Sound Off #128 - The Franchise Trap, Universal Kids Resort struggles, & more!

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On this week's show we discuss how franchising looks like a shortcut to scale, but we keep seeing the same cycle of hype, misaligned incentives, and operators holding the bag when a model is not truly proven. We connect the dots across competitive socializing, theme parks, VR, and IP-driven venues to figure out what sustainable growth actually requires. 

• why rapid franchising breaks when the concept is untested 
• franchisor incentives versus franchisee realities and long-term risk 
• Bandai Namco’s franchising plan and what 255 corporate locations changes 
• Comcast separating Sky and NBCUniversal and what it could mean for Universal expansion 
• Universal Kids Resort in Frisco as a launch failure and locality warning 
• consolidation signals from divestitures, rebrands, and closures 
• why new AAMA leadership could reshape industry direction and the AEI show 
• F1 Arcade’s “restaurant first” risk and the need to fix the entertainment mix 
• Fever’s big partnerships and the cost of a shotgun strategy 
• Dave and Busters “Unlocked” events and the brand identity problem 
• Level 99 in Disney Springs and the DisneyQuest flashback problem of clarity 
• licensing outside food brands inside venues and the margin tradeoffs 
• VR and XR market reality, consolidation, and the need for fresh content 
• World Cup activations through Cosm and Immersive Game Box timing mistakes 
• Peaky Blinders Underworld and the limits of actor-led immersive expansion 
• Kiddleton’s app as a repeat-visit and merchandising lever 

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Transcript

Welcome And The Big Question

SPEAKER_00 0:02

Are you on the edge of your city? Because we're about to cover today's latest trends in location-based educating. Brought to you by the LBX Collective, your community to connect a inspiration. All right, everyone. Let's buckle up.

SPEAKER_01 0:24

All right, well, welcome everybody to Sound Off with Kevin Williams. This is sound number 128 for July 7th, 2026. Kevin, how are you doing?

SPEAKER_02 0:35

I'm doing fine, just in a different locality.

SPEAKER_01 0:38

Yeah, same, same. All right. Well, let's dive

Why Franchising Can Go Wrong

SPEAKER_01 0:42

in. How are you going to change my mind this week?

SPEAKER_02 0:47

Well, we've touched upon the subject a number of times and promised uh our eager listeners and viewers that we would talk about the franchise situation. Is it a curse or is it a king? Um I'm going to try and change your mind. Uh I think you're one of the few people I can actually have this conversation with that actually understands a little bit about the franchising business rather than this jumping in with both feet, and that is the danger. Some developers of concepts and entertainment opportunities see this as a panacea. And I personally feel that this is a very dangerous model that should actually be left to other minds to entertain, leaving the core entertainment business to maybe a core umbrella operation while they also employ a division that handles franchising, franchising. A little bit like uh Dave and Busters used to do until recently.

SPEAKER_01 1:46

Yeah. I always get concerned when I see certain industries really get overtaken heavily by franchise models. Um we saw this happen with the trampoline park model, um, and and there was massive expansion way too quickly before the model was really truly tested. And then you ended up with all these defunct Gen Z franchisees who had put uh Gen Z, excuse me, Gen 1, Trampoline Park franchisees, and um you you end up with uh you know a lot of capital lost and struggles to operate, and eventually they figure out the adventure park model, which is a multi-attraction active park, you know, active play type of model, you know, which you know, which creates adventure and everything else, and the trampoline park concept sort of moved away, and you moved into this like multi-attraction thing. And and then so the franchise began to pick up. And then you begin to see this in the pickleball space. Um, and funny enough, actually, a friend of uh friend of ours, Barry Zelixon, who runs Fun Across America, um, just sent me an article this morning about the the death spiral of the pickleball business. Oh, and uh, you know, we've talked about pickleball before here, but you saw a massive influx of friend different franchisors, the Pickler, uh, as one of those examples of really trying to expand aggressively in all these pickleball facilities before the business was really proven. And I think that's what concerns me about you know, when you see a new franchise model come in, it's more saturated uh subset of our industry with something that is very little different and has not really been truly tested for longer than six months. You know, really should be tested for two years or so before you begin to try to franchise the model, at least to prove out that what you are franchising is valuable. The second thing I'll say here is that the franchisors typically have a different incentive than the franchisees. The franchisors have the incentive to sell as many locations as possible to get that upfront franchise fee and to try to scoop up a little bit of the royalties while they're still successful. Um, and their long-term goal is to sell that franchise system to private equity or to somebody else, and they don't care as much about the individual franchisee. And so they're willing to take anybody who fogs a mirror, typically, to become their franchisee versus somebody who uh will actually operate and truly understands the industry.

