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Sound Off #78 - Free Play Fails, Genda's Silent Expansion, AI Snake oil, and more!
Sponsored by Intercard!
Kevin Williams and Brandon Willey debate why free play arcade models are destined to fail, drawing on Kevin's experience at Sega World London where free play destroyed machine replay value. He provides compelling evidence that arcade machines are fundamentally designed for limited play experiences where skill progression requires additional credits.
• Genda continues aggressive North American expansion with acquisitions of Venue+ (1,100+ locations) and Barbelo (89 facilities)
• Dave & Buster's reports 3.5% decrease in quarterly YOY revenue while attempting to paint a positive picture with their "back to basics" approach
• The competitive socializing space sees continued investment with Spinners securing £4 million to expand their multi-attraction concept
• Builder.AI exposed as a fraud - their supposed AI technology was actually 700 human workers, leading to bankruptcy after $1.5B investment
• Disney and Universal file copyright infringement lawsuit against Midjourney for unauthorized use of their IP in AI-generated images
• VR fitness faces practical challenges including headset durability, hygiene concerns, and questionable advantages over traditional equipment
• Capcom and KDDI develop specialized mixed reality headset for entertainment applications, potentially filling void left by Microsoft's HoloLens
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Are you on the edge of your seat Because we're about to sound off with Kevin?
Speaker 2:Williams covering today's latest trends in location-based entertainment brought to you by the.
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Speaker 2:All right, everyone, let's buckle up, buckle up.
Speaker 1:All right. Well, welcome everybody to another Sound Off with Kevin Williams for June 17th. This is number 78. So we're getting up there, kevin, it looks like you are still in London. Still in London, We'll be here for some time, all right, awesome. Well, I am stuck in an airport. I came out to San Antonio for Iapus Morgan's Wonderland event and I am now trying to get home and I'm just sitting in an airport and I'm going to be late, so yeah, Good luck, all right.
Speaker 1:Well, let's dive in. Kevin, what are you going to do to change my mind today?
Speaker 2:Well, we talked about it in a number of opening shots and I suppose it's important that we try and define a little bit what we mean, but I feel very strongly that there is no place for free play arcade models in the market. I don't think that it's a viable model and I would love to be attacked on this hill regarding this review, but I think you share a little bit similar mentality regarding this.
Speaker 1:Yeah, I mean, I just don't see. We've seen so many shuts. You know, in the open and shut segment that we do for the LVX show every week, and we continually see free-play arcades being shut down, just as non-viable. They have, you know, maybe 20, 25 retro arcade games, maybe some new ones, all set to free play and it just doesn't work. You know, $10 with very limited $10 entry fee for an hour with limited F&B options.
Speaker 2:So your per capita is not going to increase beyond you know, $10 to $15 per hour.
Speaker 1:Like it's just not going to be viable. We've seen too many of those.
Speaker 2:So let me give our audience a little bit of the reason why I don't feel that the video amusement platform is a suitable one for free play application. Number one just because you have a mode on your machine for free play doesn't mean that it is a benefit or a conducive means to generate revenue. Number two we have to understand that the arcade, especially the video amusement arcade machine, is set up for a limited play option. It is set up that you put your coins or your credits or your swipe, you play a game and then, through skill, you achieve to a certain level and then from that certain level, you have to use more coins, more credits to progress higher. It is impossible on the majority of amusement machines to be able to use one credit to complete the whole game, and many amusement machines are not calibrated satisfactorily for one free play all the time. So I'll give you an example that comes from my background in the market, which is when Sega opened in London, sega World. This was based upon their Joyopolis concept that they had developed in Japan for a mixed-use leisure entertainment concept, and they deployed their latest offering of this in London. Now, at the time, the management that developed the concept and the management that operated the concept were two different parties and the operators had very little knowledge of operating amusement machines and they decided that they would have a ticket to get into the facility. They would also have a ticket to play on the machines and a ticket to play on the attractions to play on the machines and a ticket to play on the attractions. Well, due to various changes in staff and various problems, they threw away the idea for the tickets to play on the machines and they just said we will turn all of the video amusement machines to free play. And within a matter of weeks all of the machines stopped being played on. They cratered because their captive audience went onto each one of those machines, played them to completion and then didn't want to go back, had no interest to revisit or replay. They had literally killed the repeatability of an amusement machine by turning it to free play. They also created a secondary problem for themselves, which was when a new machine was put into that facility. It was hoarded, mobbed by the players. The players played it to completion, other people watched other people play it to completion and they had no interest to play it because they'd seen the other people play it and they moved on. In a last-ditch attempt to try and salvage the situation. They suddenly stopped having these machines on free play and they put them onto a card play system. But the genie was out of the bottle. They had ruined these machines already and the audience that would have been their captive repeat visitation audience had got bored with the site and moved on and even returned to some of the local arcades in the area which still charge for games, but charged for the latest games.
