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The impact of virtual entertainment experiences during the lockdown on the post-pandemic entertainment landscape

No different than what happened following catastrophes such as World War I, World War II and the Great Depression, the coronavirus crisis is acting as a catalysis to accelerate trends that were already underway for how we live, work and play and may also generate some changes we might not have imagined. We will not stay indoors forever, but our habits will be permanently changed by this period of isolation. What might the long-term impact be on our out-of-home entertainment behavior once the corona-crisis is over?

Over the past few decades we were already seeing the slow digitalization of just about every type of out-of-home activity, what our company has labeled ‘the digitalization of place’ and some have called ‘the death of distance.’ This has included the explosion and adoption of a multitude of at-home entertainment and digital social options. This trend is evidenced by changes in spending on digital leisure equipment and services. From 2000 to 2018, average household spending (inflation-adjusted) on digital equipment & services grew by 68% whereas spending on fees and admissions to out-of-home entertainment and art venues declined by 2%. 

Likewise, the share of all household spending on digital equipment & services grew from 2.5% to 3.8% while the share for out-of-home entertainment and arts declined from 0.41% to 0.38% of all household spending. Pre-pandemic household digital spending had grown to ten times that of out-of-home entertainment and arts.

The trend of more digital and less out-of-home entertainment is also evidenced by the time people spend on each. From 2003 to 2018, time spent by ages 15+ on digital entertainment and socialization increased by 12%, 21 minutes more each day, while time attending out-of-home entertainment and art venues declined by 8%.

Currently, with everyone on lockdown, the pandemic has accelerated the shift to at-home entertainment and digital socialization – 100% overnight. Now our social lives and entertainment experiences have moved exclusively to our at-home online and digital options. In the absence of attending out-of-home entertainment and other leisure activities including dining out, quarantined people have turned to craving all means of online social connection and digital entertainment to overcome boredom, cabin fever and for escapism from coronavirus stress. Even people who previously didn’t turn to social media and many forms of digital entertainment are learning to use it. Are we going to develop at-home entertainment and socialization habits during the crisis that will continue post-crisis and disrupt the out-of-home entertainment and social landscapes as we once knew them?

Pre-crisis, two basic human needs significantly influenced and drove peoples’ desire to visit and their choices of which out-of-home leisure experiences they visited.

Most out-of-home leisure experiences were communal and highly social. Research has consistently found that the primary reason people do go out, whether to an entertainment venue, restaurant, concert, museum, sporting event, festival, or just about any other out-of-home leisure destination, is to socialize with family and friends. We evolved as a social species. We were able to survive as a species by being tightknit and cooperative members of families, tribes and larger groups. We are hardwired by evolution to crave social interaction. Our need to connect with other humans is as fundamental as our need for food and water.

The second basic human need was identified by Maslow in his fourth level of the Hierarchy of Needs, “esteem, recognition and respect.” Maslow recognized that people need to seek status and elevate their social position in the eyes of their peers. Until recently, conspicuous consumption of things was one of the main ways people gained status, whether it was some logo on their clothing, the car they parked in their driveway or the purse they carried. Gaining status for owning status-worthy things took time as it required time for a person’s social signaling group to be exposed to and see those items. Then we saw the nascent emergence of the experience economy first identified by Joe Pine and James Gilmore in their Harvard Business Review article in 1998 and then in 1999 in their book, The Experience Economy. The introduction of the smartphone in 2007 with its ability to simultaneously post and broadcast on social media photos of must-attend envious experiences people were having was a driving force in the transition to the experience economy and the shift from the conspicuous consumption of stuff to conspicuous leisure. 

There’s been a shift of peoples’ identity from “I am what I own” to “I am what I do.” Now, the vast majority of people would rather be known for their experiences than their possessions. And the more status-worthy experiences you can have and post, the greater your social capital. So, people are constantly seeking new and unique experiences that their social media followers haven’t experienced and will be envious of, will wish they could do. Signaling your identity and gaining social capital has shifted to the experiences we have and post on social media. In fact, for many people, especially younger adults, if some experience isn’t Instagrammable, it probably isn’t worth doing.There’s also another motivation for photographing experiences and posting them on social media. Studies have found that sharing photos increases a person’s enjoyment of experiences. The act of self-disclosure of what you’ve done plus the validating feedback you receive from social media likes and feedback releases dopamine in the pleasure center of the brain. This chemical reaction is a big part of why social media can be so addictive. 

shareworthy experience ® post  ® pleasure & social currency 

Up until the great coronavirus lockdown, social media conspicuous leisure postings were for in-real-life experiences. The preference for unique, socially-sharable, out-of-home experiences has strongly influenced peoples’ choice of the events they attend. That shareworthy preference has produced whole new categories of out-of-home leisure experiences specially designed to offer highly interactive, social and Instagrammable experiences including many festivals and immersive pop-up museums and art exhibits.   