SPEAKER_02 4:23

I I call it the three cycles of pain. It's either we've got this fantastic idea, but we don't have the capital, so let's franchise the hell out of it. We've opened uh a couple of venues uh and we think we understand it, let's start up a franchise business, or we are an established operation and all of the founders and originators want to get out and make as much money as possible. Let's start up a franchise uh operation. Those are the three that I normally come across. We have within the virtual reality arcade and VR Arena business a number of very successful franchisees operations. Some of the names that I would quote as franchise VR arcade operations with 300, 400 facilities under their belt wouldn't be the ones that would jump to uh jump to mine straight away. Some of them are actually Eastern European and Middle Eastern uh uh franchise units that have been very successful but kept their light under a bushel. Then my biggest concern is really the uh competitive socializing market, where I don't believe that certain of the uh competitive socializing social venues have had enough time in the oven, uh as it were, to prove that their model is successful, no matter that they've opened 10, 15, or 20 facilities. And so uh I watch with interest certain chains, the flight clubs, the puttbacks, uh, as well as the top goths of this uh sector, uh, to see are we due to go through a period? I'm old enough to remember the location-based entertainment wars of uh the late 90s, where everybody and their man was trying to compete with Discovery Zone and open up an entertainment facility only for the bubble to burst, the profits not to be there, and we're going through a whole load of pain. I would like to try and avoid repeating history, especially that type of history again. But I'm also seeing a lot of greed. And the one thing about a franchise, away from making you money from every uh person that fogs up that mirror to acquire every dentist or doctor that wants to use their retirement uh slush funds to uh set up an entertainment operation. There is the real issue of recurring revenue. And if you do a franchise, there's the franchise where you just hand it to them with a bow written around it and say, have a nice time. And then there's the franchise where they are becoming part of the family and they have to follow quite strict licensing regulations. And these are the things that I think the competitive socializing sector going towards its next phase of development is going to have to come to terms with.

SPEAKER_01 7:19

Yeah, indeed. Indeed. All right, well, coming up after the break, we will dive right into the trends. Inner card makes cashless easy with award-winning readers, self-serve kiosks, real-time reporting, and flexible guest payment options. From play cards and credit cards to mobile payment and QR codes. It's introducing the industry's first part in 1989. Innercard has helped operate reduce cash handling, increase guest spending, and run smarter venues. Innercard is the world leader in cash list. If you're already part of the global family industry, we hope you'll become one deal.com.

SPEAKER_02 7:58

Well, thank you for that. And straight into the bid.

Bandai Namco Goes Turnkey Franchise

SPEAKER_02 8:02

And talking about franchises, uh, our friends uh in Japan, Bandai Namco Experience, uh, has uh announced that they're going to be uh making available their unique uh Namco franchise as a franchise, sorry, their Namco chain of operations. They have about 255 locations out there, and now you will be able to uh take this on as a turnkey. That will be the GashuPo, the amusements, uh the crane machines, I'm sure the Bandai Namco brand, as well as a deal on where you buy your merch for the Japanese sector. And they've turned around and said, you know, that they expect by 2030, through this uh uh deal that they will have uh a hundred franchises added to their operation. Will they? What will be the appetite for the uh Japanese market, or will Gender come along and eat their lunch? These are the questions.

SPEAKER_01 9:09

Well, it's certainly going to be competition from Gender no matter what. We know that, and especially in the Western market now, under the Kittleton brand, as they begin to roll out more and more of those locations. But uh I find this interesting. Well, first of all, anytime anybody announces that they're gonna be franchising, there's always gonna be 100 stores by 2030 or 100 or whatever. It's always some big number because like that's you know, they've gotta they've gotta make some sort of splash there. But I think the difference here is two things. In one is that they are already operating 255 locations. Most franchisors, when they begin to franchise, they have maybe two to five of their locations that they've been operating for just a few years, whereas this is like 255 locations. They know what to know how to run operations, they have the supply chain to supply to their to the franchisees. So I think just to start there, they're in a better franchise or franchisee relationship position. At the same time, they are a corporate-owned group that's running 255 locations that's used to owning and operating those locations, controlling everything that happens inside the locations. Making that mental shift to now handing this over to somebody who's this willy-nilly operator who you have less control over to go and take your brand and do what they want with it to some extent, right? Obviously, restrictions within the franchise system. But this is a different mindset shift to then go and work with, like versus the general managers you can tell exactly what to do when they're having a problem to the now franchisee owner operator who you can suggest what to do and hope they do it. So that will be a shift for them that they will have to figure out how to deal with.

SPEAKER_02 10:45

It all depends on what that contract, that licensing agreement contract looks like. I really want to see that licensing contract agreement because there's one important component. Do you have to buy the merch and the prices from Bandai Namco?

SPEAKER_01 11:00

Oh, I would be wildly shocked if they're if they don't, but um, but that would be interesting to find out because then you could end up with some very interesting franchisee locations that do not look like the rest of the Namco locations at all.