Speaker 2:We need to be mindful that these are not console games. These are not sitting at home playing constantly a game until completion, 30 hour, playhour play. These are machines on maximum usually that have a play duration if you played them all the way through on free play on medium settings of about three or four minutes worth of play capability. And many operators now who are running their machines on free play are finding out that they are cannibalizing their product, that the audience gets very bored of these machines and either they're going to have to have a constant churn of new machines to feed this appetite or they're going to have to come up with a model that is going to address the failings. There is also one third aspect about having these machines on free play, which is the duration or the durability of these machines to be constantly played all the way through without any let-up. It puts a lot more strength on the machines and, I would argue, totally cannibalizes the intent of how they were developed.
Speaker 1:Yeah, I think to your point as well. The only times I've seen this work is when you have, when you have the arcades that have 100 plus games. So there's so much variety for people to choose from and the hour or two hours that they're there, they're not going to sit at a single machine and play that all the way through, I mean, unless they're obsessive or something about that particular game, but they are going to just try multiple things because there's enough. It's when there's 30 games or 20 games that the free play model just doesn't work, especially if they're not cycling them out on a weekly basis, even to make sure that there's a constant refresh of games you're going to have to have a constant refresh, and I would also there also point out that there's certain machines that will not work well in free play.
Speaker 2:Certain of the retro arcade games will just feel very flat and lose their total appeal if they are put into free play. I would also argue that the dancing machines, the rhythm music machines in free play lose their importance because the high score chart and the tournament capabilities of those are rendered useless because you've placed the machine into free play.
Speaker 1:Yeah, absolutely All right. Well, coming up after the break, we're going to dive into the latest trends in the economy. 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 2:Well, thank you, intercard. And now let's drop into the trends in the biz, and we are at our usual Genda moment, and this is quite a considerable Genda moment. They are really making a push into the US market at the moment and they've announced their latest two acquisitions, or partnerships, as it were. So they have partnered or acquired the Venice Plus Venue Plus operation, to get the name right for a change. That is quite a big acquisition. That is over 1,100 venues. These are small and mini arcade facilities. The majority of them have under 30 machines. They're located in hotels, truck stops, restaurant locations. It's very similar to the agreement that the company penned in acquiring the National Entertainment Network operation and this is really pushing them up the stakes of being one of the larger of the North American operators of amusement machines. This will add considerable warehousing operations and development stuff to the chain and I would expect that the VenuPlus operations assets will be merged into the Player One amusement assets.
Speaker 1:Yeah, this is pretty significant, obviously, but they just keep moving, genda just keeps driving forward, so it's pretty good.
Speaker 2:To be expected and moving forward is we have the next uh announcements, uh from gander. Gander has also acquired all the shares in uh, what for me is a smaller version of venue uh. Barbelo is more in the what I would call the entertainment music as well as the truck stop kind of operation. They have 89 facilities of those 89. Most of them are in hotels, indoor venues truck stops, as I said, they've been going for about 70 years. Venues, truck stops, as I said, they've been going for about 70 years. So again, an established company on the smallest scale of the periphery of the amusement operation business, but another big feather in their hat two major acquisitions in the North American market, and the only people that seem to be talking about it is us. No news in any of the trade media yet regarding this acquisition, though I'm sure as soon as this sound off goes out, then, surprise, surprise, there'll be big announcements from the rest of the industry.
Speaker 1:Yeah. It is remarkable, though, how quietly they seem to be just grabbing these, and some of these are smaller, like Barbarian, but others, you know, like a Venu Plus or an NEN, these are not small acquisitions that they're bringing on into their world, so I am surprised that they continue, as we talked about before continue to do this and yet really not facing any sort of antitrust issues, and they just keep growing and growing and they will be the biggest player in the market very soon if they continue this same type of acquisitions.
