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LBX Collective
Sound Off #74 - Jukebox Dilemma, Competitive Socializing Phase Three, and more!
Sponsored by Intercard!
Kevin Williams & Brandon Willey kick off this week's episode by debating how traditional jukeboxes are becoming less visible in entertainment venues as karaoke and live performances gain popularity, signaling a need for reimagined approaches to music delivery in public spaces.
• Economy watch shows tariff situations creating uncertainty for merchandise and prize deliveries
• Genda's Gigo Entertainment continues acquisition spree with 13 Japanese arcade facilities
• Lane 7 expands with multiple brands including ML7, Gutterball, and Level X
• Competitive socializing enters "Phase 3" with new entrants SuperSocial, Rivals Social, and Pool House
• True Gamers secures $15 million funding to capture 10% of MENA esports market
• Six Flags confirms closure of Maryland water park and staff reductions
• Velocity Esports files for Chapter 11 bankruptcy protection
• Go-karting experiencing gamification wave with new projection-mapped and VR systems
• Creative Works, VRCave, and Another World expanding free-roaming VR presence
• Consumer VR market showing concerning signs with top-selling applications being older titles
Are you on the edge of your seat Because we're about to Sound Off with Kevin Williams covering today's latest trends in location-based entertainment Brought to you by the LBX Collective your community to connect, engage and inspire. All right, everyone, let's buckle up.
Speaker 2:All right, well, welcome everybody to Sound Off with Kevin Williams and man, what do we got today? Let's see.
Speaker 3:How are you going to change my mind? Well, I think we've got to face the video kill the radio star moment for our industry is the jukebox. A dead duck. In the age of not just karaoke but also live performances in entertainment venues, I think that the jukebox market, or should we say the media entertainment market, going to have to work a hell of a lot harder to survive in this challenging condition yeah, you know when, when you first mentioned this.
Speaker 2:I'm like I don't remember the last time that I've actually seen a jukebox and I'm not talking about like the old steel salad jukebox, like with the record, but I'm like like an actual jukebox with even cds or even digital or whatever. But I don't remember the last last time I've seen one, certainly in any actual entertainment venue. Well, they're there.
Speaker 3:You just don't notice them. Most of them are set to Muzak. Most of them, you know, one of the largest exhibitors at Amusement Expo is our friends at AMI. So you know, we know that the market still exists. It's just that the digital revolution has made the appearance of these machines less and less prominent.
Speaker 3:Live music has taken over in a lot of venues as the preferred choice. There's music maybe in the background or none at all, and maybe the only news that you're getting in certain entertainment venues or the only music that you're getting in certain entertainment venues, or the only music that you hear in entertainment venues is a TV subscribed from the bar area. And then there's, of course, the ASCAP problem, which is licensing. How many operators want to have the added expense of music payments? So you know, the Am amusement trade association set up catering for music and amusement, you know doesn't have that many music members as they used to have, but it's still an important part. But I would say that the jukebox is being superseded by the need for the audience to still have music and they're getting their fix, as it were, from karaoke and live performance.
Speaker 2:Yeah, yeah. I think that is an interesting trend that we'll have to continue to watch closely as we go to some other venues.
Speaker 3:One of the things we were hoping for was, you know, we would be using the smartphone of our patrons to order their next music selection, but I think they're too busy using social media. Maybe it's time to re-evaluate how music is streamed into these venues and maybe if it should be made more customisable and more personalized, so, rather than blaring out your tune to all and sundry in the facility so they can hear your barry manilow fixation, rather your unique booth. Uh, and is the future for this as a premium product rather than as a everybody has to suffer moment?
Speaker 2:Yeah, I really would personally would love to have that type of experience If I know that I'm at a restaurant and I don't have to listen to the same top 40, I can play whatever is I want. We can play whatever we want in our booth, and it's just us. We're not disrupting anybody else. I think it's a really interesting concept and idea and one that somebody should pursue, if they haven't already begun to work on that.
Speaker 3:Well, I copyrighted it, so let's see how it goes got to work on that.
Speaker 2:Well, I copyrighted it, so let's see how it goes. Perfect, all right. Well, coming up after the break, we're going to dig into some Economy. Watch Intercard is the only cashless system designed, developed and manufactured all under one roof. They introduced cashless technology to the amusement industry and have been leading the way for over 30 years. Cashless systems from Intercard increase customer spending, guest satisfaction and boost revenues by up to 30%. Intercard is so proud to be serving the amusement industry and if you aren't already part of their global family of customers, they hope you will become one soon.