SPEAKER_02 11:15

Exactly. So if you if you can dress the the child up funny in different clothing, then we're gonna have some unusual uh uh Namco stores. If it's all you have to follow these rules, the the McDonald's uh level of policing, then you know, from Bandai Namco experiences point of view, this is a very nice companion to their uh uh Namco cross store business, and is what we've been seeing across the Japanese entertainment sector recently, where they're pushing the IP as much as the entertainment.

Comcast Splits Sky And NBCU

SPEAKER_02 11:53

Jumping on, and the big news, uh, though it's still early days uh of time of recording, Comcast threw the hand grenade into the middle of their operation and announced that they would be separating the Sky Division and uh the NBC Universal Division, NBC Universal, including the theme park division uh and some of their film operation. Well, this is going to really put the cat amongst the pigeons. It now makes uh you know the universal theme park operation part of a separate entity away from Comcast. How much will that change the management positioning? Will they have more money to uh roll out more parks? You know, we know that uh Universal is in the middle of at least two major theme parks, the UK park and uh rumors of a new Middle East uh entertainment operation, uh, as well as maybe some of those parks that they concepts that they had to put to one side because Comcast weren't interested in going down this path. Could we be also about to see a doubling down on their uh regional and retail entertainment, the uh universal horror unleashed concept could now be getting a large shot in the arm uh part of this separation, or vice versa, things could be contailed as they now have to pay high licensing fees to the parent.

SPEAKER_01 13:28

Well, it'd be interesting to see if the what that type of parent separation looks like between Comcast and NBC and NBC Universal. I think this actually can be a very good thing for both the content and uh you know the and basically the entertainment media and uh and attraction division. So I actually think this is good. It makes sense from my standpoint. Like Comcast can focus on their infrastructure and and you know, cable and subscriptions and everything else that they deliver to the consumer, and then NBC Universal can focus on the things that they have done well uh over the last uh century of uh you know, basically. So uh looking forward to seeing how this all settles and uh basically how it all shakes out.

SPEAKER_02 14:14

Yeah,

Universal Kids Resort Launch Lessons

SPEAKER_02 14:15

we're we're we're hoping that we don't see uh the penny pinching that we've seen prior to this situation that leads to situations like uh Universal Kids Resort. We touched upon this in a recent open and chart, but we can delve a little bit more into the Farago in Frisco. Um a perfect textbook example of managing expectations, uh developing an entertainment concept that's feasible to achieve, and just the dangers of social media and marketing. Uh, for those of you that aren't aware, you know, our friends at Universal have opened Universal Kids Resort in Texas. This was meant to be an ambitious project, a resort aimed at a very young audience, not super young, but a young audience uh building off of IP, uh, but in a uh hotel resort and mini attractions uh configuration. And the reviews, the early reviews were appalling, and the media backlash to the opening has not been any better with phrases thrown around like the facility resembling a maximum security prison or an Amazon fulfillment center. I've never walked around an Amazon fulfillment center. Well, you could now. I can now. Uh this is going to be a serious worry for all of those that are investing in uh the universal dream team or design team to understand do they know what market they're in, or are they just going for if we paint uh Shrek or Jurassic Park on it, they will come.

SPEAKER_01 16:07

Yeah, this is a uh this is frankly uh an operational and like launch disaster. There's so many things that could have been done differently. Look, I mean, at the end of the day, the the attractions they picked, the IP they picked are actually a great fit for their target audience. This uh, you know, the age group was uh, you know, um from my opinion anyway, uh a great fit. Uh you know, that's the easy pop, brand.

SPEAKER_02 16:32

Right.

SPEAKER_01 16:32

Oh no, I know. And and you know, and even some of the experiences it created were not bad experiences in themselves um for the age group, right? So again, you've got to remember that this is targeting that 12 and under. I think of the age group as that Legoland, you know, that Legoland age group. You know, my kids, once they hit like 10, 11, 12, like they were sort of aging out of Legoland, and I could see them aging out of this kids' resort as well. So, like to that end, um, if if the parents were expecting like a universal, classic universal experience, then I think they misunderstood or it maybe was potentially mismarketed. That all being said, uh what they really knowing their location in Frisco, Texas, knowing the amount of sun that that location gets, how hot it gets, etc., they underdeveloped the amount of shade and other amenities and even just like large plants. You know, when Disneyland was first opened, they brought in, especially for like the Junkle Cruise area and everything else, full-size trees and plants and everything else. There's no reason why they couldn't have brought in full-size plants and you know put them into this place to give more shade and just the feeling of you know improving on sight lines and everything else. And then the other side is I think maybe they were used to the size of walkways and pathways and everything else that a normal full-size universal park needs in Orlando, or you know, you can't really argue the one in LA because they were you know compressed on size, but you know, let's talk about the one in Orlando or the locations in Orlando. It here, they're just the volume and throughput is not going to require the amount of extra walking space and dwell space that's needed. And so they could have been um you know much more compressed in all of their attractions, and then you know, again, giving being more compressed gives you a better sense of uh proximity to other attractions, to other people, and less of this feeling of like you're just in this open desert wasteland, which is what you know, all the pictures of you know the guests that have visited there are showing it. So a lot of like basically layout and operational uh you know design issues that could have been avoided had they really thought through their target audience a little bit better.