Speaker 2:My concern is that apathy is running amok in the North American amusement trade at the moment. They've had it their way for so long that they feel that they're invulnerable to possible erosion from other areas. I also get the feeling that this is a target-rich environment, that there are a number of vulnerable operators out there that would be just willing to hand over the keys to their operation to someone who turns up with a pot of cash, and also we have a trade association that is also in transition at the moment and its membership is focused on other things. You know I am expecting the next time we all get together at Amusement Expo there'll be this surprised look of shock that this has all happened and why didn't you write about it more in the Stinger Report kind of comments from those individuals that will be pretending that they've been keeping their eye on the ball.
Speaker 2:Anyway, moving on, before this becomes a gender-filled version, we have the latest reporting from our friends at Dave Buster's. They are trying to post a very positive spin on what has happened over their first quarter from the previous announcements that we covered. They are still standing by their decrease of about 3.5% in their quarter revenue, but they are pointing toa turning around of their initiative and strong future opportunities, and that they are very positive the phrase back to basics is being used and that they feel that they're seeing significant improvements in the revenues that they're going to be generating from their facilities. They have 13 sites that have gone through the remodeling. They've opened two to three new facilities during this period and, based upon this announcement from their interim CEO, they have seen an increase in their share holdings. So their feeling of positivity is being reflected by the markets.
Speaker 1:Yeah, what I find fascinating about this is that yeah, their stock took a 17% hit the day after this news was reported, which was just last week by the time this is running, and I just find that fascinating that, despite the fact that they continue to report same quarter year-over-year sales declines and same venue year-over-year sales declines, if not an insignificant number or percentage, that the stock continues to increase. I mean, I don't know if we have a GameStop type of moment here or what investors are seeing and what D&B is doing, but it does seem to be apparently working for shareholders, even though, you know, I thought that the goal of companies was to grow their sales and not decline their sales. But it continues to still make people comfortable with the stock market and I think, as you mentioned in one of our little sidebar conversations, that there's still no mention of main event here as well. It's all D&B, all D&B, all D&B.
Speaker 2:Why Dave and Buster's is the focus of this and why we're hearing no information about main event boggles my mind, especially as I'm trying to gain information about where main event is in comparison to the Dave and Buster's losses, but for some reason that information isn't readily available. Hopefully in the next couple of weeks it shall be made available. Hopefully in the next couple of weeks it shall be made available. But I hope I'm not looking at a situation where I'm seeing an eight percent decrease in cave and buster's store sales and then I'm going to see a similar percentage decrease in main event, because that would, no matter how much you paint positivity. That would be pointing to the major consideration that there's a problem with the brand. I personally, you know I don't think this is a game stock situation. This isn't a mean purchase. I think there's a strong positivity in Chuck E Cheese, dave Buster's and the other traded so we say, retail entertainment venues. My consideration, though, though, is if we don't see, in the next quarter, an improvement in sales just on the revenue side of the business, let alone on the same store sale, then it's going to be difficult to still paint roses and rainbows and unicorns as positivity. Here we will also be seeing a situation with Dave and Buster's where they are saying they're going up against serious competition. We are going to be seeing in the next couple of months brand new multi-chain operations entering the markets with new initiatives. And I'm not sure if many of our viewers and listeners will have seen but Dave Buster's along with painting positivity of their new openings, they've also announced the opening of a new tournament competition app that is being shared across their facilities. This is very similar to the prize tournament apps that other venues are deploying, where you can post your high score on particular games and activities and you can be placed into a big draw at the end to win prizes. This kind of stickiness, this retention of audience capability, is essential to push up the numbers and to get people to spend longer and to spend more at the site. And when you start to parachute these type of processes into your business and not see a return in investment, then bigger questions will have to be asked.
Speaker 2:Moving on, and we see the investment community throwing money at competitive socialising our friends at Spinner, a UK chain of really competitive socialising environment.