Speaker 3:So let's jump into the trends, uh, and starting with the economy, and, uh, we, we sort of having to guard our loins. Uh, it has been made clear, even though, uh, the tariff situation it seems to be a um hokey-cokey kind of moment, the put your one leg in, pull one leg out kind of situation, it still impacts the delivery and the shipping of product, and we have a situation where we're being warned that merch and certain deliveries of toys and prizes for entertainment centers and redemption centers are going to be impacted. So we are going to have to be mindful of how we're warehousing these products, not depending on just-in-time order and delivery, and hopefully our trade associations will give us some guidance on the best way to move forward in this kind of situation. While things try and sort themselves out, no matter that the tariffs for China may have been paused for another 90 days and everything is hunky-dory again, the impacts will be felt, the vibrations will move through the market.
Speaker 2:Well, and they aren't necessarily completely gone right. So you still don't have the effective embargo that the 145% tariffs were previously, but you are still going to have price increases coming down the line for manufacturers 30 percent. That still exists over the course of the next 90 day pause, which is also unsettling given the fact that it's a pause and not a definite definitive reduction in tariffs.
Speaker 3:We know that certain companies have been stockpiling purchases and covering the AAA show in Gajon in China. It is clear that the Chinese manufacturers are equally as perplexed and concerned about the, as you called it, the de facto embargo that seems to have applied and then was released. We will have to wait and see, but what we're looking at is that there will be a shortage of certain elements merch and licensed goods and we'll know a little bit more about that after the licensing expo that's coming up. Talking about the show in Garejean, our friends at Arcade Heroes have covered the first two days. We have quite an extensive report from the show in the coming Stinger report. It's quite an extensive one. It goes into the minutiae of the Chinese market and the products that we are expecting to select from, select from. The nice thing about the AAA show is that it kind of gives us a snapshot of available products that certain distributors will be acquiring for exclusivity to import into their particular markets in Europe or North America.
Speaker 3:This year's AAA show there was a very interesting selection of products, especially themed for the needs of the Western market, where previously we've kind of had the hand-me-downs. We've had a Chinese product that was rough around the edges and needed to be cannibalized and focused. Well, now we're depending very heavily on Chinese manufacturers Wallap, eunice and others to release products for our market. Even Raw Thrills products are manufactured in China or were manufactured in China, and we had a chance to see how the Chinese market has benefited from that close proximity and how certain of the development studios now are rolling out products that don't have any rough edges and are quite comparable to previous North American video amusement releases. But we'll go into more detail about that in another sound off.
Speaker 3:I just wanted to touch upon. The point here is that the Chinese embargo, as it were, was felt very heavily at the AA Asia. Moving away from the economy side of the business and looking at the biz kind of business, and here we go in the regular Genda feature for SoundOff. So we have another acquisition on their list. Genda Geico Entertainment has taken 13 facilities on board. I think it's actually 14 facilities from Ewing, a Japanese, I would say, children-friendly arcade operation. Ewing also does other entertainment venues, so this uh amusement, components to their operation, as well as a mini amusement park, were part of their division and that division, that part of the division, has been hived off and sold over to uh geiger uh so again for their Geico operation, so their spiders web grows a little bigger.
Speaker 2:As I would like to say, agenda is just Geico going.
Speaker 3:Yeah, getting that game, oasis, you're not going to have a choice. You know, as soon as you get off the plane at Narita there's only going to be Geico facilities everywhere. You know it is interesting to see how fast they're moving. But I think the company has appeared on a lot more people's radar following what's been happening in North America.
Speaker 2:I do think it's interesting, though, that so far, when we see all the antitrust conversations happening with big tech companies and even other big mergers between a Cedar Fair and a Six Flags not that they were antitrust, but they at least had to go through that procedure conversations happening, you know, with tech, big tech companies and even other big mergers between a cedar fair and a six flags not that they were antitrust, they at least had to go through that procedure right to go in um and and look at it, that just because maybe they fly under the radar, because they're just 13 stores and then it's 20 stores here and it's 20 stores there, but like the amount and and the, the rapid growth that these guys are going on is pretty incredible and at some point I would argue, at least in certain markets, that they are getting to an anti-competitive place. Death by a thousand cuts.
Speaker 3:We have a situation here where the Japanese amusement industry has been shaking their arm off to find a sucker. They thought that would be buying up all of these loss-leading arcade facilities, though what I think we're seeing is the world domination writ large from what Genda has achieved and is achieving. I don't think they're an ethereus company. I think their heart is in the right place. Think they're a nefarious company. I think their heart is in the right place. It's just that if a company of this magnitude just turned up one day and started buying normally, you would have expected some kind of, let's say, federal observation. But as a company that is traded on the Tokyo Stock Exchange, as a respected amusement operation in Japan, now expanding internationally, I think you're right about the radar being not tuned correctly to their appearance and by the time people work out it's going to be too late. Moving on. And another company expanding at a pace is our friends at Cosum. They just broke land or broke ground, I think is the correct phrase for their fourth location in Detroit. They have already got their LA facility operational, their Dallas facility operational. Their Atlanta facility comes on stream in time for the buildup for the FIFA World Cup, which is very clever. I haven't seen them make an official comment about how they that the Atlanta facility is open before the soccer mecca event. But I would say that for the 40 facilities that they want to roll out in the next five to eight years, they seem to be on track to achieve that to eight years. They seem to be on track to achieve that. Moving on, and I touched upon in Open and Shut about the opening of a new Lane 7 facility. But the interesting thing about that particular site was that it is part of a chain of new brands within the Lane 7 operation.