SPEAKER_02 18:45

I would love to know the resumes of the individuals involved in this project. I get this awful feeling, personal opinion, that someone went to the IKEA catalogue and selected Waterride Flavor Six, Jungle Gym Flavor Three, and they dropped them in. They dropped them in with a CAD program that was set to resort walkways uh in Orlando, uh, and we ended up with this. Where's the bamboo? Where's the seating? Where's the uh where's the shading? The basics of understanding your locality, your guest experience. And I'm just wondering, you know, is is this going to see a purge within uh the universal design team? Uh, because if you drop the ball on this type of IP, then questions will have to be raised about the other part projects that are in development. Yeah.

Consolidation Hits Parks And FECs

SPEAKER_02 19:45

Anyway, moving on, and another one that we touched upon in a recent open and shut was uh you know the continuation of the divesting of uh properties from Parkairs. Uh you know, we talked about some of their uh water parks in the US that were let go, and now we have the Raging Waters Sydney facility being handed over to new ownership and to soon to be rebranded. Well, I think it's actually already their website seem to be already operational as Sydney Action Parks. Uh let's hope the new owners uh enjoy what they have and that they can build an empire of their own uh where Parquet could not.

SPEAKER_01 20:34

Yeah. Well, I mean, look they get to expand, right, from Jambaroo Action Park to now having a second location, Sydney Action Park, and this gives them that growth opportunity. And my guess is uh they had probably a decent deal um on this location. Uh there's no way that they've they spent uh to acquire this location what uh you know Parque excuse me, Parquet has put into this location over the number of years that it's been in uh active development and and you know operations.

SPEAKER_02 21:08

This is what you would expect to see a going concern acquired by local operator who now is uh in control of two of uh the largest visitor destinations in uh Australia. That's uh going from uh reasonable to domination, and that momentum has to uh keep going. I also know that there is part of the deal some uh payments going in regarding refurbishment and development of the brand, which they have now made their own. So this this is an interesting one, but it is part of my constant consideration about uh consolidation and restructuring that seems to be going on in the market. People with capital to acquire, those with assets that they need to diversify. Moving on, and a surprise one, though not such a surprise as we touched upon in Open and Shut, that uh Funspot America in Atlanta, you know, acquired or rebranded uh 2018, turned into a fun spot, some money put in, uh redevelopment, but fundamentally it hasn't achieved what they were hoping for. And the facility is closing in August, very quick closing, just a month from when we are recording this. You know, it's not again, as I said uh previously, I would kind of have expected a deal to have been done to find someone to take this off their hands, and as we just saw previously, rebranded it and relaunched it. This was an acquisition by the uh the Funspot America team that was out of their comfort zone, as you touched upon. And uh I think it is something that's come back to bite them very hard.

SPEAKER_01 23:03

Especially because they did it's not like they developed this thing over a period of time. They came in and acquired this business in 2017 before they rebranded to Funspot America. It was obviously fixed Fun Park, then it became Fung Junction in USA, and then it was acquired again by Funspot in 2017. And so this seemed like it was a desire to expand more aggressively than they were probably prepared to. Um, and uh maybe after maybe they had some extra capital. They thought, well, let's go and expand. Um, and instead of doing what FunSpot has done very well since their very beginning, which was to grow organically, uh, they started, they started as a small FEC and expanded and added bigger attractions and bigger attractions and some roller coasters and bought more land and then added a location. And in most cases, they expand organically. They tried to go in from an acquisition standpoint without really maybe fully understanding what they were buying, where they were buying it, and who their target audience was. And it just didn't fit their ethos and how they grew their current locations. And I think it was just an over-expansion and overreach that just ended up uh not working out for them, unfortunately. And you know, I think one of the two reasons that may exist is that the fact that they're didn't announce a sale of this property, but rather announced a closure, is that they're looking to potentially consolidate attractions, bring some of those back into their two existing locations, or to uh just have a write-off. Um, you know, maybe there's some uh some tax benefits to just being able to write this off as a loss. Um and uh and and that could be another reason for the closure versus a sale.