Speaker 2:It is a mixture of duck and bowling. They have the gamified darts, they have clay pigeon shooting digital clay pigeon shooting, and they have their bar and food offering. Along with Midigolf, the spinners operation, they have three sites out there in the UK at the market and they've just received an investment of four million to help roll out another round of facilities. This is what we're going to be seeing a considerable number of, where investors are now looking at sites that have established themselves, at least got three or four operations under their belt, shown a really good EBITDA or return on investment, and then they're given some more money to expand the brand a little bit more and a little bit more. Spinners is the first of a group of these kinds of chains that I expect to be reporting on, with more investment being thrown at them compared to what we would see a few months ago or even a few years ago, where it was brand new concepts receiving investment towards seeing if they could prove themselves in the market.
Speaker 1:Yeah, Spinners is definitely one brand that I'm excited to watch, just because this is they're doing what we've said needed to happen in the competitive socializing space for a while, which is you need multiple attractions to keep people coming back and mixing and spending either long-term dwell time while they're there or having more reasons to come back and increase the number of repeat visitations on a yearly basis. And so, yeah, this is I'm glad to see they continue to expand, glad to see they got investment, because we need more of these examples to take social entertainment to really make it a viable LBE offering into the future.
Speaker 2:You know from the point of view of the market. You know if you were a Puttshack, if you were a Clays, if you were a Old Bar One, if you were a Flight Club you would look at something like this and say, if one of these spinners opened up next door to us, where would the customer go?
Speaker 2:Is the experience of your augmented reality, gamified darts strong enough for someone to say, no, I'm not going to spinners, where there's other things I can do after I get bored of the darts. No, I'm going to go to flight club because flight club as nachos are fantastic. It's that argument now about. Are we in the entertainment business of offering multiple entertainments, or are we really in the hospitality sector, where you go to a restaurant because you really want an Indian meal, you really want a Mexican meal, you really want that meal and nothing else? And I think when these entrepreneurs who are running these other chains work out what the reality of running an entertainment is, we will see an explosion of these single-site chains now throwing other entertainments in the mix. Personal opinion We've seen the acquisitions.
Speaker 2:The M&As are taking place. It isn't just Genda, though. I'm waiting for the Genda Waterpark to open up. Our friends at Blue Bayou, our friends at Blue Bayou, the water park in Louisiana has been acquired under a new operation and they're going to be reopening next year under the Soak Fun brand.
Speaker 2:It's interesting the water park market is seeing a lot of juggling. We were just touching upon that with the Six Flags entertainment movements. I expect to see some other water park developments. The thing to bear in mind about a water park is that it has a limited season of operation, it is offering a unique entertainment experience Very difficult to simulate the water park experience and it has secondary and tertiary entertainment attached to it. Many water parks either have a hotel component to it or they have food and amusement and attractions beyond the water park attractions. Be prepared to see a shake-up in this part of the market, especially under the new conditions, as we're impacted by increased prices for the raw materials, the cleaning materials, the water, the rates and the taxes that go into operating these sites. Many of them are still feeling the pain from the recession, as well as feeling the pain from COVID, when they had to go through quite a lean period, so they are vulnerable to these types of everyday yeah, I do wonder if the Blue Bayou potentially had a brand issue in the market.
Speaker 1:So maybe they had some other issues. Because typically you know, when you have something that's been around for a long time the Blue Bayou Water Park it's got brand name recognition, it has marketing, marketing momentum to it as well. To then come in fire it and completely change the name to Soakin' Fun, when you could have just kept Blue Bayou, but under new management. And again, I wonder if the Blue Bayou name was damaged in some way?
Speaker 1:to justify the change in brand, because otherwise that's a big lift to have to promote a whole new brand. Get all that up there instead of just keeping the name. So I'm always a little bit concerned when I see a brand shift under an acquisition, unless there's a real significant need for it.
Speaker 2:I think the new owners coming in are going to be establishing a brand and they feel that their brand is going to be strong enough over multiple sites that it can subject or subvert the Blue Bayou brand. I would argue that the Blue Bayou brand is only suitable for one particular locality where the Soak Fun is a generic brand which I expect to see across many venues Moving on and we move from the biz to the tech and AI Black Eye for AI not the first or the last that we can experience, but Microsoft plowed quite a considerable amount of money into builder AI as an up-and-coming opportunity in the AI technology sector. Well, it seems that the AI in AI actually stood for actually Indians. It was revealed in an expose that the company wasn't actually using a generative artificial intelligence machine to computate all of the information that they were dealing with. They were actually using mass employees. They were not employees, hired retentive staff. They had about 700 offshore engineers answering the questions that were being thrown at the AI and remodeling it and pretending as if this was the best thing since chat GPT. Well, the operation had had 1.5 billion invested in it and has gone suddenly bankrupt with the revelation that it was all smoke and mirrors.
