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More Proof that High Fidelity is the Winning Formula

Today the entertainment landscape is highly competitive and is only growing more so. Location-based entertainment venues (LBEs), including all types of family entertainment centers (FECs), are now competing for consumers’ discretionary dollars and leisure time with the expanding options of at-home and mobile digital entertainment as well as an increasing selection of other out-of-home entertainment experiences including retail-tainment and many free options. Both on this blog and in our Leisure eNewsletter we have featured a number of articles discussing that in order for LBEs to win today and into the future, they need to offer High Fidelity.

High Fidelity quote copy

When it comes to spending on fees and admissions for entertainment on trips and vacations, since 2004 we have seen a 20% decline in household participation and a 28% decline in average household spending (inflation-adjusted). That’s a tough market to compete in and one you would think would be very price sensitive.

Spending & participation entertainment on trips 04-13 copy

Well, just the opposite appears to be the case. The High Fidelity venues are winning and are even able to raise their prices faster than inflation.

There’s probably no Higher Fidelity entertainment experience than The Magic Kingdom at Disney World in Orlando, Florida. And it isn’t cheap when you consider not only the admission price, but also adding the cost of travel, hotels and meals for a family to go there.

Guess what? Despite a shrinking market for entertainment on trips and vacations, between 2006 and 2013, The Magic Kingdom grew its attendance by 13%, 2.5 times the rate of growth of the US population. That’s an 8% increase in their US market penetration rate. And most amazing, between 2006 and 2015, they raised their admission price from $63 to $105, 44% faster than inflation. If they had only grown their admission price by inflation, today it would only be $73, $32 less than what it currently is.
Magic Kingdom price increase & attendance 2006-2015This clearly demonstrates that in today’s increasingly competitive entertainment marketplace, High Fidelity plays an important role in the formula for success. Even with the mindful frugality of spending brought on by the Great Recession, if people are going to visit an LBE, they are opting for the High Fidelity choices and are more than willing to pay a premium price for the experience. It’s not about the price, but rather the value you get for what it costs. People no longer are willing to waste their precious leisure time for a mediocre experience. If they are going to leave the comfort of their homes and the convenience of their digital screens, it needs to be a really great, High Fidelity experience.

Additional reading:

To win today, it’s all about offering a High Fidelity experience

More High Fidelity proof

Proof that moving to a High Fidelity customer experience is a winning formula

More proof that High Fidelity wins

 

Posted in Entertainment, Experience, High Fidelity, Location based entertainment, Theme Park, Travel expenditures, Trends, Uncategorized | Tagged , , , | Comments Off

Be an LBE disrupter before you get disrupted

Often, when I give presentations or discuss the trends we are seeing with the shrinking market for community location-based entertainment venues, I often hear a response along these lines, “But people will always go out for entertainment.” Well, that is not totally true. Our company’s research finds a long-term trend of a declining percentage of people going out, and for those who still do, many visit out-of-home entertainment venues less often.

What we are seeing today for just about every type of consumer business is business-model disruption. When it comes to location-based entertainment venues (LBE), it’s not so much about disruption from other LBE competition (although that is happening some), but rather much more about disruption from the fast-evolving innovation occurring with the Triple Revolution – the Internet, social media and smartphones.

Consumer digital technology is dramatically changing consumers’ behaviors and expectations and taking away LBEs’ market share of both consumers’ leisure time and discretionary spending. At-home and mobile digital technology options are rapidly expanding in availability, selection and quality while declining in price. Average household expenditures on all types of consumers’ at-home and mobile digital technology (equipment, downloads and subscriptions) increased by almost 1/3 (+31%) from 2004 to 2013 while average household expenditures on fees and admission for entertainment and the arts decreased by over 1/4 (-27%) over the same ten years. The average dollar increase to household spending on digital technology over the ten years was more than three times greater than the total amount that the average household spent on for fees and admissions in 2013.

During those same ten years, there was a more than 1/3 (-38%) decrease in the number of people attending entertainment and arts venues on any given day while time spent on digital devices of all types has skyrocketed. Just over the past three years, the average amount of time adult Americans spend on their mobile devices is up 75% and total digital time is up daily by one-half hour. And research shows that time on digital devices is displacing leisure time spent at real world locations.

Time spent on digital leisure '12-'14 copy

LBEs are fast being disrupted by the siren call of the digital world, including all of its forms of entertainment and social media, which most users consider as a form of entertainment.