SPEAKER_02 24:48

It's one of those considerations that's out of my bully wick is when you know the financial heads get together of how they're going to write something off like this. Are you going to salvage components from it, staff assets, and transfer them to another facility, or are you just going to say, bang, this is another Galactic Star uh Star Cruise experience. We take our knots, we get our tax rebate, and then it's someone else's problem. That said, if you want an example of what Funspot America can do right, have a look at their Orlando uh facility and see how that has organically grown, still incorporates multi-level carting, it has uh coaster components, it's in a very small package and it works very, very well. Moving on, and we have transitions and changes.

AAMA Leadership Shakeup And Stakes

SPEAKER_02 25:43

Uh Pete has been a uh stoic uh individual, Stalwalt of the AAMA, for the last 10 years, and it has been announced that he will be uh taking retirement. Uh I'm led to believe in the next couple of weeks and months he's going to be uh departing the operation. This is all part of a much greater shakeup of the AAMA, the uh American Amusement and Machine Association. And I think this will have serious ramifications on how the AAMA moves forward, uh, and also how the impact that this will also have on the AEI show, which is uh controlled uh by the Trade Association. This kind of change is needed, I feel very strongly. The only thing that I'm interested about is that we don't have a name of who will be jumping in or parachuting into the position he's vacating.

SPEAKER_01 26:50

Yeah, I mean, known Pete for a number of years and uh he did done some great things uh you know during his tenure, and uh, but at the same time, look, new leadership is needed to move things forward into the new era. We've talked about the amusement industry really needing a strong shakeup and um you know having new leaders and new blood, new voices, you know, etc., into this role could be really good, again, depending on who comes in. And we don't know yet. Is it just another uh you know, OWG, um, you know, old white guy? Uh or is it a is it a uh you know, is it somebody different? Um, you know, whoever that might be coming into this, uh hopefully they're bringing in fresh perspective and fresh energy and fresh blood to really see the amusement industry into the next uh the next decade.

SPEAKER_02 27:37

Uh away from the sausage factory analogies that uh some people have made about certain associations or the quality of their menolin numbers, uh, what I need is someone who understands three things entertainment, entertainment, and branding. If we can get someone uh to come in here and be able to force, and I mean force the membership to leave their comfort zone and embrace the needs of a transmedia uh industry, then we will have to place ourselves, or will inevitably place ourselves on a straighter course. No offense to those that have uh gone before, but the industry has changed, and we really do need to change. Uh we can't. I know there are a number of the gate guards that will be very unhappy by these developments, uh, but all I can say is more power to best elbow. Indeed. Next we have changes. Well, I you know, in uh in promotions changes. I'll leave it to our audience to make the

F1 Arcade Identity And Operations

SPEAKER_02 28:46

decision here. But F1 Arcade again, another one. We talked about a GM being added to uh the mix uh for their North American. Now we're talking about a US director of operations. Uh interesting that this individual uh comes from a restaurant background. William has really got his feet under the ground uh under the table 11 years with SRG concepts, who are known for their restaurant and uh branding operation. And prior to that he uh he was studying. So he is uh a relatively fresh-faced individual from a brand and corporate uh positioning. He has quite a uh daunting task in front of him of taking the F1 arcade mix, and this is one of those ones that we could touch upon when we were talking earlier about franchising, saying that this still hasn't really proven uh its chops, even though it is so many facilities uh into the business. And I do know that the F1 uh operation is looking at this as a franchise vehicle.

SPEAKER_01 29:56

Yeah, and then this this higher uh well, look, I mean he seems like he has a great amount of experience in the hospitality and restaurant side, which is awesome. Um, but what this tells me is that F1 Arcade still doesn't fully understand themselves as an entertainment destination. They see themselves as restaurant first, entertainment second. And if you're going to be any level of social entertainment, you need to see yourselves as entertainment first and then restaurant second. And because if you don't get the entertainment mix right, entertainment experience right, you are just a fancy restaurant that has a bunch of simulators sitting in a corner that nobody's using.

SPEAKER_02 30:37

I am sure the operation team are breathing a sigh of relief that they've managed to uh hunt down all of the problems that were holding back the uh racing simulators that they were operating. We know under the surface from sources that were very close that they had a baptism of fire, getting all of their 60-odd per facility simulators working the way they wanted. It took a lot longer for them to get the software to operate the way they wanted, and they're just happy that the uh teetering house of uh House of Cards is held holding itself together, and they fixate on the price of the cocktails, price of the sliders, and making sure that the booking system and marketing is in place. I am going to go to my crystal ball and make uh uh a prediction that next year we will be hearing about a major root and branch change to the way that the game experience works, how you book the game experience, and possibly the addition of a tournament system or a recurring means to get people into the facility to play the games. Because at some point in time, one of the accountants of the C-suites is going to see that they're not making the proper 40-60 split from their entertainment and that they are maybe heading more towards a greater split on their food and cocktail over their entertainment, and they are not a cocktail and food facility, they're an entertainment, social entertainment facility that has high high-level food and beverage. We shall see. They may turn around and throw out all of the machines and say, hey, we're just a watch party facility uh with fantastic cocktails and foods.