Speaker 2:There's a lot to unpack here and I expect there to be some federal cases and a lot more media coverage. Though I was a little less keen to talk about this one because, you know, the poster boy of AI gets black eye and it kind of casts a bad smell across that most of the automation that was being done with their sites had been done by human beings. Actually looking over the camera footage when their problems were arised during the calculation of your cash registration, picking up, walking out the store, they had to use human beings to double check on some of those payment options. Here it is much more blatant this is not just human beings helping the systems. This was human beings doing the systems, and I expect this not to be the only time that we're talking about a slappy wrist moment. So when you're talking about billions of dollars being fraudulently spent on promises that turn out to be bunk, then it gets pretty concerning.
Speaker 1:Yeah, this is. This is not going to be a risk slapping incident. This is going to be federal indictments. There'll be fraud charges by the CEO, by other members of the company, for sure.
Speaker 2:Unless the deal is done.
Speaker 1:Well, maybe right, but this could very well be a Theranos moment for the AI industry, and we're just going to begin to see the fallout here of what happens with Builder.
Speaker 2:And it is mindful for us in the out-of-home entertainment sector, as we see more and more AI options being thrown at us in the creation of graphics or the handling of text or the interviewing of our guests for reservations. We need to be mindful that not all AI is artificial, but maybe a human at a call center.
Speaker 1:Yeah, by the way, for those of you who are just listening to this, the meme that you grabbed, kevin, is Scooby-Doo. You got Fred pulling off the hood of. Ai, and it's actually a picture of four Indian engineers behind some computers. So well done.
Speaker 2:It's a classic meme. It's a classic and the pitfalls of AI are being writ large, not just in fraudulent, but also in legal. Many of us who create content or produce information have been wondering how the hell that the AI platforms have been able to mine all of our information willy-nilly and get away with it without having to pay some recompense for the information that they're grabbing. Well, it's taken its time, but Disney and Universal have got together and they've gone to federal court in Los Angeles and they have put together a copyright infringement injunction against Midget. So they're saying that their copyrighted materials, particularly and they show in their indictment the Star Wars characters, including Darth Vader and Yoda, as well as the Minions characters and Kung Fu Panda and Shrek, are being manipulated without their permission and used in graphic creations through the Midjourney AI graphic engine. They're saying that this is piracy and they've even used the phrase that this is a bottomless pit of plagiarism. This will open the door on all AI search graphics and network engines towards where they get their information, how they represent their engine and the material that they are utilizing, what they're spewing out. At the end of the day, I hope this is the beginning of a reckoning where we police these AI bots to properly pay the dues that they owe for the copyrighted material that they are mining for their information, and I hope it's also the beginning of a reality check for AI generally.
Speaker 2:You know we have fraudulent activities on one end. We also have illegal activities, depending on how the voting of the legal process goes regarding the usage of this material. It isn't fair use. Using Darth Vader or Shrek is not fair use. So how are they going to come to a situation of paying the dues that they owe when this material is represented in their package is going to be fascinating. This could be the moment, as we saw in the music streaming sector, where music streaming was abundant. Everybody was copying everything Pirate Bay and all of that, everything Pirate Bay and all of that, and then it took a couple of very serious legal cases and then suddenly the whole ball of wax imploded upon itself and became more realistic and Jews had to be paid for streamed music material. I'm hoping that that is the point that we're going to be reaching regarding the AI usage of people's material.
Speaker 1:Yeah, and you know it's interesting. So in the lawsuit that was filed, they alleged two things. One is, obviously, they used the Disney Universal content and IP to train their models, and so that's one thing, right. So the New York Times is suing CHPT for that. And there's others around using their content to train their models, and so that's one thing, right. So, and New York Times is suing Chet Chibiti for that, and there's others that are using, you know, around using their content to train their models.