To counter digital Darwinism and avoid the innovator’s dilemma, LBEs need to disrupt their current business models. This disruption requires a paradigm shift from thinking that LBEs are entertainment destinations to re-conceptualizing them as great, upscale, social destinations targeting adults rather than everyone in the family. Great contemporary food and beverage becomes a major attraction and the entertainment shifts to a less prominent role.

Location-based entertainment no longer has the draw it did just a few years ago, as now entertainment alternatives are conveniently available in the digital world 24/7, not matter where you are and at low or no cost. The LBE formulas of just a few years past are no longer future proof. Be a disrupter before you get disrupted, because that disruption is already underway.

To learn more about the long-term trends affection LBEs, check out our company’s white paper, The Perfect Storm: LBE Disruption & Opportunity.

Posted in digital, Disruption, Entertainment, feasibility, FEC, Leisure time, Location based entertainment, Out-of-home, Trends | Tagged , , , , , , , , , , , | Comments Off

Vietnam’s Largest FEC Opens

Helio Center, considered Vietnam’s largest and most modern FEC, opened to the public on February 11, 2015 in time for the Tet holiday. The 157,000 square foot (14,600 square meter) indoor and 2.5-acre (one hectare) outdoor family entertainment center is located Da Nang, Vietnam. Da Nang is located on the coast midway between Hanoi and Ho Chi Ming City (formerly Saigon). It has a metropolitan area of one million and is a very popular tourist location for Vietnamese and foreigners alike with its beaches, 5-star resorts and less crowded and laid back lifestyle.

Randy White, CEO of the White Hutchinson Leisure & Learning Group, designers and producers of Helio Center, said work started on the project in July 2012 with market and culture feasibility. It then immediately proceeded to design and construction. Considering the complexity of the building design with its ground floor, mezzanine and a basement garage for 1,000 motorbikes and 53 automobiles plus sourcing and procurement of entertainment equipment and finishes from all over the world, Randy said, “The FEC was actually completed in a very timely manner, even by Western standards.”

Man Quang, CEO of Helio Center, said, “It is exciting to be able to bring a totally new entertainment experience to Vietnamese people with this state-of-art, world class FEC. I am confident it will be a major attraction and bring much joy and happiness to both residents and tourists for many years to come.”

The FEC includes both adult-oriented and family attractions:

  •   14 lanes of duckpin bowling including VIP lanes
  •   Children’s edutainment (play and discovery) center
  •   Indoor ice skating
  •   4 indoor rides
  •   Combination Ballocity and soft modular play structure
  •   150 redemption, simulator and video games
  •   Redemption prize store
  •   Indoor go-karts
  •   19 private karaoke rooms
  •   Celebration and birthday party rooms
  •   Multi-purpose theater-style performance, karaoke and meeting room
  •   Coffee and bakery café
  •   Food court featuring five different world cuisines and a bakery

The outdoor area includes:

  •   Children’s discovery play garden
  •   Multi-level seating for the coffee and bakery cafe
  •   Restaurant village which will seat over 600 buildings featuring different cuisines
  •   Children’s boating school
  •   Children’s motorbike and automobile driving school
  •   Bumper boats

 

At peak times, the FEC will accommodate 4,000 guests. The center employs a staff of 600. Helio Center cost more than USD 45 million by Western cost equivalents.

Helio Center Grand Opening Ribbon CuttingHelio Center started its marketing campaign, predominately on Facebook, well before opening. By opening, it had already registered 50,000 members who will use its Power Card debit card system to pay for games, attractions and food and beverage, get discounts and earn points towards VIP status.

Unusual for entertainment projects, White Hutchinson designed the building with a natural daylighting roof monitor system that allows the majority of the center to be totally lit by daylight during the day to save on electrical lighting costs. The project also incorporates a number of special acoustic treatments to prevent it from being too noisy.

A unique feature of the basement garage is the security system it has to prevent the theft of motorbikes, something you won’t find in the West. There is a small charge to park your motorbike, 2,000 dong (10 cents US). When a motorbike enters the garage, they stop at the security check-in, pay and a computer-camera system records both the driver’s face and the license plate. Then when leaving, the driver drives through a security checkpoint that verifies the original driver is on the motorbike by matching the license to the original photo of their face.

Posted in Bowling, Entertainment, FEC, Location based entertainment, Press Release, video games | Tagged , , , | Comments Off

Smartphones are sucking the fun out of leisure time

Our company’s Leisure eNewsletter and this blog have been giving continuing coverage to the disruptive impact digital technology is having on location-based entertainment (LBE) including data on how the use of digital technology both at home and on mobile screens is taking leisure time and discretionary spending market share away from LBEs.