Speaker 3:Lane 7, for you guys that are not familiar, is a boutique bowling emporium in the UK and now Europe. They're renowned for being one of the earlier of the companies that jumped on the competitive socializing bandwagon and shaped a lot of the thinking behind it competitive socializing bandwagon and shaped a lot of the thinking behind it. Lane 7 has raised some capital to grow their operation and while growing their operation they've also decided to break down their operation into unique offerings rather than just one Lane 7. To serve them all. They have now come up with four distinct operations or they say distinct, but I would argue about that.
Speaker 3:So we have traditional Lane 7, which has about 19 facilities, one in Germany and the rest in Ireland and the UK. We have the ML7, which is an arcade-intensive duck-pin bowling variant of the model. We have the Gutterball, which is much more an arcade facility with maybe a couple of lanes, a little bit of bowling component, uh, but heavy on the social competitive nature, as well as the fb. And then we have level x, which is really a hybrid mule mixed use leisure entertainment facility. Uh, there's two of those out there. They're finding their ways, you know. So, really, the level x, gutter ball and ml7 are at the beginning of their establishment, where lane 7 is a proven entity. The one thing I would say is it's clear that friends like gravity have been influential in forcing these chains to think about not being a one-trick pony but being able to offer some level of diversity.
Speaker 2:Yeah, yeah, and we touched up again on this a little bit during the open and shut. But one of the things that's just confusing to me is, first of all, when I go to the Lane 7 website, it is not when I go to their venues. The Level X and the Gutterball venues aren't actually listed there, or at least not under that brand.
Speaker 2:They may be listed there by city but not under that brand. And yet the Arrow 7 location is on the venue page for Lane 7. It isn't its own website, but the Level X and Gutterballs also don't have their own websites for those locations. So there's different brands and these mixes of attractions but yet still dropping everything under the Lane 7 website and it's only going to confuse consumers. And I get that. They're trying to experiment and I like that. They're trying different things, but they need to separate the brands more distinctly from the Lane 7 brand, to separate the brands more distinctly from the Lane 7 brand.
Speaker 3:They need to. You know, I would argue they need to go back to basics and look at their brand offering and their guest experience offering. I think they really do need to look at their logos and their themality. The venue should be distinctive. You should be able to walk off the streets and know that you're in a gutter ball or know that you're in a lane seven, and not have the vague argument that it's kind of different because they don't have this or they don't have that. And you know, the most important part is they need to sort out their web process, because 80% of the individuals that are going to visit one of these sites is going to do that courtesy of staggering across their website or using TripAdvisor. That's pushed them onto their website and at the moment, they don't have a cohesive message to get across, and I would have expected a company that has been in the competitive socializing market since 2013 would have got that element together at least. Maybe it's a time for the C-suite management to have a come to Jesus moment. Yeah, moving on and no one else is standing still.
Speaker 3:We have what I like to call phase three of the competitive socializing revolution. So, our friends at Lane 7 can say that they were around at phase one. We've been through phase two, where our friends like Putshack and Flight Club established themselves, and now, at phase three, we have the new entrants trying to go for world domination and we've had announcements of three new operatives. The first one has already thrown their doors open in Ireland with Super Social, and if you haven't seen the open and shut we did on that, this is a 19,000 square foot facility in Dublin and it has the standardized spaghetti at wall approach to no, it's a little bit more refined spaghetti, no meatballs, but they have a bit of everything regarding creating a competitive socializing brand which is clearly aimed at being rolled out internationally. And from what we've seen and what we've heard about SuperSocial, it's been well received in the city and the owners are happy enough to start cogitating over their rollout aspirations. Moving forward, one of the machines inside SuperSocial is the successful Conductor shuffleboard or gamified shuffleboard system, and our friends at Conductor, through their Game Vault competitive socializing division, has actually dunked their toe in the water and have become a operator or are in the process of just about to throw the doors open on their first facility called Rivals Social. It is going to be populated with a lot of their own machines, as you would expect if you are a manufacturer of competitive, socialising products. Why pay for milk when you own the cow, as it were?
Speaker 3:The issues here are that this is, to use an English colloquialism, the poacher becoming the gamekeeper ie, or Americanism, the vampire running the blood bank. You know, literally the manufacturers of the product are now running their own facility and if this is successful, we'll be looking to open more facilities. We've been here before Chuck E Cheese when it started out as pizza time was created by atari, the people who made the video games uh, kind of as a a facility, uh, for them to put their machines into. So they, you know, got secondary revenue out of their machines. It didn't go the way they were hoping and various reasons Atari and Chuck E Cheese went their separate ways. But you know it is an interesting history repeating to see rivals social. I will argue with them about the name. I'm looking forward to having the deep, dark conversation with them over that. I've seen the walk-around pictures of their 12,000 square foot facility. It is in stealth mode. It is clearly a venue to allow them to learn important lessons and it's going to be a useful test facility, but again, I'd rather come back and talk about that once we have some publicly shareable imagery of that.
