Stinger Report - 17/05/2021

TSR Newsletter | May 17, 2021

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-- The Stinger Report: Service Message --

The Global Digital Out-Of-Home Entertainment (DOE) Sector covered in The Stinger Report .

Wishing all our subscribers, famlies, loved ones, (and those serving) stay safe and well.

Kevin Williams

Publisher, The Stinger Report (TSR)

Entertainment Facility Bonanza!

Part 2 | # 1070

Report Skinny

In The Stinger Report #1070 – This issue covers in detail:

1. [TRENDING NEWS] The impact of immersive entertainment is seen in the cinema sector, reinvigorated by the first major film releases after so long. Premium Large Format (PLF) experiences are seen as drawing the audience back.

2. [BREAKING NEWS] Retail-Tainment is back on the menu, as the retail and mall sector looks at the opportunity – with news that even Walt Disney is looking to return to pop-entertainment in malls, as the company decimates its stores.

3. [TRENDING NEWS] Sports Betting and Casino gaming is on the rise following the lockdown, with a number of entertainment corporations thinking on a Sports Betting element, while the casino sector reconsiders Skill Gaming.

4. [TRENDING NEWS] The explosion in interest in Augmented Reality development looks to pivot towards using Commercial Entertainment as a springboard towards customer recognition.

….and much, much more!

To read the full Stinger Report, register for your subscription here.

- The Stinger Report, published by KWP and its director, Kevin Williams, is the leading interactive Out-of-Home Entertainment news-and-views resource, covering the immersive frontier and beyond.

Main Report

Following on from our previous feature and, in this second part, we reflect on the continued investment and momentum in leisure entertainment investment, along with the rearranging of the landscape as the key players in the market vie for their positions of control in what is shaping into a major upturn in entertainment business investment.

- The New Cinema Experience

Most of our readers will be familiar with our overview of the emergence of the Cinema Entertainment Center (CEC) experience as an alternative for many multiplex venues, as they look at the wreckage of the “Cinema-Apocalypse” accelerated by the Global Health Crisis and furled by the Premium Video On Demand (PVOD), streaming landscape. But even for the movie theater business, there are opportunities and possible new business dynamics.

Licking their wounds with some good news, some brick-and-mortar cinema locations have seen a resurgence of business, even under capacity caps and audience concerns. This is illustrated in North America, with the Warner Bros.’ release of ‘Godzilla vs. Kong’, a film that saw a gross box office income estimated at $32.2m over its three-day launch at some 3,064 theaters, breaking highest opening weekend numbers post-pandemic, closer to before lockdown numbers (but by no means back to previous numbers). As we reported, some cinema venues had reverted to private hiring of soundstages, and the media also followed our lead on reporting the use of some sites as video game big screens for hire.

The return of the big cinema experience [Warner Bros.]

There is another aspect of the business, that of reinvesting in a new business approach. Continuing the theme of this feature, we are seeing cinemas looking to re-invest in a brand new future with “Big Screen”, employing “Premium Large-Format” (PLF) screening rooms with Dolby, and supporting these PLFs with VIP seating and dining services, as well as the deployment of the latest ‘4DX’ motion effect seating. This approach is best described as turning the movie-going experience into a special one. Those with the capital are investing now to expand their offerings in face of the need to secure their positions, as the market re-emerges.

As covered by news service Boxoffice Magazine, one of the biggest providers of the PLF experience has been IMAX. The operation has taken several jarring knocks over lockdown and, even after this, has just experienced the departure of the Chairman of the Board, who had been instrumental on acquiring and redefining the operation, along with its CEO. IMAX is now seeing some opportunities for optimism, with its 700 Chinese PLF locations achieving, from last July, a gross box office income of nearly $80 million leading up to December. Regarding its Western holding, the continued redevelopment to expand the Big Screen offering from its business is underway. Having burnt its fingers already with the failed ‘IMAX VR’ proposition, the company will be more careful.