Speaker 1:What the second level of the journey is the fact that they continue to use their models then to reproduce in almost near exact likeness the IP of these companies. You know, and this is where I think the really big stickiness comes into play, yes, it's one thing to train your models on content, and I think that that should be compensated as well, but it's another thing to boost that content on an endless basis, this bottomless pit of plagiarism. And they've had a chance to solve this. Disney and Universal both sent seats in the system and journey over a year ago and even as recently as a month ago, and they continue to just completely ignore it, not even respond to the letters in any form whatsoever. And you could argue OK, maybe it's because McJourney is a company of 11 people and they just don't have the ability. These guys are printing fucking money just creating this stuff, so they have plenty of money to go and hire counsel to respond.
Speaker 1:They just decided to give the middle finger to these companies, to these content creators, and now they're going to have to deal with it that issue, and it is going to be a reckoning for MidJourney, but also for Stable Diffusion and any of these other models that are reproducing these types of imagery.
Speaker 2:I would assume that the combined Walt Disney Universal legal team has collected information not just from Midjourney, but from other of these AI graphic creation tools let's call them that at the moment image creation tools. Let's call them that at the moment, image creation tools and if they get half of what I expect they're going to get with their infringement, they will just go to all of the other companies with a similar attack and this attack will decimate the sector. It will really hurt, because you can't just pull out the Disney graphics that you've been mining and hope that you can carry on. You can't just pull out the Darth Vader's and the Yoda's and the Minions. You're going to have to go to a root and branch change of your platform. You're going to have to change the way that prompts execute and stuff like that.
Speaker 2:I believe this will be the beginning of something big, and mid-journey has no excuse. No excuse to ignore a cease and desist, to ignore all of these. You know you can't just say it's because we're 11 people. You can't just say it's because we're a small company, because you have been making billions off of your platform and if you stick your hand into the tiger's mouth, be prepared to have it chewed off. I'm surprised it's taken so long. I don't know if this is a long play by Disney and Universal where they waited for these guys to really stick their arm all the way in to the jaws before they clamped down on it, but I'm saying this is definitely going to be a Pirate Bay moment for the AI moment and a lot of people that have invested heavily into AI as the future of their financial success, maybe now considering that this could be quite a painful moment, and maybe running to the Bitcoin and the federal level to try and look for protection. We've been here before when companies have made mistakes like this and, having seen the individual that was actually behind Napster and all of the problems over streaming music recently being released from prison by presidential order, I'm wondering if they're going to hope that the president will jump in and try and salvage them from the big beast of Disney and Universal.
Speaker 1:Yeah, maybe you actually can't predict anything that's going to come out of that administration. But I will say look, universal, disney, their legal counsels, they are smart, they are smart, they are patient. You know they were waiting for the right moments. We don't know if they're waiting for the right revenue moment at MidJourney, but I will say, if anything, they certainly were waiting for the quality of the production that comes out of these models now to be at a near similar likeness, and that could be just waiting for the technology to catch up, to where it's good enough, where the majority can't just point and say well, look, you can see some differences.
Speaker 1:Darth Vader has six figures instead of five because our model is so bad. Well, now, their models have continued to get better and better and now they're nearly exact. This seems to be a point where they can now come in and swing the hammer.
Speaker 2:You know, if you're a technologist and if you're observing this technology, you understand that it's going to get better exponentially. You know that there's going to be improvements and you know that one day it's going to be not just putting a hand into your popcorn but trying to eat the whole bucket, and I think that they've picked this particular time under this particular administration is the perfect execute. Universal and Walt Disney at the moment be prepared for other corporations maybe to join the plaintiff suite. I wouldn't be surprised if Sony jumps on board this or Warner Brothers jumps on board this and then at that point we have a serious problem. You can't just hide in Californian state law. You're going to be looking at an international moment where AI meets its maker, moving on and going from the dangers of overusing AI to the dangers of overusing virtual reality and exercise. Only joking, we had seen a number of companies toy with the concept of using virtual reality as an exercising or fitness environment. This is based mainly on the success that the consumer VR industry has seen with many of the fitness apps that are available on the consumer VR systems. We have seen companies come and seen companies go trying to get you to use a virtual reality system in a gym kind of environment, and here we have the latest attempt at this. Ethereal Matters offers me a machine here that is interesting. It has weight relief and trains the body in many areas. It is linked to a virtual reality app that monitors your health and offers game experiences or offers stress and exercise experiences, and this is the type of unit that you would expect parachuted into a gym. You know, this is not something that you're going to find in your home usage. The reason why I'm talking about it now is so, as we're recording this, the awe, the augmented world expo is taking place and the company has presented their product. Uh, at the show, uh, and you know the guys that I have at the show are reviewing it. Just turn around to me and go.