Speaker 3:And then the other new entrant, looking at world domination in the competitive socialising market, comes from an interesting pedigree Pool House original name that it is not comes from the same brains behind Topgolf and the same brains behind Putshack, and the brothers who came up with both concepts were looking at gamification within a traditional entertainment medium adding gamification to shooting golf, adding gamification to mini golf and now adding gamification to pool using projection mapped camera vision ball tracking. They intend to open their first 21,000. So the largest of the two new entrants here. This is going to be a big facility and it's going to be a one-trick pony big facility. So far, though, rumor on the street is that they may have gone back and re-evaluated if they can do a bounce and only be dependent on just ping pong or just mini golf or just, in this case, pool and a little bit of f and b as the main draw, or if they're going to have to pull it and add some other competitive entertainment to offer a unique mix Again we watch this space with much interest.
Speaker 2:Yeah, I would say certainly if Pool House stays down the path that they are currently walking, then I would consider them a second gen.
Speaker 2:They haven't quite learned the lessons that we've been talking about for probably the better part of a year plus at this point. And you know I have a problem with the rivals. I mean, obviously we'll keep an eye on it, and not that they shouldn't have a facility to be able to test all of their stuff to see how well it goes and how well a mix of their attractions works in a social environment. But the name should just be rivals first of all. They're going to go with anything at all. Just leave rivals take, take out the social, which you can't even see anyway. And also, if it's rivals social, then I don't know how social rivals feels about that as well, given the fact that they are a company that has a projection-mapped mini-golf or augmented mini-golf experience and that they are an up-and-coming effective competitor to Conductor slash GameVault. So this might be a little bit of an intentional dig at social rivals or they're just totally oblivious to that concept and they've just decided to go rivals.
Speaker 1:Again, which is not a bad name for a social competitive venue.
Speaker 2:But to add the social there just doesn't make a lot of sense.
Speaker 3:Our free consultancy is drop the social.
Speaker 2:Yes, exactly, drop the social, drop the the.
Speaker 3:Yeah, drop the social. The interesting thing about Pool House is that you know they raised 35 million to start this property, so they've got a lot of money to play around and you know nail down what needs to be done to make them a third generation or third phase competitive socializing venue rather than just an upscaled second generation, as it were. I would not be surprised to see other manufacturers of entertainment systems deciding that they would like some recurring revenue and migrate into the facility business. I know of one company in particular, a well-known manufacturer of attractions and amusement systems, that has started the process of looking at entering the market, running their own facility. Our friends at Sega Amusement International acquired Funbox or rolled Funbox into their operation and so directly or indirectly, have, you know, roots in facility operation. It's always nice to sell to yourself, as Bandai Namco knows with their Namco stations.
Speaker 3:You know it is not unusual in the amusement sector to see, or used to see, amusement manufacturers and distributors running their own facilities In competitive socializing. This is a new world and we're going to have to see if this is a good thing or a bad thing for the third phase of the market. But it's nice to see that competitive socializing wasn't a flash in the pan, like some people were trying to denounce when we first started commenting about this nearly 10 years ago. Wow. But the future over 10 years, I think yeah. But the future for competitive socializing is that this next phase of investment has to learn from the mistakes of the previous phase. If they don't, they will be constantly cursed to repeat it and we could see a major shakeup in the market.
Speaker 3:Moving on and we haven't really covered that much what's been happening in the esports sector. I know that some of our listeners will treat esports as a periphery to the core amusement and competitive socializing interest, but I would argue that esports lounges and esports tournament events have a strong place in the location-based entertainment market. And in Dubai, one of the budding chains out there, True Gamers, with about 130 facilities within the region, has received an injection of about $15 million towards world domination. They want to take a bigger capture of the market. They want to take a bigger picture of the market. They're looking at taking 10% of the existing MENA, Middle East and North African esports market a tall order. It is a very profitable business out there and in Saudi we have seen the Saudi Royal Fund putting money into esports.
Speaker 3:I actually presented at the Gamer 8 esports convention in Riyadh a few years back. I was lucky enough to be invited to talk about the future of esports beyond the esports tournaments and the esports lounges, and I get the feeling that True Gamer is one of those companies that is looking towards the future. They're so in the future at the moment that they actually use robots to deliver to your gaming base. So your Cheetos and Gatorade come on the back of one of the biped robots. I don't think that's just a gimmick. I think they're finding it a very useful addition and also a saving in staffing. But I would say that the esports lounge market is now going to be going through a period of M&A, the same way that many parts of our industry overall are going through merger and acquisition, and this could see a big shake-up in the sector.