SPEAKER_01 32:38

Or or just reduce the number, right? This is what we talk about with Top Golf, just overbuilding your facilities and just don't have 70 simulators in a location or 50 simulators in have 20 or have 10 and have smaller locations and maybe them more frequently or whatever. Like change up your model a little bit, but having 7070 simulators, unless they're all actively busy, even if 30 of them are being used, it still looks like you have an empty facility. And that's the same problem with Top Golf when you have 100 bays over four levels or three levels. Even if 50 of those bays are used, you're still only at 50% capacity. Um, so this is you know, it's the overbuilding that is the issue for me. Um, and you know, you can if you if you were to streamline that and really hone in your entertainment experience, I think that's what's going to really help them be sustainable in the long term.

SPEAKER_02 33:31

It's that entertainment experience that I am adamant about. I uh I am not heavily a cocktail uh and food guy. I am an entertainment guy at home. And I know the individuals that sold them on this model of having 60-odd machines in their facilities have disappeared. They're now no longer with that operation. And I also point to the problems that they're having understanding their entertainment simulator mix because of the number of F1 boxes that were opened after they opened that first one. So we, you know, we know that there is trouble at Mill to coin a uh northern English term, but there is also a very simple path to address all of these and to come out smelling of roses. And uh readdressing the entertainment mix of these venues is part of that. And this is the type of thing that a new director of operations is going to have to consider.

Fever Strategy And Stadium Control

SPEAKER_02 34:31

Fever appears a lot next door to Gender in our coverage, and fever is also in the process of restructuring and repositioning itself as it looks towards its future. Tom uh comes from a very interesting background. He's ex Talker Social for three years uh as uh head of strategy there, uh, as well as two years with uh TME Timo, sorry. The issues that I have here is that uh we're looking at a market strategy and partnership senior manager. You could argue who's he replacing, or did they have someone uh doing this prior? Uh, and we also have to consider what side of the fence, because we've been talking about how FIVA has been doing some very high-level deals, both in creating their own entertainment operations, such as the FIVA Hub, that I have as the illustration image here. But also we've seen some major deals with sporting. We've talked about uh FIVA's relationship with F1. Well, at the time of recording, we can also report that FIVA has signed a five-year deal with uh the um Madrid uh stadium uh to be in total control of that multi-entertainment facility. It's not just a football stadium, but it also has major live event components. FIVA are flexing their muscle, it's just going to be which directions they're going to double down with, or are they going for the world domination uh approach?

SPEAKER_01 36:13

Yeah, and I wonder if they well, maybe it will be important to have somebody in a strategy component because we've talked about before, like Fever seems to be taking the shotgun approach to just trying lots of different things, and some things work, some things don't. And that has historically worked for them at the smaller scale in which they initially started, right? But now they're really beginning to expand significantly, taking on really big partnerships, again, like full stadiums, full entertainment portfolios, and managing those across the board. And it's beginning to look a little bit like it is haphazard and that there isn't a strong, solid, clearly defined strategy in which they are going after. Um, again, there may be some grand vision and they're just taking bits and pieces of it. So uh I, you know, I am I am a fever fan, and just uh if from the outside, just watching what they're doing because they are one of the few companies really making interesting moves and trying and experimenting different forms of of entertainment and experiences. And so I like that, you know, they're shaking things up and trying new things. I like that uh um, you know, melting, not not melting pot as much as like they're just stirring the pot a little bit to see what's working. And I think that's that's useful in our entertainment space. Um, what I actually think is more interesting about this move for Tom coming over to Fever from Toka Social is that he's been at Toca Social for the last three years, arguably during their big growth phase, as their head of strategy. And on open and shut, we were actually questioning Toka Social's expansion strategy because they're opening one location in Guatemala, as we announced there, they're opening another location in Mexico, a couple of locations in the US, a few locations here and there, and and they're expanded across multiple countries, multiple uh, you know, uh both currency and language regions. And it just seemed like there actually was very little strategy to their expansion process. And so uh somebody who was leading that, what I would consider very haphazard strategy, coming over to fever into a role in which there is also what looks to be a very haphazard strategy. Maybe he'll be poor, uh he'll be perfectly suited, or maybe he'll uh you know we'll struggle to bring some directionality to fever in in that particular space. That being said, he's a senior manager, so he's not obviously the at the C-suite level quite yet. Um, but uh but yeah, leaving Toka Social during this period of expansion also signals like, are there things going on inside of Toka Social that he might have seen uh writing on the wall that potentially we aren't seeing quite yet as well.

