Spectrum Sports

Trends Report: Taking the Pulse of the Industry So Far This Year

May 21, 2018 No Comments

By Scott Borowsky and Frank Seninsky 

Here we are 4.5 months into 2018 and our sectors of the out-of-home leisure entertainment industry continue to thrive and grow.  That is taking into account all of the negative statistics reported that show that families are going out less frequently and spending less on out of home entertainment in the family entertainment center (FEC) sector.  

However, when drilling down the numbers, we discover that when families do go out, they are spending higher per capita and making sure that they are combining food and entertainment wherever that combination is available with great value (deals) and excellent guest service.  Pretty simple?  Even if families go out every other week, the FEC sector is still in their mix choice.  Note that it only takes 33,000 individuals visiting a local FEC three times per year and spending $15/visit for the facility to gross $1,500,000.  In a 20-mile market of 330,000, that is only a 10 percent penetration rate, realizing that a small FEC can be hugely profitable in this market even if 300,000 (90 percent  of the population) has never even heard of them.   

On the other hand, with good marketing and service, the same FEC could make the same revenues in a small 60,000 population market if they had a 50 percent penetration rate.  This is assuming the same medium household income and other demographic commonalties.  The best we have ever seen is a bowling center in a local market of 30,000 that has very close to a 100 percent penetration ratio and is known as the community center. Still, this center is also in a summer tourist locale that includes a lake and camping area. But, of course, the facility does not get that many tourists unless it rains. 

Current Trends 

#1.
Our industry is once again getting into big box retail stores that are closing.  Many of these big boxes are perfectly sized to be FECs. As we have stated previously—be careful—some can be easily and efficiently upgraded for our industry and some will cost a lot more, so do your homework.  As the future of big box retail does not look good, this trend to covert to FECs could continue for several years. It is a blessing as big box spaces offer high ceilings and great markets.

One example of this trend is the giant multi-level health clubs that are taking over old Macy’s stores. Comprised of spas, salons, swimming pools, basketball courts, sports, gym, workout, Pilates and yoga spaces, birthday party rooms, kids’ areas, cafés and more, , all of the pieces are there.  The Life Time Café in King of Prussia, Pa., is just one example of how an ‘all in one place’ facility could kill off smaller gyms.  Maybe our industry will soon see the light and start putting games and attractions into this new market. 

#2.
Dave & Busters now has Happy Hour. Dave & Busters is a well-recognized brand and they are working hard, not only to expand into more states, but to keep their name on everyone’s mind. Their concern is to keep moving forward and to create high traffic flow. We also notice that their food footprint is getting smaller and smaller, as they learn how to increase their bottom line with even lower revenues in these smaller facilities.

#3.
According to some published reports, virtual reality (VR) is projected to be worth $809M by 2022. 

As reported in The Redemption & FEC Report April 2018:

What could this mean?  First off, I (Frank) disagree about the size of the market.  I think it will expand across all platforms to close to $50 Billion in 15 years if you include augmented reality.   The Alpha-Omega Group is currently putting together two test locations for our own VR system and starting a company to create content that we hopefully can license to the hundreds of VR companies out there that are looking for great content.  

Several VR startups are approaching an average of $2,000/week ($100,000/year projected) and I believe that the FEC market needs to average at least $4,000/week or double that level before traction will take place.  Currently repeat play is the major problem as the content is not really that exciting.  Another drawback is that spectators watching people playing VR get bored quickly watching people move around making fools of themselves. We, and I am sure that many others, are working on incorporating a green screen technology that will permit the spectators to see exactly what the players see. 

The Buzz Boyz are looking forward in June to Bowl Expo and Foundations Entertainment University (FEU).  Bowl Expo is projecting more attendance and more booths.  FEU is way ahead of pre-registration, as many in the industry want to get a look at The Big Thrill Factory. The Big Thrill Factory was voted Best FEC in North America by IAAPA.

The mood in our industry is positive.  Trade shows in general are showing an uptick, for example ASD and Toy Fest West in Las Vegas both had big increases. 

Photos courtesy of LIFETIME.

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