Speaker 2:Yeah, yeah, and I think that this is one of these rare cases in entertainment where there's a very, very true, I won't say disconnect, but delineating line between the Atlantic Ocean, between what we're seeing in Europe and then the MENA region, north Africa, middle East, from what we see in the US and its adoption of pure-blood esports venues. We try to put esports into entertainment and that didn't work for a number of reasons that seem obvious in hindsight. But the true, pure, just the your true gamers type environment doesn't exist here in the us really, um, in any significant amount, and I think this is, uh, you know, justa like. Clearly there's, there's a cultural difference between, um, where uh people go to play their esports and and where esports are done here in the u.
Speaker 3:In the US.
Speaker 3:I would also argue that same in certain parts of Europe.
Speaker 3:That said, where esports funds are and where money is being injected into the market, such as in the UAE, then we see the game lounge having a place, an outer home place, in the market, as well as the at home what, what we would like to call the uh, the uh, the first space and the third space, uh, uh, uh, uh, large there, the uh.
Speaker 3:I. You know, the investment that has been put into this market is quite considerable, the same way that the investment in esports in the Chinese market was quite considerable, and one of the reasons why we saw a lot of esports lounges in China and in Asia. I would point out that things go up and things go down, and one of the things we need to be mindful of is that too many similar esports lounges that don't offer enough of appeal, and we will see both attrition as well as merger and acquisition. Moving on, and you've had a racket ball, you've had ping pong, you've had bashy ball, cornhole and the ubiquitous pickleball. Well, now we have curling, added to the weird and wonderful selections of sports that are trying to add a cocktail to the mix.
Speaker 3:This is an interesting opening because it's a temporary opening in manchester for a period between november to february they will have a pop-up curling, competitive socializing venue. I don't know why they don't stick a pickleball on ice venue next door to it.
Speaker 2:Yeah, yeah. Well, I really enjoyed. The only time I've done curling was in Nashville for one of the FEC summits, and I really enjoyed the experience, but it was on ice as well, and this is clearly not. Uh, first of all, it's not on ice. So I'm looking other side it's an ice-free curling, so it is, um, when you look at the stones, they're they're not the true traditional stone. So this is, I think, definitely leaning heavily into the winter theme and the whole feel of trying to do something, you know, during the the holiday season with your friends and drinking some drinks and just having fun, trying to do something new that's what they're going for.
Speaker 3:also, those stones are very heavy and the competitive socializing industry has learned that our female visitors, even though they want to not be talked down to, they, have to be mindful that you're going to have to make them friendly for all of your visitors, not just individuals that like to pull their back out. Those curlers take that weird position for a reason when they're playing the game. It's an interesting one. I look forward to reporting back on how well it was received during the holiday period. Our friends at Round 1 in Japan have been reporting their numbers and they've bucked the trend that we've seen in North America, where same-site entertainment venues have been seeing between 5% and 11% declines in same-site revenue.
Speaker 3:Our friends at Round 1 Japan have seen an increase by 12%, a solid 12%, and they are moving at a great pace. They have plans for more facilities in Japan. They had opened their first facility in China recently and they're talking about all roads out there. They also have, you know, their North American operation, which has 50 plus facilities, and those have started to roll out me, roll out new venues um, we talk about one of the new venues in open and shut coming up. Uh, and also our friends at round one are diversifying.
Speaker 3:We've already talked about, uh, their plans to open up a eating facility. There is no amusement or gamification in this site. This is literally a capture of multiple food venues based around Japanese culture. The first venue was revealed to be a 19,000 square facility in Hollywood and it's going into a very upmarket entertainment hub space, very social. I think they're going to have to change the name and get away from Round 1, because Round 1 brings connotations that this venue ain't going to be living up to. The last thing you want is mom and the kids turning up at this place thinking it's a round one facility.
Speaker 2:There was never a time that I went into a round one expecting their food to be delicious, so it's not what they should be branding their, their food hall with I've always wished, when I've had to review around one bowling facility, that there was a decent food and sake sampling components to it.
Speaker 3:this ain't uh going to fly, uh, I hope.
Speaker 3:I hope it's a lost in translation moment between the Japanese team that is leading this, which is clearly the Japanese side of the operation, rather than North America that is leading this so far, and I think hopefully a word to the wise that they will sit down and rebrand themselves after they've given time Moving on.
Speaker 3:And you know the other shoe dropped from our previous repage about what was happening at Six Flags Entertainment. You know the closing down of the Maryland Water Park facility et into the 43 regional parks that they had operational, Now we're down to 42. The CEO has made it clear that he doesn't foresee seeing any more in the medium term, any more of their park and resort business closing down. He didn't say that there may be other departures of peripheral operations that are surplus to requirement and he made it clear that he is looking at a cull of staff, partly due to the duplication following the merger, but also trying to get to a position in 2026 where they generate a savings of 16 million. Sad news for those that lose their job, but I think in the current market there will be a lot of entertainment facilities that will be glad to look upon the employees from this operation with the experience and education that they have accrued while working for this vast operation.