Now along comes research that indicates a new type of disruption – that the use of digital technology, and more specifically the smartphone, is actually decreasing the fun many people have during the leisure time when you aren’t on the phone, included at LBEs.

Researchers at Kent State University surveyed a random sample of 454 undergraduates and examined how different types of cell phone users experience daily leisure. They measured each person’s total daily smartphone use, personality, and experience of daily leisure. Students were categorized into three distinct groups based on similar patterns of smartphone use and personality: low-use extroverts, low-use introverts, and a high-use group who averaged more than 10 hours per day of smartphone time (about 25% of the sample).

Compared to the two low-use groups, this high-use group experienced considerably more leisure distress – feeling uptight, stressed and anxious during free time.

On the opposite end of the spectrum, the low-use extrovert group averaged only three hours of smartphone use per day and showed the least boredom and distress and greatest tendency to challenge themselves during leisure time.

The researchers suggest that for all those who feel the need to check their phones incessantly, the issue may not be that they enjoy their phones more than others do; rather, the obsessive habit could demonstrate a need to stay connected, an obligation to remain in the know — which ultimately spills over into their leisure time.

“In our previously published research, we found that high-frequency cell phone users often described feeling obligated to remain constantly connected to their phones,” one of the researchers said. “This obligation was described as stressful, and the present study suggests the stress may be spilling over into their leisure.”

So it’s bad enough that smartphones are taking leisure time and spending entertainment market share away from LBEs. Now we learn that at least for one segment of the population, the highly addicted smartphone user, it is contaminating their enjoyment of other leisure time activities, including time spent in an LBE and accordingly decreasing the perceived value of attending.

Posted in digital, Disruption, Entertainment, Leisure time, Location based entertainment | Tagged , , , , , | Comments Off

The digital death of boredom and its implications for LBEs

I’m bored; let’s do something. Not all that many years ago that is something most people frequently experienced. Back then basically all we had to do at home was listen to radio, watch network TV shows on our cathode ray televisions and play board games. And when we were away from our home electronics, we could really become bored. When you’re bored, you look to do something to relieve that boredom. A visit to a location-based entertainment venue was often the answer back then.

Today that situation has dramatically changed. We are bored far less often due to all the digital content options at home, whether it is watching streaming movies, television shows or sports on our HDTVs, playing video games or immersed in social media or other content on our digital screens. And we are no longer bored when away from our home electronics with the smartphones and sometimes tablets we carry with us everywhere. According to Nielsen’s Third-Quarter 2014 Cross-Platform report, U.S. adults spent an average of 46 hours, 44 minutes per month connected with content through a smartphone app or mobile web browser. That’s almost double the 26 hours, 13 minutes they spent in the same quarter two years earlier. And Nielsen reports that 68% of adults used smartphone apps to relieve boredom or to kill time, 70% of the time while they were by themselves.

Smartphone content time on app or web browser copy

Boredom used to be location-based entertainment’s friend. That has changed today. The bar has been raised to get guests in the front door of entertainment venues, as they’re rarely bored anymore.

Posted in digital, Disruption, FEC, Leisure time, Location based entertainment | Tagged , , , , , , , , | Comments Off

Movie Attendance Continues its 12-Year Decline

Hollywood has reported that North American 2014 movie theater attendance dropped 6% from the previous year and box office revenue declined by 5%. Actually, the decline is greater when we adjust for an increasing population; per capita attendance declined by one-fourteenth (-7.1%). This is the continuation of a twelve-year decline from its peak attendance in 2002 when the average North American went to the movies 4.9 times. In 2014, it was down to 3.6 times. Over those twelve years per capita attendance has declined by more than one-fourth (-27%) and box office ticket revenue has declined by 13%.

movie box office 2000-2014 attendance ticket price copy

We’ve been following cinema’s decline for many years. Every year Hollywood reports declining attendance, they attribute it to the poor quality and draw of movies that year, the lack of blockbuster films. That is rather hard to believe when it’s a decline spanning over a decade. And you can’t really blame it on the Great Recession, as the decline started back in 2003, almost five years before the economic turndown. And although the middle class is becoming more economically squeezed than ever, moviegoing is the most economical form of out-of-home entertainment there is at an average ticket price of just over $8.