But during the pandemic, people still have their evolutionary programmed need to socialize as well as get their status fix and build their social currency. They no longer can meet face-to-face nor post shareworthy out-of-home experiences. Will we see the development of virtual experiences that people value and want to share, as much as real world experiences? Will quarantined people start posting screen-capture photos of ‘must-attend’ streaming events that are shareworthy enough to create social currency and FOMO? Will they engage in and share other virtual digital experiences in other new ways to gain status currency? Will these become habits rather than temporary pandemic replacements, causing a permanent shift to virtual, digital shareworthy status-accruing experiences and how we socialize? 

Many digital entertainment experiences also have a high social component And just like a lot of streaming video games and esports, they can be a means for gaining status,. For example, Fortnite not only has a highly social component, but also offers social currency opportunities through “wins “and the acquisition of “skins” and other game achievements. NASCAR has streamed iRace, virtual racing by real NASCAR drivers. Now virtual concerts abound. We’re now seeing the evolution of other virtual experiences such as virtual cocktail parties, virtual rave parties, apps for co-watching and even virtual graduations at college campuses created on Minecraft. Even before the pandemic, we were seeing younger people creating and uploading videos on YouTube and TikTok of at-home experiences to their followers. No need to leave home to have some shareworthy, status-worthy and social experience.

Other forms of virtual entertainment may evolve during the pandemic that is both highly social and shareworthy. Post-crisis we may no longer have as great a need to meet up out-of-home for communal entertainment if we have learned that we can get the same feeling of togetherness and develop social currency virtually.  

However, there are four key requirements in order for experiences to have high conspicuous value that are difficult, if not impossible, to replicate virtually:

  • How involved you are in participating and shaping the experience, as passive involvement has low conspicuous value.
  • Are you be physically evolved? Lack of physical involvement has low value.
  • How often and how many people participate in the experience? Experiences with wide regular participation have low value as shareworthy as they are not unique and lack limited access.
  • How unique is the experience from those that your social media followers have? The more unique, the higher the conspicuous value. 

Most virtual experiences are readily available to everyone, so they lack exclusivity and uniqueness. To truly have some shareworthy conspicuous value, they will have to be offered as one-time events to a limited audience, perhaps through limited sale of virtual tickets. We may see that development soon. However, the physical aspect will always be lacking. That is until sometime in the not too far future we see mainstream adoption of XR (mixed reality including VR) that blurs the line between the physical and digital worlds, creating an experience with an immersive presence and good haptic capabilities that can replicate the sense of being in a different environment. 

Until that time when we can once again leave our homes and there is a new normal, out-of-home entertainment should still reign king for conspicuous leisure, although we will have learned to place less value on proximity for social and entertainment experiences and more on our digital options. The pre-pandemic trends of the growth of digital entertainment and socialization is sure to have been accelerated and should continue post-pandemic as digital options continue to evolve and improve.  

Posted in Coronavirus, Covid-19, Disruption, Entertainment, eSports, Experience, FEC, Location based entertainment, New normal, Out-of-home, pandemic, post-pandemic, Trends, Uncategorized, virtual, VR & AR | Tagged | Comments Off on The impact of virtual entertainment experiences during the lockdown on the post-pandemic entertainment landscape

Free 13-part webinar on building the perfect business plan

There’s no better time to start a business than in a turndown. If you’re planning to start a new business or grow a business, Brandon White of Build A Business just started a free 13-part daily webinar on building the perfect business plan in 13 slides. He just broadcast the first webinar, which you can access here for the next 70 hours. Sign up for future webinars here that will continue tomorrow at 11am Pacific, 1pm Easter Daylight Time. 

Full disclosure. Brandon is my son and has been a successful serial entrepreneur. 

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The post-pandemic future of America’s location-based entertainment

The coronavirus is likely to devastate large portions of the location-based entertainment industry. Businesses that survive should expect a less-saturated market with a changed consumer base and market size. 

The impact that the COVID-19 virus is having on America’s location-based entertainment industry is devastating. If not already closed, soon every location-based entertainment center (LBE), which includes all the family entertainment centers (FECs) and theme parks, will be totally dark. Customers won’t be walking through the doors, staff will be unemployed, but rent, debt, utility and many other expenses won’t stop. 

The unemployment rate in the country will be skyrocketing due not only to the closure of LBEs, but also due to closed retailers, restaurants and so many other business segments that depend on spending by consumers who are presently bunkered down in their homes, scared and conserving what money they have to try to survive. The country is going to be in a recession, not only until the pandemic subsides, but for much longer. Recovery won’t be overnight. Consumers are learning new and lasting habits of using ecommerce, restaurant carry-out or delivery and digital entertainment while being restricted in the homes. 