Speaker 2:Kevin, you've talked about this machine before and I have talked about this type of machine before because we've been there before. We've had companies like Black Box VR that came up with a virtual reality fitness size machine that was placed into their own venues as well as our partner venues. We talk about in the coming open and shut, about operations like next fit, which have venues or a venue set aside to offer fitness, and all of this is fantastic and has been helped, some would say, by what happened with covid covid of the industries, that COVID decimated the most of the space and the amenities that are offered. That generates the profits that these companies utilize. Those profits were decimated and the fitness industry has been trying to find a way to come back. I'm not saying that virtual reality is going to be the best way to do that because, number one, I don't feel that the head-mounted display technology is the best way to do that because, number one, I don't feel that the head mounted display technology is the best thing that you want on your bonds when you're getting that sweaty.
Speaker 2:Um, we're already seeing people with the consumer vr fitness systems complaining about how they're. They're trashing machines. Water and salt is not a good lubricant for electronic technology and it eats through the foam and it eats through the foam and it eats through the plastic and it gets to the electrics and you lose your headset. From a facility operation standpoint, you don't want to have to have a warehouse full of headsets to make up for all the ones that are going to get bricked by the sweat and the problems or just get damaged through the average day-to-day operation. The other issue is this is only really feasible if the fitness regime works to a level that is totally compelling to bring people into the space.
Speaker 2:If it's a novelty factor, that's one thing, but if it isn't really generating the loss in the the weight, uh, and creating a compelling experience, then it's just another, um, you know, concept that someone thinks is a good idea, but when the rubber meets the road it proves not to be as strong.
Speaker 2:That said, I don't want to shoot ethereal matters down, uh, without a trying it. I would like to try the system and be getting some testimonial from users, regular users, to how much this workout is helping them. I can tell you that black uh, black box vr still with us and they still have a very loyal following to their experience because people get serious value out of that experience. And I can tell you that some of the other augmented reality and virtual reality, active entertainment exercising systems out there generate some serious interest and are good for not just the older users but also the younger users for physical education. When we were last at IALPA I think it was we were looking at one particular company that offered an active entertainment gamification exergaming experience, though it wasn't using head-mounted displays. It was just using traditional screens, but it is the line to draw between how good the technology is at actually achieving what it's set out to be compared to how compelling it is as an experience.
Speaker 1:Yeah, we touched on this, we touched on NextFit, on the last uh, you know, last open and shut, and I just I struggle with vr as a fitness element. I mean, look, if it helps people get out and actually get fit because they can strap on a vr headset and that gives them more of a gaming environment, then okay, great. You know, I'm all for it. If it helps a few more people get healthy in the world, uh, that's totally fine. It it's not for me. I have just, you know, I can go ahead and look at a screen or just listen to something and work out. I don't need to strap a whole immersive environment in front of me to take me away from the fact that I happen to be in pain a little bit as I'm working out and pushing my body a little bit.
Speaker 1:You know, I do think of devices like Tonal. Tonal is a mirror. It has an overlay. You can watch yourself. It overlays, you know. It tracks your body and temperature. It has the arms, very similar to Ethereal Matter. It comes down and they're all adjusted and they can move and they give you all the different types of workouts that Ethereal Matter is trying to do, but without the headset. And if I can do very similar workouts with Tonal either at a gym or at my home, then I can ethereumatter I'm not sure what, strapping the virtual reality headset, which just causes all the issues that you already talked about with sweat and wear and tear and everything else and just the irritation around my face and just adding the extra heat that my body is not able to emanate as a result of wearing a headset. I don't know what the advantage of a material matter over a tonal is, except for maybe getting a few gamers out and getting them a little bit more.