Truth be told, there are much more fundamental reasons why moviegoing is on the decline. It has a lot to do with the fast growing digital entertainment and social media competition. Movies are no longer the only game in town. We now have smartphones, tablets, large screen HD TVs and instant video and movie streaming. We have increasingly higher quality television programming. We have instant entertainment anywhere. The lure of digital devices is keeping people away from cinemas.

Brooks Barnes at The New York Times says the real problem is generational, “(In the past) young ticket buyers traditionally turned out weekend after weekend – with the quality of the films mattering less than the opportunity to fraternize. But this group is staying home more often.” Nielsen reports that during the first three quarters of 2014, Americans aged 12 to 24 saw 15% fewer films in theaters compared to the same period in 2013. In 2013, the number of frequent moviegoers between the ages of 18 to 24 fell by 17% according to the Motion Picture Association of America.

Moviegoing has lost a lot of its social currency with the younger generations. It has also lost a lot of its social appeal. The younger generation wants to share the experiences they are having with not only the people they are with, but also with their social media friends. You’re not allowed to talk, text or post on social media at the movies.

What we are seeing is the growing attractiveness of High Convenience – instantly accessible, enjoyable and low and no cost digital entertainment and social media – while the Fidelity of moviegoing has not increased enough to offset that increasingly attractive alternative. The higher the Convenience of digital entertainment and social media becomes, the higher of Fidelity of real world experiences needs to become to be competitive.

A few theater chains are raising the Fidelity of moviegoing. One example is AMC Theatres, which has pulled the standard movie seats out of a number of theaters and replaced them with lush electric recliners to counter the comfort of sitting in lounge chairs at home while you watch a movie or binge-watch a Netflix series. This decreased the theater seating count by two-thirds. AMC also added reserved seating when you buy your ticket on-line. They also added food and beverage, including alcohol. The result is a significant increase in attendance. AMC understands that the moviegoing experience needs to be more than just the film, it’s the Fidelity of the entire experience of devoting around 2.5 hours of your limited leisure time to being in the theater, and that doesn’t count the time to travel there.

The declining attendance that is happening to moviegoing is happening to just about every type of out-of-home entertainment. Participation and average household spending on almost all types of location-based entertainment is on a long-term decline that started back in the early 2000s, just like moviegoing. However, just like AMC Theatres, there are players who have learned how to be successful in a smaller market by increasing the Fidelity of their experiences. Examples include TopGolf and Punch Bowl Social that we wrote about in this month’s issue of our Leisure eNewsletter.

Posted in Location based entertainment, Movie box office, movies, Out-of-home | Tagged , , , , , , , , | Comments Off

Exactly Who Are the Affluents?

In our last December 2014 white paper The Perfect Storm: LBE Disruption & Opportunity, we discussed how the upper middle and higher income households, what are called the Affluents that make up more than 20% of all households, are growing and control the majority of location-based entertainment spending. In the White Paper we described Affluents as people with personal incomes in excess of $70,000 who predominately live in households with two or more income earners with total household incomes of $100,000 or greater. We used that simple definition for brevity. However it is really more complicated than that, as household size has an impact of how much money it takes to live comfortably. A four-member household needs more income than a two-member household.

Pew Research just completed an analysis of who the upper-middle and higher income households are, what they call upper-income. They found that 21% of households had upper incomes and 46% had middle incomes in 2013. Here are their findings of what families are upper-income:

Upper Income graphicThis corresponds very closely with an analysis early this year by USA Today of what 2014 income the average family of four needs to live the American Dream.

Cost to live American Dream copy

 

Pew Research’s analysis found that the only income group that has seen their net worth grow since 2001 are upper-income families whereas lower- and middle-income families’ net worth have declined significantly.

PEW wealth gains since 2001 The wealth gap between upper- and middle-income households has grown to a record high. The median net worth of upper-income families is now 6.6 times greater than the median net worth of middle-income families.

The upper-income, the affluent households are now and should continue to remain into the future as the households with the lion’s share of discretionary income and the propensity to spend it at entertainment venues and restaurants. They are the market to target.

Posted in Consumer expenditures, Demographics, Entertainment, feasibility, Target markets | Tagged , , | Comments Off

35 Million Households Visited an Agritainment Farm this Summer and Fall

Members of over 35 million households (29%) with more than one-third of the U.S. population visited and paid for an activity at an agritainment farm over the summer and fall this year. This is the finding from the first national agritainment survey conducted by the White Hutchinson Leisure & Learning Group consultancy firm. 2,004 people were surveyed about their agritainment farm visits and activities that took place between July 1 and mid-November. Activities they were asked about were multi-activity Fall/Halloween attractions, corn mazes, u-pick pumpkins, u-pick apples and other fruits, haunted attractions and hayrides.