How severe the recession will be, how long it will last and how permanently consumer behavior will be changed will depend on how long the shut down and social distancing needs to be maintained. The longer it does, the greater the long-term impact will be. 

 “It’s amazing how slowly habits change, where people get stuck in the ruts of doing things, and then you have a shock like this that can change everything,” said Erik Brynjolfsson, director of the MIT Initiative on the Digital Economy. “It forces people to overcome the switching costs, figure out something new and say, ‘Hey, this is way better.’”

Prior to the pandemic, LBEs were already facing headwinds in many markets due not only to industry overexpansion, but also to the growth of one-time events such as festivals and the increased perception of dining out in restaurants as a form of entertainment. These shifts in entertainment preferences are especially true for younger adults, the prime target market for most LBEs. LBEs, especially attraction-based ones, were losing their repeat appeal (an essential element of their business model) to “Been there, done that, so many other (Instagrammable) experiences to do.”

With the exception of about a dozen national FEC chains and the major theme park operators, most LBEs are individually owned. They don’t have the financial survival wherewithal to weather the storm that large chains and companies have. Many are over leveraged and capital poor. We are sure to see a high failure rate during the pandemic and shortly thereafter. 

Even when we move into the post-virus era (and here’s hoping it happens much sooner than later), there’s no question stir crazy consumers will want to go out again for face-to-face social and entertainment experiences. Joe Pine, co-author of The Experience Economy, believes that the experiences now being shut down will draw people again in future. Joe says, “We are social beings and we crave social environments. While the experience economy might be a new thing, the desire for experiences is from time immemorial.”

However, it will be a slow ramp-up of demand for LBE experiences for a number of reasons. Many consumers will be financially strapped and lack any discretionary spending. This will be especially true for low-wage and middle-class consumers who are most likely to lose their jobs during the pandemic. Nearly 40% of Americans already were living paycheck to paycheck before the coronavirus hit. 

Based on a March 10-16 survey by the Pew Research Center, only 40% of employed adults said they would likely continue to get paid during a coronavirus shutdown. 37% said if they had to miss work and not get paid for at least two weeks due to the coronavirus, it would be difficult for them to keep up with basic expenses. The percentage who said they would likely continue to get paid increased with incomes and education and the percentage who said it would be difficult after two weeks declined with incomes and education. 

Many consumers are reshaping their attitudes towards out-of-home entertainment and other leisure experiences as more threatening to their health than before. Many will have learned to substitute at-home digital entertainment and restaurant meal delivery for some of their previous out-of-home leisure. Discretionary spending will take a long time to recover to pre-pandemic levels if it ever does. The pandemic will have a disproportional impact on low-wage workers and much of the middle class who lack the savings and resources to financially survive the pandemic, with many continuing to remain unemployed after its end. Additionally, post-virus, the vast majority of consumers are likely to become ultra-cautious with all their spending and devote more of their incomes to building a rainy-day, or future pandemic fund and less to discretionary entertainment and leisure.

The future is sure to see an acceleration of the LBE gentrification trend that has been underway since the Great Recession and that has shifted a greater share of out-of-home entertainment, arts and restaurant spending to households with a bachelor’s or higher degreed heads of household. Pre-pandemic, those households grew to account for nearly 3/4s of all spending on out-of-home entertainment and arts (73%). 

Even for what is probably the most affordable form of out-of-home entertainment, movie going, bachelor’s+ households accounted for two-thirds of all ticket sales.

As the PEW survey shows, college educated households are less likely to be negatively financially impacted by the pandemic than low-wage and middle-class households who have a higher likelihood to lack the savings and resources to financially survive the pandemic if they become unemployed, with many continuing to remain unemployed after its end.  

The post-pandemic out-of-home entertainment landscape is sure to be completely different. There will be less competition, but at the same time the demand will be less and slow to grow. With some permanent reset to consumers’ entertainment habits of relying more on at-home entertainment options and the loss of large segments of low-wage and middle class consumers, demand for out-of-home entertainment may never return to pre-pandemic levels. Whether supply and demand will be in balance will depend a lot on how many LBEs survive to operate on the other side of the pandemic and how fast and to what degree consumer demand returns. 

It is possible that outdoor venues may recover faster than indoor ones, as with continuing health concerns, consumers may consider outdoor environments safer health-wise than the confined and more tightly crowded indoor ones. Those venues could include agritainment/agritourism, theme parks, adventure parks and outdoor attractions such as miniature golf. 

There will be a new normal for LBEs on the other side of the pandemic, and it will be very different than the normal we had just a month ago. 

Posted in Coronavirus, Covid-19, Disruption, Entertainment, FEC, Location based entertainment, New normal, pandemic, post-pandemic, Theme Park, Trends | Comments Off on The post-pandemic future of America’s location-based entertainment