Stinger Report - 30/11/2020

TSR Newsletter | November 30, 2020

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

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Kevin Williams

Publisher, The Stinger Report (TSR)

The Roadmap Ahead for Entertainment

Part 4 | # 1048

Report Skinny

The only way to “Stay-Up-To-Date” regarding the new phases of immersive entertainment is with The Stinger Report. In this report we look at Immersive Reality Tech on the Rise, with the latest XR applications for commercial entertainment; along with The eSports Arena Avalanche with numerous new facilities announced; and The results of the Amusement Convergence with mergers and restructuring. This series then concludes with a detailed report on the Emergence of Retailtainment investment.

Main Report

The investment in new and innovative levels of entertainment is being fed by an audience that has been locked in at home for an extended period, with people having seen their vacation plans disrupted and are now looking for unique experiences. For the venue entertainment industry to survive, it will have to offer unique entertainment to stay relevant.

- Immersive Reality Tech on the Rise

The latest innovation in display technology was revealed by electronics giant Sony, with the company revealing its new ‘Spatial Reality Display’ (SRD) system. Based on volumetric 3D technology, the glasses-free 4K resolution display achieves the impressive effect using special optics married to a stereoscopic display panel. Known by the company as the ‘ELF SR1’, the 45 degree, canted 15.6-inch screen incorporates user eye tracking to achieve the amazing “window on a virtual world”. Due for release in November at a $5,000 price point, it is obvious this is a commercial technology platform. Sony is now looking at markets to deploy this hardware – at present it can only be experienced by one viewer at a time and a possible new game cabinet application would seem obvious, as well as the obvious interest from the casino machine sector.

Mixed Reality (MR) development has been gaining momentum for deployment in the entertainment facility sphere, bringing a video game approach; and now Drone Interactive has revealed its partnership with the owners of the Fun Planet Family Entertainment Centre. The companies have been working towards completing the development of the production ‘ARCADRONE’ platform, that sees specially modified racing drones to be able to compete within a special enclosure – the four-player game incorporates anti-collision software to ensure the game play. This project was first reported by The Stinger Report back in 2018 and, following a location test of an early prototype, the final version system will be operation at the end of the year.

The inclusion of MR to other attractions has also accelerated, and this can be best illustrated by the work that Valo Motion has done in the physical activity sphere. Along with the popular ‘ValoClimb’ (augmented reality climbing wall), the company has developed its ‘ValoJump’ – offering a trampoline-based active game experience. The company has launched its latest title ‘Jumpball’ – with two players on their respective trampolines, using their body movements represented on the screen, to take part in a highly physical ball-shootout. The system sees two adjacent ‘ValoJump’ trampolines connecting the players automatically to the same 60-second game experience, offering a compelling experience for players and audiences, supporting events and tournaments. Valo Motion is keen to point out the systems can be rendered completely touchless (except for contact with the trampoline), making gameplay hygienic and simple to clean. Physicality, exergaming, and active entertainment are especially important elements of current innovation.

Speaking of MR and AR technology, and new developments were revealed in the deployment of this technology into the theme park and resort sector. New start-up BoldMove announced the development of its ‘AR Quest’ – an augmented reality platform based on smartphone application, marrying physical elements (such as activated animatronics) dotted round a venue, and activated by game elements represented in AR on the user’s device. The concept is revisiting the idea first outlined in the 2016 FOIL conference, of “Play-the-Park”, allowing guests to fully interact with the venue through immersive tech. This is the latest attempt to install AR elements towards offering virtual attractions into enhancing the park’s social media catchment, along with optimizing guest movement that could support physical distancing needs. The smartphone approach is supported by partner ActiveMe, a specialist in retail and museum activation.

New investment in MR technology was illustrated with the news that start-up Tilt Five has secured Series A funding of some $7.5m for its AR headset platform. The system employs micro-projectors to superimpose a virtual environment on top of the real world, viewed through the special headgear. The company was started following the collapse of the previous developer of this style of system, CastAR (many of our readers will remember we charted the rise and ignominious fall of that operation, which burnt through its then $15m investment). The technology behind this AR headset is still seen to offer a great opportunity for consumer and commercial application, and the operation is demonstrating an augmented boardgame experience using the micro-projectors and wand system. The new investment will be used to launch a projection version of the concept and sees investment from BITKRAFT Ventures and Galaxy Interactive, led by SIP Global Partners. An obvious commercial entertainment deployment is inevitable for this technology, once the business has been placed on secure footing.