Speaker 2:Yeah, I mean, I mentioned it a little bit on on open and shut, but this is not surprising, just only surprising at how long it took to make the cut.
Speaker 3:I think we're all surprised that it's taken so long for them to do the post-mortem review of their operation and see what they have and what they don't have. Referring to esports, six Flags actually has an esports operation as part of the Six Flags group and, again, I haven't heard any news about what will happen to that going forward. I think it's proven for the current C-suite a very difficult process to go through what they have, what they need to keep, what they don't need to keep, and also have to suffer management changes as some of the management move on, even if they weren't part of a culling, they may be looking at moving into other operations while the going is good. Moving on to the dangers or the pitfalls of the esports scenario and one of the companies in north america that set itself out as a esports and entertainment operation, velocity Esports, which actually salvaged itself off of the body, as it were, of GameWorks. Of the three facilities that Velocity opened, Two of these were actually previous GameWorks locations that had been reprieved and turned into esports and mixed-use entertainment.
Speaker 3:Well, the company itself has filed for Chapter 11 bankruptcy protection. We're not sure if they're looking for a buyer or if they're looking for reinvestment. We've lost one of the three facilities. They're looking for reinvestment. We've lost one of the three facilities. In February, the Velocity Esports in Chicago closed its doors and the other two facilities seem to be operational. Their Las Vegas facility is still running. We had one of our spies wander through to check everything that's happening. We had one of our spies wander through to check everything that was happening. I think this is one of those situations where the company feels it's a good time to refinance itself, reposition itself and also maybe find a kindred spirit to grow, which was, on paper, an interesting opportunity in the North American market. In the North American market, offering a bit of esports with entertainment and F&B and a watch party component is not such a stupid idea in the market. It's just how it was executed, I think, and the management behind that. That maybe needs a little bit more time in the oven.
Speaker 2:Yeah, potentially, or maybe it's just another example of that cultural divide that I mentioned that seems to exist across the Atlantic. And maybe esports venues, esports, dedicated venues, at least in the more traditional esports sense, not the ride simulator esports that F1, et cetera are trying to do, but more like your gaming PC console esports experience, is just not a fit for the US.
Speaker 3:I would argue that how you execute esports in an entertainment venue, so as a component to an existing venue, takes a lot more skill than just copying what was done in Asia or what is being done in the UAE. It needs more finesse, and I give you a perfect example of you can throw as much money as you like at the problem and still make a mess of it the esports facility inside the Luxor and the vast amount of money that was put into that, only to really now be used as a watch party occasional drop-in venue. It isn't just the curse of Luxor, it is also the misunderstanding of who you are attracting to your esports venue and going forward in the next couple of months and years, we will have to talk to the esports market or the esports market will talk to their audience through their own voice, and that is a danger that we haven't taken on board, which is, if we get this wrong, then the very profitable esports industry will work out a way to talk to its audience without us.
Speaker 3:Moving on to the tech trends, and I'll zoom through a couple of these it is interesting to see gamification being added to the go-kart sector. We have a new entrance into the market not using digital technology beyond interactive pads mounted into the raceway and a heads down display computer touch screen attached to your karting experience. The company Emotional Ideas. You know from their information on their website and some information I've garnered from sources site and some information I've garnered from sources they were hoping to be rolling out their own facility based upon this concept, but they're also now looking to find a warm body indoor karting facilities that want to apply this technology to their mix. I haven't played the system. I will hold off judgment about how effective this gamification is in a physical manner rather than what we are seeing from other developers.
Speaker 2:Yeah, I think I've watched some of their videos, have certainly not played it. I'm sure it would be actually fairly enjoyable, but when you compare it to more fully immersive projection mapped experiences like chaos carts or battle carts, it's definitely going to be lacking, but it depends on what the venue operator is looking for. Those systems are also probably more expensive than most of my ideas. I think that if you're looking to retrofit an existing go cart facility, this might be a great option for you to add a little bit of gamification to your traditional karting.
Speaker 3:It's important to understand that chaos karts and battle karts are using e-karts that can only travel at a certain speed, so they don't have the full, as the karting industry would call it, the full karting experience. You can't race to the same speed where a system such as this, I think, allows you to touch those speeds, and it'll be important to see if this maybe is the middle ground for the existing high-octane karting industry to be able to dabble a toe in gamification. Moving beyond the mixed uh reality systems that we're seeing in the system using projection map, we're also seeing head-mounted display uh carting systems and uh. We recently uh got the reports back from the aaa show in gajon in china and we have two companies that threw their hats into the ring using head-mounted displays. We've already talked about in a previous sound-off of a system using a virtual reality headset through their pass-through mixed reality capability. Those were using Quest. These ones are using Pico systems. One Chinese manufacturer was demonstrating their system on the show floor A mixture of computer generated environments, missiles with physical track way and visible real drivers in the environment and visible real drivers in the environment, and then a well-known karting company, race Park. They have also rolled out their MR go-karting system, which was also previewed for the first time at the AAA show.