SPEAKER_02 38:48

You've you've hit the nail on the head for both sides for me. Uh why go now when it's needed most, and why uh turn up here at this level when it's needed most? But you know, I also am a fan of Fever, though we really do need to see Fever take some direction uh on what they're trying to achieve rather than the shotgun approach uh that you describe. All that said, there's also a third uh option here, which is we know that FIVA are looking at possible acquisitions of important entertainment strategies or operations, and those need to be applied to their strategies. So again, whoever he's reporting to in the C-suites uh is going to really need uh some strong uh advice and steerage.

Dave And Busters Turns Into Raves

SPEAKER_02 39:38

Taking on to the next, and uh I wake up to a news story uh uh from uh, let's see, a local media service uh while I was out in California, and uh I have to add a new term to my uh uh list, which is the return of the rave. Um Daven Busters has been operating a process for the last few months, if not years, of something called DMB Unlocked. I did not know about this. I had to go and do a lot of research. What DMB Unlocked is, is the opportunity for managers on their own uh own decision process. They've been given the rope to hang themselves to create something which are near enough raves, adult-only events taking over the Dave and Busters space. These have been going on and been, in some cases, been seeing sell-out gatherings of individuals celebrating within the Dave and Busters to live music or hiring out the karaoke runes or just you know taking over the entertainment space. And in other locations, it's been hit or miss. I don't know what you feel about this, Brandon, but of this just smacks over we don't quite understand what we've got, let's give it to our GM to try and work it out. And trying to explain to the C-suite accountants why one particular facility is making more money than another, and that's based on the you know, the raving and the uh industrial amounts of alcohol that took place because a certain band, popular band, was playing on stage, will have certain executives asking, what business are we in?

SPEAKER_01 41:38

Yeah, this when I when I read about this as well, first of all, I didn't know anything about DMV Unlocked either, but then again, I am not that target audience uh looking to seek out rapes. Um, but uh this this does just again hit uh hit me you know square across the face and say, like Dave and Busters just truly doesn't know who they are. They they have lost all sense of identity. Um they want to lean into this 21 and over adults-only thing, that's fine, but but their marketing and everything online and everything like it just doesn't align with this type of thing, like they just are fully unsure and unclear about who they are and what space they really truly belong in. And um, yeah, I this this just further emphasizes that point to me.

SPEAKER_02 42:28

Do the stats line up that the rave community or the groups that come to these raves and these special unlocked events then bring their kids, because many of them will have kids, to a Dave and Busters afterwards because they had such a good time? Does Dave and Busters understand the impact this has on their machines? Are their maintenance team having to work twice as hard to repair all the machines, to remove the stage constantly every couple of nights, to just deal with the general impact of running a live gig event within a location-based entertainment space? And when are we going to find out about uh main event unleashed? Is that something uh that is also going on that we know nothing about?

SPEAKER_01 43:24

No idea.

SPEAKER_02 43:26

No idea. We we will be revisiting this again because I know that there will be quite a few investors that will be surprised by this news as well as just local consultants in the sector.

Level 99 Opens In Disney Springs

SPEAKER_02 43:43

Level 99. Uh they've been in soft uh opening for a period of time. We've already covered them in sound off shut a number of times. Well no uh we should.

SPEAKER_01 43:54

Yeah, basically, because like how many times have they announced that they're finding that they're actually actually truly fucking? Open finally.

SPEAKER_02 44:01

Finally, finally, finally, finally open, and they had a big party, and um yeah, yeah, yeah. I was just surprised how much the new building and watching the cameras going around reminded me of Disney Quest. So I was getting Disney Quest flashbacks as they were walking around the facility. 63 mission rooms are fun, but the difference here with this particular uh version of the level 99 is they've got quite a comprehensive cocktail bar and uh shareable food menu, uh, much higher uh level compared to uh their other three facilities. Welcome to uh Disney Springs. We will be keeping a close eye on you, is all I'm gonna say.

SPEAKER_01 44:53

Yeah, I mean, look, I think that they will do well for a period of time. Um I mean, this is uh the the mission room.

SPEAKER_02 45:00

If branded well, if branded well.

SPEAKER_01 45:02

Yeah, fair. Um yeah, but the mission room concept is uh, you know, they have a lot of competition, obviously, in Disney Springs, uh, but not so much on the entertainment side. There's bowling, there's movies, there's other stuff, there's a lot of FB. Um, but they, you know, they the mission room concept is doing really well right now. Um, it is one of the more popular types of entertainment concepts um in a lot of spaces expanding. And so level 99 has an opportunity to capitalize on that for a period of time. My big concern for them was the you know how big they built out their F and B element first, just really optimizing around the entertainment component, just purely because, you know, one, I mean, yes, they do need to increase their per cap by having FB. We've talked about that before. They should absolutely have that. Um, but there is an enormous amount of FB competition elsewhere. And so how much will people stay for the food after or before they've played the entertainment when they can go across the street or across the walkway, not even the street, to the House of Blues. Um, you know, they put in the reservation a house of blues, go play some mission rooms at level 99, and go back out over to House of Blues, listen to some live music and have you know some southern Southern Creole food. So, anyway, that is one of the issues I think that I they that they will experience given the amount of real estate they've given to their F and B component.