Moving from projection tech to gesture recognition, and the needs of the “high-touch” entertainment sector which is looking for a solution to address the laborious cleaning needs post-COVID. It was revealed that, in Japan, an augmented crane machine has been on test that, rather than using a joystick and buttons, uses friction-less gesture recognition to track the player’s hand movements and represent them via the crane claw. Call the ‘Motion Crane’, the system is a conversion of a conventional crane cabinet, with the generator recognition hardware incorporated from a new industry start-up. The possibilities of this approach being applied to other prize machine concepts will be a new trend in the market we hope to report further on – readers will be aware of our previous IAAPA coverage on this technology’s growth in adoption.

Speaking of new technology being ushered in regarding considerations of the new global conditions, and it was revealed that Walt Disney had started the testing of virtual queue technology at their parks. The first experiment has been carried out at the Walt Disney World Resort, on their ‘Rise of the Resistance’ attraction, at Star Wars: Galaxy’s Edge. The virtual queue system in based on an app, only accessible via My Disney Experience, and managed into “Virtual Boarding Groups”. And then only guests with valid tickets, annual passes, and/or a Disney Park Pass reservation can activate the app and reserve their spot on the ride – with normal and virtual boarding groups entering through dedicated areas before boarding. This development comes just as Disney has started to look at addressing the capacity of this popular attraction. Still in a phase of refinement, it is expected that the results of this test will see wider adoption across the properties of a virtual queue based infrastructure – a momentous move in the history of the theme park sector, with impacts on theming, operation, as well as staffing, going forward.

- eSports Arena Avalanche

Once again, the emergence of “eSports” was an aspect of the re-emerging entertainment facility landscape. The public interest in eSports as a replacement of the loss of live sports has been accelerated, and the deployment of eSports in its own dedicated facilities has seen a growth of investment during this phase – as covered in previous Stinger Reports. The latest investment in this sector was seen in October, with Simplicity Esports signing a letter of intent to acquire five franchisee-owned eSports centers. This has been seen by the trade as the operation shoring up its position in the market, by defining its facility capabilities. This will be part of the Simplicity Esports development of a combined operation, comprising facility, organization, streaming and team management, looking towards NASDAQ listing.

Another new eSports venue chain started its rollout, with the first store marking the partnership between eSports operation Nerd Street Gamers, and the discount store chain Five Below. This sees the creation of an eSports gaming area within selected stores, with the first three locations opening in October. The partnership comes off the announcement of Nerd Street Gamers raising funding of some $12m twelve months previously, funding this rollout and future facility plans, looking at opening 70 locations in the next two years.

Regarding the ability to add an eSport component to existing venues, or the ability to place an eSports experience in a high-foot traffic location, interest has grown in pop-up eSports activities, especially in the “Retailtainment” sphere. As charted in The Stinger Report over the recent months, the number of new eSports facility developers has mushroomed, but not all of the development is for retail unit style installations. Amusement and attraction developer AMEGA Entertainment revealed the development of its innovative ‘E-Racing Container’. The modified shipping container has been converted into a compact turnkey installation that can be deployed quickly, almost anywhere, offering four motion SimRacing rigs for network gaming and eSports support, indoor and out – it can also be modified for racing and café-bar spectator layout.

The importance of having a defined eSports presence has seen more manufacturers and publishers signing up. It was also announced in October that Japanese operations KONAMI, SEGA, and Capcom had joined the Global Esports Federation (GEF), joining the operation’s publishing and development advisory council. Launched last year, the GEF is hoping to be a powerhouse in the steering of eSports endeavours internationally and is now seeing support from the largest Japanese publishers, as well as Tencent in China, and numerous Western developers and publishers. The Japanese eSports scene was seeing much promotion as more information was revealed of how eSports will play a part alongside the 2021 Tokyo Olympics. One such example was the revealing of the Japan eSports Grand Prix events for next year, supported by the Japan Esports Union (JeSU).