Speaker 3:So we have two. Well, you know, a joke in england is you wait for a bus and then three of them come along, uh, together. Well, we have three head mounted display karting systems. The jury's out. I need to get in each one of these systems before I can give an honest appraisal of if they are winners or losers, uh, if they're going to take first or second place on the podium. The issues I have are number one I always feel uncomfortable about putting a head-mounted display on anything that it wasn't intended for. So this is a real departure.
Speaker 3:We have been here before with virtual reality systems used on ride vehicles. People with long memories will remember Spree Interactive and their virtual reality bumper car system, as well as our friends at Mack Rides who also dabbled with a virtual reality bumper car kind of system. These can be difficult. Regarding the onboarding process, you know, putting the person into the go-kart, having to put the head mount display on, making sure they understand the safety protocols, understand that they, you know that they have to be. If they have problems they can take the helmet off. And all of that added extra to the process of trying to generate revenue out of your carting system, and it will be very important to see how both of these companies, as well as our friends in France, handle all of that as well. As the most important component is the game fun.
Speaker 2:Yeah, absolutely, I mean. And yes, in order to pass judgment on whether the game's fun or not, we have to try these out. Each and every one of them is fine, but I think they're also going to have a consumer hurdle to get over, a consumer safety perspective. And am I going to, first of all, myself, put myself in a cart, but not so much myself, but knowing that other people are going at high speeds, potentially with VR on their head, vr headset on their head that they cannot see in control in real time? And am I a parent who's going to put my young kid potentially in one of those and put them in that same situation?
Speaker 2:So anyway, I mean, I think, that's a hurdle, a real hurdle they're going to have to overcome and that will hopefully maybe take place over time uh, I'm trying to remember when, I think, the go-karting convention takes place or the roller skate convention takes place in may actually right now this week yeah, yeah, so the roller skating ones happen.
Speaker 3:Aa is out the way I'm trying to remember when the go-karting one is, but I think we can expect that, uh, we're going to see a lot more uh about this uh in the north american market. Uh, and especially, I've been able to have a chat with the guys at race park and you know they were able to give us a lot more information about what their intentions are, which we can talk about. Once I've actually had the chance to put my bum in the seat, as it were, I'm going to run down. Another horse's head has appeared in my bed.
Speaker 3:Regarding individuals from the arena VR sector, making sure that I mention them in our light conversation about freeaming VR systems out in the market, our friends at Creative Works have just held their Amusement 360 event. Sadly, I was unable to present at this due to the Spanish power outage situation, but it was another successful event, another record-breaking attendance, and they were showing off their limitless VR system. And the important thing to understand about their free roaming system is it's one of the few systems that actually has physical items represented in the virtual game experience. So when you see a wall in front of you in the virtual game experience. There is a real wall in front of you and that adds a lot to the ducking, the hiding, the leaning against the elements that are very strong in laser tag writ large in this virtual reality experience. Our friends at creative works have also created a very flexible model, from 16 players all the way down to four player arena systems. So, again, learning the lessons of flexibility. And VO is a very large player in the sector. They talk about 250 venues out there internationally, but I think there's more people using their systems as an addition to their entertainment facility rather than just standalone and VR facilities. One of those that we were talking about that has a zero franchise model where you know it is very cost effective for facilities to jump into if they don't have the big budget. And also they have quite a large library of content as well as a large library of VR escape room content, which made their platform very popular with certain operators. One of the biggest of the escape room vr content providers out there and a game with a very large uh retinue of different game experiences is vr cave. They kind of hide their light under a bushel. They, you know they focus on getting the products out there supporting their install base, which they claim is over 250 internationally Really strong player in the market and one of those companies that I like to keep an eye on to chart how the VR arcade sector is going on the wider circuit. You know the springboards tell us springboards. And the synthesis VR companies tell us about the content. Vr Cave kind of tells us about the operation at the market and the zero latencies and the Sandbox VRs kind of tell us about the franchise and you can use all of these companies as a barometer to the health.
Speaker 3:Another world is Eastern European operation and also has quite a large install base. They have over 250 facilities, have over 250 facilities internationally. Yeah, they all say they have 250 over internationally. I'm sorry, it's a common trait across all of their websites. What the real numbers are on my database are slightly different to the numbers that they are claiming. I would actually say on our database that the numbers we have of facilities that these companies are supporting is higher than what they're actually saying. So I think that they're just going for a large number but not giving the exact number, so their competition has to keep on guessing. But again, the interesting thing here about Another World is that they are quite happy to have the operator go out and buy consumer MetaQuest headsets off the shelf, as our friends at Warpoint, when we were talking last SoundOff, were happy to do, and I get the feeling that's an Eastern European thing, that they don't really care that much about the issues that some facilities have had in North America dealing with consumer VR headsets in commercial entertainment spaces. If you go over to any of these companies' maps you can kind of see the pinpricks of where all of these locations are and you know another world. It's quite dense forest of Eastern European VR arcades utilizing their systems.