Speaking of IMAX and PLF, it was announced that projection specialists Barco and IMAX were to collaborate on a new range of state-of-the-art laser light source technology, based on the Barco all-laser projectors. The agreement will see IMAX convert over 1,000 of its conventional projection systems to the new platform provided by Barco – to increase the visual fidelity at the cinema locations going forward. The two companies have collaborated in the past, and this new agreement will include support and servicing, along with the new hardware. This follows on from The Stinger Report’s coverage of the Panasonic Business announcements regarding their investment in LBE and theater business.

Increasing the fidelity of the cinema [BFI IMAX]

Another operator of PFL experiences is CJ 4DPLEX, with the ‘ScreenX’ brand which we have reported on before. CJ has also burnt its fingers in the VR arena, following the assimilation of Simuline. But the operation has been investing heavily in restructuring its cinema business, and the quality of its PFL offering in Korea and Japan. Meanwhile, at the same time, the operation has looked to its Western holdings and increased the experience offerings. As reported, the operation is working closely with the ‘4DX’ technology providers to create more experience-based cinema experiences. Experience seat manufacturer MediaMation (and its ‘MX4D’ seating) is seeing the investment into moving from the mass seating of old, to PFL and VIP seating. Other cinema chains have turned towards looking at both CEC and PFL style experiences to bolster their flagging businesses re-emerging from the privations of lockdown.

An example of the re-investment into the cinema segment was revealed in April, with the announcement that Saudi Arabia’s own native chain, MUVI Cinemas, has commenced an expansion plan with a $218.6m investment. This plan will see some 23 sites developed in the next 12-months. The reason for the increased investment on previous plans was explained by chief executives, that the region had proven highly receptive to the first venues opened. MUVI’s plans come following a strategic partnership with local digital media studio Telfaz11, and film distributor Front Row Filmed Entertainment – towards growing the operation. This is one of the many examples of growth being charted post the main privations of the recent situation for the entertainment sector.

As we continue to see massive investment in entertainment and events (“Immersive Concert Venue”), it was revealed that AmazeVR had raised $9.5 million in funding from several global investment firms, including Murex Partners, We Ventures, Bass Investment, and Dunamu & Partners. The operation was created with a mission towards building the next evolution of music and creating a new class of artist experiences. The operation has plans to create new immersive experiences for recording artists and, along with their development virtual concerts, livestreamed, they are also looking at theatrical releases in 4DX movie theatres, equipped with haptic motion chairs. Numerous new start-ups have positioned themselves onto the scene towards reprising live convert experiences in an immersive format – an aspect of the immersive frontier that will be keenly fought over.

- Retail-Tainment

Following on from The Stinger Report’s coverage of the current situation surrounding Tru Kids – the current owners of the Toys “R” Us (TRU) remaining business – it was revealed in April that management firm WHP Global had acquired controlling interest in the Tru Kids operation, so taking control of the 20 toy and baby brands retained. The value of the Toys “R” Us property is still seen as being considerable, at its height representing some 900 branded stores, generating $2b in global retail sales annually. With this new ownership it was revealed that, as touched upon in our previous coverage, the TRU branded facility operation has a serious Social Entertainment venue interest.

As reported, the Tru Kids operation has shuttered its two short-lived, re-branded retail stores. Now, with WHP managing strategic expansion, plans for the dedicated children’s entertainment center business have been revisited. In a statement, the operation cited it was focused on leveraging a global network and digital platform for the TRU brand. It was revealed, by the news site Figures.Com, that part of WHP’s expansion plans included the filing of several trademarks including “Toys R Us World”, “Toys R Us Park”, and “Toys R Us Land”. While some point to this as just protecting interests, the reality is that moving forward, the opportunities for the iconic toy brand to move into an entertainment facility business seems the most logical step. Obviously, the famous ‘Toy R Us’ Times Square flagship store offered a tantalizing glimpse at what a theme park inspired venue could look like. We will continue to watch for developments.

The famous New York flagship site [Xinhua/Wang Lei]

Continuing with the impact of the “Retail Apocalypse” on the sector, and news was broken in April that some 60 North American ‘Disney Stores’ would close, with other territories also seeing sites close (representing 20-percent of the 300 international stores). It would later be revealed that the cuts were much more extreme with all the Canadian stores, with 18 closed, many more going, and only a handful of flagship stores retained (such as the Times Square, NY store).