Just as this news broke, it was revealed that the International Olympic Committee (IOC) was reported as stating that they do not recognize any federation claiming to have international standing in the eSports world. This included the Global eSports Federation (GEF), and the International eSports Federation. This statement was made by the newly formed eSports and Gaming Liaison Group (ELG) of the Olympic Committee. This statement was made to stop groups and operations from joining these groups, including GEF which was started in 2019 and is backed entertainment conglomerate Tencent. With the explosion in influence of eSports in recent months, this development is seen as a major power grab by the IOC to control the international accreditation of eSports, especially considering the build-up to the postponed 2021 Tokyo Games (no word if this also applies to JeSU).

- Amusement Convergence

As with all industries that depend on a social entertainment audience, the current months into and beyond lockdown of global business have been difficult. The arbiter of a Global Depression on the back of this has added to the woes for many. But in these times, several trends have started to materialize. One of those is that of “Consolidation and Merger”. Especially for an industry that has been living on borrowed time, amusement has been ripe for investment, as much of the business has failed to reinvest by enjoy the sun while it lasted. This has left what many see as golden opportunities for acquisition of those operations greatly impacted by the drying up of their liquidity, as they deal with the pressures of the business crisis.

It was announced that Family Entertainment Group had continued their drive to acquire entertainment operations in high traffic locations. The company signed an agreement with Face Amusement, to the purchase of Arcade City and 7D Dark Ride Adventure operations. Along with the acquisition, we have seen the consolidation of resources between companies with similar goals and aspirations, hoping that their conjoined efforts can make a difference, and even grow in these new conditions. With this in mind, we received the news that veteran Italian distributor Faro Games revealed they are in discussions with fellow regional amusement manufacturer Tecnoplay – most recently covered in The Stinger Report regarding their eSports ‘Racecraft’ title, shown at EAG’20. Together, the corporations hope to use the innovation and distribution contacts towards increased market penetration.

One aspect of the distribution business has been decimated by the global business conditions and has needed free thinking solutions from the finance and business sectors. With this, we have started to see landlords looking more pragmatically at helping operators survive and, at the same time, machines are also structured to keep business. One example is from SEGA Amusement International (SAI), offering a “Buy Now Pay Later” (BNPL) finance deal. SEGA executives are offering generous 0-percent APR for 36 months on top of the 90-days deferred payments (this was only for US customers, at this time). Deals like these are allowing new game deployment and a much more generous opportunity to generate revenue, in an incentive scheme that will go towards buying new systems, soon to be emulated by many more corporations. We have already reported on other distributors such as Betson Enterprises offering similar payment deferrals, as well as some manufacturers.

Continuing to create means to help operators in difficult times to get the max out of their hardware was underlined by VEX Solutions. The developer of the VR entertainment platform announced it had upgraded data-driven tools to help LBVR attractions’ owners market their activity efficiently. This includes the supply e-books that will help owners learn in-depth information about their customers and their habits, alongside tips and tricks learned over three years of operation by VEX, in combination with the data gathered from a survey answered by 6,000 LBVR customers.

- The Emergence of Retailtainment!

The decimation of the retail landscape by the global health crisis can only be matched by the impact it has had on oh so many other businesses – including the venue-based entertainment market. But it is the opportunity that location-based entertainment venues can have in their flexible application into the retail space that has been brought to the forefront once again. This is the opportunity that the diversity of a new kind of “Entertainment Anchor” can offer the retail and leisure space, defining new thinking and new investment.

The Landscape after COVID

The reality is that a considerable number of shopping venues, leisure spaces and retail areas will be attempting to draw and maximise their footfall, but because of their offering, an increased extinction of lease holders, and an audience looking for something unique after excessive period of home isolation. New investment has turned towards entertainment as a profitable addition to the mix, drawing footfall and generating a new revenue stream.

Where previously the concept of adding an Entertainment Anchor to a mall environment was broken down into simplistic hospitality, cinema, and amusement components, the industry and the opportunity has totally had to change, and we are now seeing a return to thinking that can trace its roots back to the 1990s. The concept of the “Amusement Theme Park” – “Mixed-Use Leisure Entertainment” (MULE) venues that offer a F&B, mid-scale attraction, and amusement machine mix. This can appeal to a “Super-Staycation” audience which is looking for unique entertainment close to home.