Speaker 3:Moving on to the consumer VR sector and you know a kind of consideration about where the market is at the moment. We've seen shake-up layoffs at Meta. We have seen them repositioning themselves more focused on ar and mr uh. While still supporting the vr sector, they're not really pushing it as a brand, as it were. They're focusing more on the mr and uh. We're led to believe.
Speaker 3:In a recent interview with uh, this uh, the chief executives of the Reality Lab, which is the group that handles the VR, mr and AR head-mount it were and tell us what are the top selling VR apps, games that are being played across their system and, taking that data that they gave us and you know, doing a little bit of research, it was interesting to note that, of the top 10 games, only one of them was uh developed uh, uh, back in 2023 the uh. The rest were developed in 2022 or as far back as 2016. Uh, the leading game, uh beat saber you know, the perennial uh vr title was developed in 2018 and has stayed at the top slot. Surprise, surprise, meta was quick to acquire the developers of Beat Saber, beat Games and control them under their Oculus Studio division, and that's true of some of the other development studios that are involved in this top 10. So, again, we're not sure if the reason why these are the top 10 selling Meta Horizon App Games is because they're being pushed front and center by Meta, because they have special users. But I would argue that these games are strong games in their own right, but it is concerning that we don't have newer titles finding top 10 positions in the market. Of course, if this was the PC VR market, we would be seeing something like Half-Life Alyx in the number one or number two slot. I wouldn't be surprised if Beat Saber was number one on that platform as well, and the same goes with our friends at Sony, with the Sony PlayStation.
Speaker 3:It is clear that the originality and the new content in this latest phase of consumer VR adoption hasn't arrived yet, and it may not arrive if what the rumors are on the street is that the VR consumer market is about to go through a major shake-up. So that is mindful for us in the location entertainment sector to protect ourselves against any shake-ups that take place in consumer and to promote original content that is modern and new that we have access to, such as Sandbox having the latest of the Netflix titles. They have the new chapter of the Squid Games property already there. Our friends at Zero Latency have the Warhammer 40K latest game experience experience Space Marines. We need to promote that our content at least is up to snuff and not depending on eight-year-old or seven-year-old content.
Speaker 2:Yeah, well, it's interesting. You say eight-year-old and seven-year-old content. It's not only that, but it's content that seems to be targeted at eight-year-olds and seven-year-olds and ten-year-olds. When you look at some of this content here these games, I mean this is very indicative of where I think the consumer vr audience is. My son was deeply into his meta quest uh vr experiences three years ago.
Speaker 2:He's 18 so three years ago, four years ago, five years ago, you know, when he had some of the early, he had some of the early. He had the early meta, while then it was on to the still even he had early meta quests two and then the three, and you know he continues to play beat saber and or he continued to play beat saber for a long time. My daughter, who is now 15, when she was a couple years younger, would play job simulator. Her friends would come over and they would do that after school and middle school. So it's not surprising in some regards, um to see these as the right if what we're seeing is a younger audience actually playing vr versus the over older adult audiences. We just don't see you playing vr at home. And, and I think if a studio is going to create content, then who are they going to create it for and why do they need to create it if their job seems like it keeps selling like hotcakes for the young kids?
Speaker 3:Well, one of the most successful games in the market, minecraft has recently, as we reported in a recent SoundOff, pulled their VR support from their latest update. So they're not looking towards the market and I would argue, one of the most successful games that Meta has, beyond their Beat Saber and their Job Simulator, is Gorilla Tag, but as Gorilla Tag is a free game, it doesn't appear on this particular chart.
Speaker 2:That's a good point. It is actually the other game that my son would play all the time was Gorilla Tag, and he was actually one of the oldest ones when he was 13 and 14, one of the oldest ones actually playing that game as well.
Speaker 3:I think that Meta made some serious errors in how they targeted their product for the market. They turned their nose up at the older generation and they went very young because they thought that they could get them young and then hold them. They're now finding out that that comes with pitfalls and, to be honest, the losses that we were reporting in our last sound off that Meta Reality Labs has incurred is unredeemable and no matter which audience picks up their product, they're not going to achieve those targets and I would argue that this end of this year is a make or break moment for the consumer VR sector and that is why, again, I repeat, we need to be mindful in the out-of-home commercial entertainment VR sector that we're not pulled down by the undertow. Anyway, that's enough pontificating the tongue in order Time for a drink. I think that's enough from me If I touched upon anything that you want to go back and deal with. Are you happy with that?
Speaker 2:No, I think this has been a great sound off, Kevin, and already looking forward to next Tuesday for the next sound off. See you all in the next one.