Walt Disney Company executives for the operation pointed both to the Global Health Crisis, and the shift by the customer towards online shopping, as the main reasons for this claimed restructuring. The statement included the phrase “the global pandemic has changed what consumers expect from a retailer”. Interesting to consider what is meant by “expects from a retailer”, possibly pointing to a need for a greater experience from the branded venue that Disney was considering.

This greater experience was revealed a few days after the announcement, with the news that (repeating history) Walt Disney Company had started its own investigation into Retail-tainment, for the second time in over twenty years. It was revealed by media service Blooloop that Disney Imagineering had instigated a new division that would investigate bringing Disney’s global portfolio of products and experiences to retail outlets, as pop-up entertainment. This was described as ‘New Experience Development’ which would be undertaken by this division. Disney has been deploying pop-up experiences at parks, but this would be a new focus.

Sources suggest that this Disney operation had been heavily inspired by the work of FoxNext, following the acquisition of the operation and other assets. Disney IP deployed in Retail-tainment style pop-up installations, is reminiscent of what studio divisions FoxNext (‘Alien: Descent’ 2018) and DreamWorks (‘Dragons Flight Academy’ 2019) undertook years previously. Although there is no word if the operation will be investigating resurrecting its aspirations in the LBE scene, with ‘ESPN Zone’, ‘Club Disney’ and ‘DisneyQuest’.

As covered in the previous part of this Stinger Report feature on the explosion in entertainment facility investment, the current approach to deploying IP into the entertainment facility landscape continues to bare an eery similarity to the investment made in the 1990s towards the last flash of interest in Location-Based Entertainment (LBE), with the likes of ‘Block Party’, ‘Discovery Zone’, etc. More recently we have seen ‘LEGO Discovery Zone’, ‘Mattel: Play’, and ‘Nickelodeon Universe’, along with others entering the stage. Are we about to see another explosion in LBE activity as part of the rebound of the market?

- Casino and Sports Betting

Once again, the changes and developments in the casino and gaming sector influence consideration across the larger Out-of-Home Entertainment landscape. During April, the documentation regarding Japanese casino regulations was revealed to the public and trade, from the newly formed regulator. This document outlined the draft of the regulations, standards, and licensing rules for casinos and gaming system operators opening in the country. This document is a framework, as the country starts the process – Japan is looking to be the most rigorous gaming jurisdiction in the world. The document was also part of a public consultation process that will see revisions based on public feedback.

Following on from previous “Sports Betting” coverage by The Stinger Report, and more clarity on previous statements was revealed. First off, regarding ATARI and the deployers and licensees of this legendary IP. It is now confirmed that the operation will be split into two dedicated divisions, one focusing on the free-to-play gaming and game IP (ATARI Gaming), and a new division to wholly focus on Blockchain payment and betting infrastructure (ATARI Blockchain). This Blockchain infrastructure includes the launch of the new in-game currency called ‘ATARI Token’. There is still no word on how these operations will interact with the new facility entertainment business in development (ATARI Hotel). Sources have suggested that the first venue will include a casino style environment, and that this will be one of the first to support Blockchain currency for payment – athough at this point, there is no official confirmation.

Regarding our recent coverage of “Skill Gaming”, we would like to thank our sources who pointed The Stinger Report to additional information that defines the state of play with this embryonic business. Skill Gaming had seen the promotion of leading names in the sector, Gamblit Gaming, GameCo, Synergy Blue and Next Gaming, along with several other hopeful start-ups and established names in this undefined sector. Skill Gaming offers the tantalizing promise of the marriage of gaming to actual arcade-style video game concept. However, regulatory scrutiny into this business has been intense regarding deployment into the strict casino landscape.