Today, a decimated retail sector is looking to capture and profit from a dwindling audience. Spaces once populated by department stores chains have now become available. At the same time, owners of office spaces (decimated by home-working), along with hotel and cinema locations, are all considering the possibilities of factoring in an entertainment component; the landscape has been primed for a new approach.

The Opportunity of Entertainment

The current “retail-apocalypse”, as with the decline in cinema tickets sales, has seen operations spiral out of control long before the pandemic. Many ideas had started to be developed to carve out a survival plan. One such example was The REC ROOM, developed by Canadian cinema and amusement giant Cineplex Entertainment. The operation has been developing its own unique MULE venue – better described as an Urban Entertainment Center, comprising stylish dining and a mix of amusement, gaming, and even a high social entertainment mix. Other developers are attempting to follow this path.

Key elements, seen pre-COIVD as essential for the new generation of MULE that could be incorporated into the retail and mall landscape, include a mixed bag. eSports has been a constant rally point for some developments, with operators such as Gameworks opening chains within malls that comprised a strong F&B element, with amusement, but focused wholly on offering eSports. While in lockdown, the audience has grown for eSports as a replacement to many of the live sports impacted by the crisis.

An aspect of the pre-COVID investment in VR was seen as a great “White Hope” – there was investment by corporations such as mall owner Unibail-Rodamco-Westfield, partners with virtual reality experience developer The VOID; while other mall and venue operators formed their own affiliations. Jump forward to today, and only now are these LBE VR venues reopening, and face surmountable difficulties with some grasping at Chapter 11 protection. While immersive entertainment is still part of the mix in the thinking of these new entertainment sites, the whole landscape for this technology sees its deployment being totally re-thought. MULE concepts in the works do not fixate on one entertainment technology but will do the heavy lifting in offering a highly flexible and focused immersive platform.

Concerning “Eatertainment”, the brothers that founded Topgolf were reported to be moving forward with their new project (revealed in a report by Restaurant Business). After leaving the social golfing success, the founders have created a new entertainment project based on a high-tech food-and-game brand, based on mini-golf, called Puttshack. The test facility was opened in London in 2018 and uses similar RFID technology employed in the original operation – now scaled down to work in a mini-golf environment, with the game accounting for between 40 and 50-percent of the operation’s revenue. It was revealed that the plans to roll this concept out into North America are still on track, even with the impact of the global health crisis, with a plan for the new 25,000-sq.ft. facility to open in Atlanta in Spring 2021. This is expected to be followed by a Chicago location as the third site.

It is not just the retail sector that is looking at a “Entertainment Experience” offering to create a viable mix under the current changing landscape. It was revealed that developers in the hotel sector are also looking in this direction. Examples include Universal Music Group (UMG), announcing a partnership with Dakia U-Ventures, towards launching ‘UMUSIC Hotels’ – what the partnership has described as part of a chain of “music-based experiential hotel properties.” The idea sees the inclusion of holistic entertainment as part of the music-first immersive experience. The operation announced the first three locations they intend to build these properties – Atlanta, Georgia; Biloxi, Mississippi; and Orlando, Florida. IP and experiences seem to be driving these projects initially – and where Retailtainment saw ‘Nickelodeon Universe’ indoor FEC, added to the mix at the American Dream mall project. While we also have the ‘Atari Hotel’, self-described as a “one-of-a-kind video game-themed destination”, that will comprise immersive experiences. There is a need for these venues to build a strong entertainment offering, rather than just depending wholly on their IP – to draw attendance will be key.

What This Could All Mean:

From the wreckage of failed business plans, and critically damaged and indebted operations, brand new investment in new location-based entertainment offerings have started. Avoiding the hype-train that has hindered so many, development has continued in what has been dubbed the “next generation of social entertainment venues”.

With the availability of new retail, mall, and venue spaces, owners are much more pragmatic and open to unique ways of thinking. The limitations of previous interpretations of “Entertainment Anchors” have been ditched, and a brand new look for Social Entertainment venues has been born with the post-lockdown audience.

Adopting the needs of social distancing, the rise of cashless payment and the deployment of online registration, are driving new thinking in how the market will want to consume its entertainment. Social Entertainment has to be social, fun and compelling, and the next generation of MULE venues, about to break onto the market, will mark a new chapter for “Retail-Tainment”!