Participation was highest in the Northeast where 38% of households attended an agritainment farm activity and lowest in the South with one-quarter attending.

HH regional agritainment participation graph

In the South, Midwest and West regions of the country, more people attended a multi-activity Fall/Halloween attraction than any other type activity, with the Midwest having the highest participation rate. However, in the Northeast, u-pick apples, cherries and other fruits was the most popular, followed by Fall/Halloween attractions, almost tied with corn mazes as third in popularity. In both the Midwest and South, u-pick pumpkin patches were the second most popular activity followed by corn mazes in third place. In the West corn mazes are the 2nd most popular activity followed by u-pick pumpkin patches.

In our company’s twenty years of working in the agritainment industry, we knew farms were growing in the crowds they attracted, but we never realized how high the household participation rate had become. For entertainment-type destinations, these are incredible market penetration rates. It’s second only to movie theaters and higher than participation at theme parks. Agritainment truly owns the Fall, and especially October.

Posted in Agritainment, Agritourism, Entertainment, Location based entertainment, Out-of-home | Tagged , , , , | Comments Off

Industry Label Reinforces Paradigm Paralysis

At the IAAPA Convention in Orlando this year I was part of what we believe was the first seminar ever given at IAAPA about attracting the adult market, called Growing Your Revenue with Adults. We presented data on why the family market is on the decline and why it is more lucrative to go after the adult market at community entertainment venues compared to the family market and discussed what it takes to be a successful adult center.

This is a completely new idea for most of what is called the family entertainment center (FEC) industry. And that is exactly why it is such a new idea, as for over two decades, community entertainment venues have been labeled as FECs. So everyone assumes centers have to target families, which means adults and children.

This has created a paradigm paralysis in the industry about who the target market needs to be due to the FEC label, basically, a little bit of something for everyone. And that is exactly why so many centers are marginally successful at best.

I didn’t fully realize how incredibly powerful labels are to our thinking until over this past weekend I read Adam Alter’s book Drunk Tank Pink: And Other Unexpected Forces that Shape How We Think. There’s an entire chapter about the subconscious, invisible, involuntary ways that labels affect the way we think, feel, and behave. Alter cites extensive research showing how immensely powerful labels are in shaping how we see the world and react to it, how labels craft the images that populate our thoughts. It’s sort of what could be called a linguistic Heisenberg principle: as soon as you label a concept, you change how people perceive it.

So the bottom line is that every industry magazine, every industry trade organization, every industry seminar program that talks about the family entertainment center industry is doing the entire industry a disservice, as the family label is perpetuating the paradigm that centers have to be designed to attract families. The family label is precluding most developers and owners from considering what is now proving to be the more successful approach of developing entertainment centers for adults. We need to change the industry name to something like entertainment centers or community entertainment venues to break the stranglehold the family label has on the industry’s development and future success.

P.S. What most people in the entertainment industry don’t understand is that when you design and operate a center for adults, you still get many families, but when you design and operate for families, you don’t get the adults.

Posted in Entertainment, FEC, Location based entertainment | Tagged , , , , , , | Comments Off

The Tchotchke Index Tracks Location-Based Entertainment Spending

American’s spending on tchotchkes—trinkets, junk, yard sale finds, gift shop items, home decor trinkets and other decorative items for the home—is an excellent measure of their impulse spending, the fluff available in household budgets. It’s a good gauge of American’s economic wellbeing, rising when Americans are feeling economically flush and falling when they are feeling financially pinched. Back in 2007 the American Consumers Newsletter started to name tracking that spending the Tchotchke Index.

We dug into consumer spending data to show you what has been happening to the index since it’s 2000 peak of average household tchotchke spending of $240 (in 2013 dollars). It fell to a low of $158 in 2004 following the 2001 recession, 9/11 and the dotcom bubble, recovered to $226 during the housing boom and has been on the decline ever since to the low in 2013 of $103, 57% below its peak.

tchotchke index

It is no coincidence that we have seen a similar long-term decline in location-based entertainment spending starting in the early 2000s, rising in the mid-2000s and then declining since – a pattern comparable to the Tchotchke Index. Many Americans continue to cut back their spending on not only tchotchkes, but other discretionary items including location-based entertainment.

Posted in Consumer expenditures, Entertainment, Location based entertainment, Recession, Uncategorized | Tagged , , , , , , | Comments Off