Recently, The Stinger Report revealed investment into GameCo (in March) but, at the same time, we were directed to the announcement in February of the Nevada regulators’ rejection of a gaming license for the company’s CEO. This resulted in the ruling that the executive would need to divest all interest and ownership in the operation. The regulators referred to concerns over business practices, especially surrounding involvement with the bankruptcy of Beyond Gaming, and voted to deny the license (as reported by news site Casino.org). At this time, it is unclear what the full impact of this breakup of the chief executive’s involvement will have on the Skill Gaming operation, and if this will play a part in the current and ongoing investment. Whilst the command for the company to reorganize will severely impact its business, the company is still operating machines on several casino resorts such as MGM Grand and Atlanta Casino Resort.

The overly hyped opportunities of the Skill Gaming business had taken far longer to prove their promise. In recent years, leading corporations have been under incredible pressure, as they attempted to define the winning formular. These troubles had manifested themselves with Gamblit Gaming (in 2019) laying off a significant number of staff. This was claimed to be part of the implementation of changes to support continued innovation and growth, streamlining operations to improve profitability. This came after significant licensing of game IP, including ‘PAC-MAN’ from BANDAI NAMCO.

This has also included the launch of an online mobile game brand. The Skill Gaming business has, in recent months, seen major executive and business restructuring across the board. Synergy Blue (owned by the Augustine Band) announced the appointment of a new CEO to lead the direction of an operation with a tag line “fun you can bet on”. This was followed by the launch of a new arcade-style gaming platform called ‘Area50Fun’, a platform clearly inspired by video arcade and casino gaming in a fusion that hopes the cement the Skill Gaming brand, while at the same time also reducing its workforce.

Rendering of the new entertainment gaming solutions [Synergy Blue]

The fundamental drive in establishing a new form of gaming environment is to address the crippling drop off in time spent on the gaming floor by Millennial visitors, against Boomer and Gen X age groups (marked by a 30-percent decline in casino winnings). There is hope that the familiarity of the arcade-style gaming presentation, with gaming components, would drive business and usher in a new generation of gaming machines. The Stinger Report has covered releases from companies who wrapped themselves heavily in video game IP, such as the KONAMI Gaming ‘Frogger’ and Scientific Games ‘Space Invader’ and ‘PAC-MAN’ platforms. The question within the gaming industry is if the promise of Skill Gaming was matched by the competence of the developers who chased after the goal. And many of the hopeful Skill Gaming start-ups seem to be hurriedly pivoting towards supporting eSports elements.

Speaking of Scientific Games, the gaming corporation was in the news regarding the operation’s investor rating being upgraded. Previously, the operation had been languishing with a lower-than-expected rating, but international ratings agency Moody’s investors services upgraded this rating (B3), citing the reopening of more gaming facilities worldwide since last year’s closures, which would favorably increase revenue and operating income. Scientific Games has been involved in new launches and announcements of partnerships, such as with BetSwap. More of the gaming scene expected to benefit from these changing conditions.

The casino sector is under incredible pressure and, while some invested in Sports Betting, Skill Gaming, or even eSports, the traditional casino sector still seemed wedded towards migrating to full online gaming. To illustrate this, it was announced in April that leading US omni-channel provider of land-based gaming and interactive entertainment, Bally’s Corporation, had signed an agreement to combine with global online gaming operator Gamesys. The move was described by Bally’s chairman as “marking the transformational step in our journey to become a leading integrated, omni-channel gaming company. And capitalize on the signiﬁcant growth opportunities in the US sports betting and online markets.” The phrase “omni-channel gaming company” is one to remember and can be expected to be emulated by Bally’s competition.

The continuation of coverage The Stinger has reported on also includes news of Punch Bow Social (PBS) falling into bankruptcy protection after the collapse of the Cracker Barrel acquisition in the face of the commencement of the Global Health Crisis. The operation has been in limbo ever since and, while other venues emerged from lockdown towards recommencing business, PBS was wrapped in legal and financial issues and the company’s 13 remaining operations closed. It was announced, at the beginning of April, that a solution had been found in this case. Crowd Out Capital had placed a bid of some $32m to acquire the operation. It was revealed that this bid had been accepted by the creditors of the PBS operation, and that this bid will also settle all outstanding disputes. This will include settling the attempt by investment firm Sortis Holding to secure ownership.