Speaker 2:Well, it is based upon whether this is targeted as an audience group that isn't being targeted at the traditional approach to fitness workout, and having a virtual reality system is going to be an additional draw. I'm just waiting for the first user to get pink eye before we start rethinking about this approach. The hygiene aspect away from the wear and tear of the headset is going to be in. The hygiene aspect away from the wear and tear of the headset is going to be Anyone that goes to the gym and complains about someone not wiping down the exercise equipment after they've used it. This is another level, but we will wait and see how ethereal does in the sector. In talking about head-mounted displays and I touched upon a few sound offs ago that kanami had been sorry capcom had been involved in developing an immersive attraction, uh, which was using the latest mixed reality, augmented reality and mixed reality technology based upon their monster hunter ip well, it was revealed during the awe show that a special head-mounted display has been created in partnership between KDDI and Capcom towards creating this mixed reality or augmented reality experience. I made the mistake originally of saying that the head-mounted display being used in the attraction that opened back in May was actually a Microsoft HoloLens, because you know from the image search and from the information that was made available to us at the opening of the attraction, it looked like the HoloLens layout, even down to the layout of the straps. Well, we now learn that, no, that isn't the HoloLens layout, even down to the layout of the straps. Well, we now learn that no, that isn't the HoloLens system. That is actually a specialist system that has been developed by these two companies in partnership with Qualcomm, using their latest XR technology.
Speaker 2:I find it interesting that it looks so similar to the HoloLens, especially as our friends at Microsoft have discontinued making the HoloLens, especially as our friends at Microsoft have discontinued making the HoloLens.
Speaker 2:My spider sense is tingling that I think that maybe the companies may have originally planned to use the HoloLens technology were surprised or blindsided by Microsoft when they suddenly decided to discontinue making their mixed reality augmented reality platform and then decided to say well, we've got all of the spares, components and knowledge. We will go away and make our own on this. These two companies will then start selling this system to other companies interested in utilizing, because there were a number of other entertainment operations that were blindsided by Microsoft pulling out usage of their HoloLens 2 platform, and sometimes someone's loss is another person's gain, and we've been here before with companies thinking that just because they've taken their toys away, that the other operations won't be able to continue. We're seeing here, for example, that the companies have been able to come up with a clue solution, and I'm wondering if this clue solution will be seen in other localities.
Speaker 1:Yeah, this could be also a very similar situation that I experienced personally with Bose sleep buds. So Bose, these little sleep buds that go in your ears, they run white noise, play alarms and that kind of stuff and you can sleep with them. They're silicone, they were phenomenal, I absolutely loved them, changed my life. But then Bose discontinued them. They said they weren't going to be making them anymore, discontinued them. They said they weren't going to be making them anymore.
Speaker 1:And then all of a sudden, about six months later, a company called Oslo announced that they you know, they were creating this Sleepbuds and they looked exactly like those Sleepbuds and they were in the same exact case format. It's all exactly the same, except their software was better. So they created some of their own software, but their hardware was exactly the same. And then I went and dug into their website. Turns out, on their website they actually acquired the specs and some of the hardware components and everything else from Bose. So Bose discontinued it. They came in and said we think we can do better than Bose did and they've done a phenomenal job. And I've now owned the Osvo Sleepbuds and I've been using them for a year. I highly recommend them for anybody. I do wonder if this is a situation where Microsoft said, hey, we're going to do the HoloNES. These guys were working and said why don't we just buy your plans and maybe buy some of your tooling and we'll take over your stuff? And they just bought some of the assets, the HoloLens components.
Speaker 2:Wouldn't be surprised. Information is short on the ground about this. Other than KDDI is very proud Japanese telecommunication company Glad to be involved in this process. Capcom glad that everybody loves their new attraction and I would assume that if you're going to enter into building headsets, you're not just building it for one attraction, that you're going to be rolling out more attractions maybe or new versions of this attraction. This is an interesting point and has rammed home at AWE the show that really we are seeing the pivoting moment away from the consumer deployment of this technology where we're seeing dependable sales and deployment of this technology in the commercial side, especially in the commercial entertainment side.
Speaker 1:Again.
Speaker 2:I don't think this will be the last time that I'll be talking about this partnership between the two companies, time that I'll be talking about this partnership between the two companies, and it's interesting to see Capcom returning to the amusement and entertainment sector. Anyway, just to remind everybody, if you want to keep up on the latest developments, that we have our two newsletters out there, and if you want to throw any questions at me, please contact me directly. But I think I've covered everything there, brandon, unless there's any points that you want to bring up.
Speaker 1:That was an excellent, great sound off Kevin and you know, hopefully next time we're both going to not be remote, Although I think you'll still be remote, I shall All right.
Speaker 2:You have some travels, and a good one to everyone out there.
