operation has entered the Australian market. Around the time of the operations foundation, and in 1981 the company opened ‘Charlie Cheese’s Pizza Playhouse’ in Queensland, Australia. The name change was forced on the company regarding the Australian slang term for throwing up being Chuck! As if an omen, the project would be an abysmal failure with the site closing just over 12-months. A start of a decline that would see the original management leave and the operation financial woes and merger with ShowBiz Pizza. From the wreckage and countless wows, the operation would evolve into the current property business.

Current owners CEC Entertainment along with supporting an active franchise business for India, Australia and the Middle East as also looking towards Europe. While at home launched their flagship ‘Chuck’s Arcade’ new-wave retro mall-based arcade chain with ten rebranded sites. And launch the new ‘Chuck’s Adventure World’ – active entertainment standalone venue. The first facility in this chain opening in Arlington North Texas. The need to reinvent the brand to survive in a changed market, with a more sophisticated market and high demand on their entertainment spend not lost on the CEC management.

An indication of this growth in investment in established brands CEC Entertainment, revealed their plans to grow the Chuck E Cheese franchise outside of North America. The operation retained property advisors Wright Property in the UK in 2024 and revealed in September they had signed multi-facility agreements to open locations across the country operated through the newly established CEC Leisure UK division. These venues will be specially redeveloped versions of the brand for the territory and will mark moves to expand into Europe. This news following the previously mentioned development of the Chuck E. Cheese franchised. It is expected that other “Eatertainment” franchises will be following CEC into the European sector with upscaled location-based versions of their properties, tailored for the unique needs of this market.

The new LBE phase of investment sees, those older entertainment brands reinvesting to raise their game. Building on proven entertainment experience. While newcomers to the LBE scene are learning harsh business lessons on what does and does not work regarding wrapping a brand in a physical entertainment space offering. Business experience from the retail, and branding sector found wanting when applied to the unique waters of the location-based landscape.

The interest in LBE has emerged as the dust settles on the single site entertainment approach. Operations such as Immersive Gamebox, Sandbox VR and leader Zero Latency, and others, offers single entertainment immersive entertainment, riding off the back of the zeitgeist that previously surrounded VR, and then XR immersion. This technology has now been interposed into other venues as a secondary entertainment attraction. The mixed-entertainment space has evolved into what we like to call the “Mixed-Use Leisure Entertainment (MULE) venue. Examples of these range from Main Event and EVO to Andretti’s and Gravity MAX.

Those investors late to the emergence of LBE concepts have suddenly started to throw financing at establishing chains. As seen with the active social entertainment chain Level99, securing a $50m in follow-on growth equity commitment. This coming from Act III Holdings – the investment vehicle is led by CAVA, the sole equity partner in the operation since its founding.  The investment reported to be going towards scaling the business, expanding into urban and suburban markets with the 30,000-sq.,ft., to 45,000-sq., ft., venues model. This is one of the many social entertainment and MULE operations being supported (further coverage of this in the Entertainment Social Arena reporting).

Defining Survival

The interest in turning digital properties and brands into physical spaces has been dubbed “Phygital” by some – but is fundamentally a transmedia business pivot. The Bricks-n-Mortar approach for recuring revenue from games, streaming services, and movie properties is an obvious approach. To be able to experience these properties “in real life” (IRL) is one that can be monetized and rolled out to achieve global reach.

The only fly in the ointment is that wrapping an IP or brand round a mediocre entertainment experience is a recipe for failure, and the implosion of the 1990’s LBE phase is a testament to this futility. Major industry executives are about to experience the same sucking feeling that their counterparts of the 1990’s once felt, as they learned the valuable lesson of “entertainment-over-hyperbole” took hold. The fight for survival now has started in the middle of difficult economic conditions squeezing disposable income, and the transition of the player base to the Millennial and GenZ audience.

We charted back in 1998 the reason for the implosion in the then LBE craze – a mixture of poor business-to-entertainment investment. Lack of experience in the market. And a dependence on technology rather than entertainment substance. Fundamentally those in the 1990’s entered the LBE market thinking these projects were theme parks, rather than entertainment facilities. The constant danger of a poor entertainment experience generating a “One-and-Done” mentality with customers.

And now the spectre that the sales slump issues, impacting the “Eatertainment” sector, would manifest themselves into the LBE, or mixed entertainment businesses. This was made self-evident with the final confirmation of the situation surrounding Pinstripes. The 18-facility bistro, bowling and bocce entertainment chain making the announcement that the owners had declared bankruptcy. The operation was now actively working to find a buyer or generate investment to ensure the situation of the 900 workforce and facility business. Those that have followed the Stinger Report and our sister news service Entertainment Social Arena, will have known that Pinstripes was in a serious condition. But sadly, this is not the only operation in this sector that is facing the reality of the decline in “eatertainment” same-site sales.

The consumer interest in location-based entertainment is not declining, and the sudden surge in Social Entertainment venue business illustrates the strong growth potential in the sector. But so many of the existing brands are sitting on considerable debt accrued during the trying COVID conditions, or failed management restructurings that they find the current challenging conditions impossible to compete within. This linked to an inability by the current management to comprehend what is needed in the actual entertainment business to drive repeat visitation, and opens the door on a possible repeat of previous conditions from the 1990’s. We will watch this phase very carefully.