This successful bid is yet another example of the changing atmosphere towards facility and Out-of-Home Social Entertainment in general. PBS operates, across its facilities, bowling, putting greens, table tennis, Karaoke, and amusement – including shuffleboard, pinball, and video amusement. The operation had also experimented with a short-lived VR lounge concept. The creditors and investors feel that the Crowd Out Capital bid offered the most expeditious route to reopening the business and generating revenue again from the returning audience. It will be interesting to observe the progress made following this speedbump, in what had been promoted back in 2019 as the fastest-growing restaurant chain in North America.

- Augmenting the Landscape

As we look towards the summer market, certain technologies seem to be attempting to find their feet coming out of lockdown. One of these technologies is that of AR – augmented reality has been promoted as a possible major opportunity in the scientific, engineering, education, military, and entertainment sectors since its latest phase of adoption, soon after the resurgence of interest in VR. However, it never really succeeded to gain purchase, even after the billion-user success of Niantic’s ‘Pokemon Go’.

Now, the chance for AR to try again and gain serious adoption seems to be happening. AR’s promise of being able to superimpose digital information and imagery on a real-world view has once again been promoted as an accessible goal. This time the technology is being married to the deployment of 5G networking, offering a more powerful connectivity for the hardware. The name of Niantic was linked to this latest phase of development, revealing their latest Pokemon AR project, codenamed “Urban Legend”. Described as a 5G AR Demo, a video has circulated of a much more sophisticated multi-player smartphone and headset Pokemon battling game, interacting within the real world. Leaks have even surfaced that Niantic is planning to release the game on its own AR headwear, as teased by the CEO in a Tweet [image]. This follows a time working on proof-of-concept demonstrators, using Microsoft ‘HoloLens2’ hardware.

The teasing of a new entrant into the AR market [Niantic]

Speaking of Microsoft, the corporation’s HoloLens division scored a major contract success with the announcement they had won a $22b US Army contract to provide AR technology as part of the ‘Integrated Visual Augmentation System’ (IVAS) initiative. This makes use of combat viewing systems to supply soldiers’ situational awareness and assist in decision-making in combat. This is the latest of the Enterprise facing projects that Microsoft has sought for its hardware, promoting the latest iteration incorporating the Microsoft Mesh software for Mixed Reality (MR) platforms.

The migration from standard AR (information overlayed on top of real-world imagery), mostly personified as “smart-glass”, and MR (visuals incorporated and interacting with real-world imagery), is one of the subtle enhancements of the dream of augmented reality deployment. For the location-based entertainment scene, numerous attempts to deploy AR and MR into the space have been attempted. Even here, the next phase seems to be gaining ground. As previously covered in The Stinger Report, the use of AR headsets at Universal Studios Japan’s ‘Super Nintendo World’, $500m attraction ‘Mario Kart: Koopa’s Challenge’, could be the herald of greater adoption in this space.

Launch of a new generation of AR attraction [Universal Studios]

We have already reported on SONY’s 2020 ‘Ghostbusters Rockie Training’ project, as a temporary attraction installed at ‘Ginza SONY Park’ location, which offered players a chance to become Ghostbusters, wearing prototype SONY R&D Center developed AR glasses. This attraction used more as a test-of-concept than as a serious entertainment attraction. SONY is following companies such as Magic Edge, who have attempted to parachute recognition of their new technology with pop-up attractions employing the hardware.

Demonstration of the AR attraction [SONY]

Another major aspect of the resurgence in interest in AR MR has been the news, as we reported from our CES’20 coverage, that along with SONY, Facebook and Apple were all working on production release headset designs to compete in the 2022 marketplace. Recently, Apple’s chief executive went as far as to state that AR is 'critically important' to the future of the corporation.

While most of the MR investment has been focused on Enterprise, such as with ‘HoloLens2’ ‘Lenovo XR1’, and ‘Lynx-R1’, new investment is attempting (once again) to try and roll out an AR platform that will be attractive to the consumer audience. The use of MR allows the best of both worlds (able to be a VR headset and, using Pass-Through, also be an AR system), and this is seen as a winning combination, all furled by the adoption of 5G network connectivity.