SPEAKER_02 46:16

Uh as a man that went through the pain and anguish when we opened DisneyQu on that very space over 20 years ago, they have not really learned one of the most important lessons, which is what the hell are you? So they're going to now, their staff, 20 years on, are going to be experiencing the same thing that our staff experienced at DisneyQuest, with people just sticking their heads in and going, What films are you showing? You know, they they do not define themselves clearly outside as a mission room uh experience, and it's going to be very hard for them to try and get that branding out unless they've got a serious marketing project in place and that they've positioned what they've done. I don't know walking through the front door if you see the bar first or if you see the registration tables first. Also, as you say, it's a very big space for 63. Um, you know, within that uh 50, well, let's let's say 49,000 square facility. I am surprised that they didn't go for a mixed entertainment uh blend, uh, maybe put in some something on the ground floors along with their mission room. But again, uh level 99 has planted its flag in the ground as being a mission room uh entertainment going up against the activates of the world, and we will just have to see how this facility does over the next 24 months. And I this is the last time I'm gonna be talking about it opening. Moving on, and gravity kind of follows what we were talking about in a previous sound

Licensed Food Brands Inside Venues

SPEAKER_02 48:07

off. We touched upon an entertainment facility taking a fast food franchise uh represented by a known personality and adding it to their lineup of food. Very similar to what we saw with the Shack O'Neill chicken facility, we see Gravity uh in their third uh third of their Gravity Max sites and a troubled Gravity Max site. The Liverpool facility went into an unusual-shaped uh facility and has been trying to find its feet regarding uh its social entertainment offering and it's mixed, it has quite a dedicated upstairs uh competitive socializing kind of atmosphere. But feeding the hunger of the audience that they're trying to attract, they've gone with sides, and sides is run by another group of charismatic, well-known uh individuals, in this case, YouTubers. Uh YouTubers with a group of YouTubers with over 22 million uh um supporters. I am fascinated to see Gravity parachuting in licensed venues into their space. And I'm wondering if we're going to see the same thing happen across their other Gravity Max facilities. That would be incredibly telling if that is the case.

SPEAKER_01 49:39

It would be interesting, and I don't fully understand the strategy here for both gravity as well as for Elevate, who brought in the Shaq's chicken chain. And uh, you know, the reason is like unless it's really going to be a marketing draw to get people in your doors to come to sides, when there's already standalone size locations, like maybe I could go to one of those. Why would I go inside of a gravity to go to either sides? So, unless it's you're really gaining from that marketing, that footfall increase by having this well-known brand inside your facility, you are then only giving up the potential margin and upside from an F uh in F cross-sale. Because you're clear you are, you know, they're giving up money to sides to be there. Um, unless Sides is like actually leasing space and they're just a subtenant of that particular space, you are giving up revenue. But by even being a subtenant, you're giving up that potential per cap increase in revenue from the guests who are coming in to do your entertainment because you're now handing that revenue would have made from the F and B over to some third party. And and I don't know that those two things one way outweighs the other. And it'd be interesting to understand their math because to me it doesn't seem to make enough sense.

SPEAKER_02 50:53

I've been hearing a lot of things about Gravity Max maths recently. So uh I, you know, I am equally confused. Uh, the benefits do they outweigh the negatives? Uh you know, they are a target audience recognized chain, if that if you want to use that, you know, is the Liverpool audience that familiar with the side man? Will that definitely bring them in? Is the quality of chicken enough that it won't impact the reviews and evaluation of your facilities, as we mentioned with the Shaq situation? If if the food is bad, if the service is bad, it isn't uh SIDES that is going to be getting the hate mail, it will be um Gravity Max. And also, if we don't see this applied across the other um Gravity Max chains, is this just a one-off to salvage a problem child, or is this just an experiment? Lots of questions to be answered when we revisit this in 12 months' time, not 24, but in 12 months' time, we should have the answers one way or the other. Indeed. Moving on, and the tourist of pain for all of you people out there that are following. Um, you know, quite a split there. But anyway.

SPEAKER_01 52:15

All right. Well, coming up after the quick break, we will continue. Every birthday you miss is a party book somewhere else. If you run a trampoline park, family entertainment center, play cafe, or party venue. Party ping connects to your booking system and automatically sends a text to parents with a personalized birthday message along with a custom gift for their kid at just the right time when they're deciding where to celebrate. Venues using party ping receive 20% more party bookings. More parties, zero extra work. Check them out at partyping.ai. That's partyping.ai.

SPEAKER_02 52:48

Thank you for that.

VR Market Reality And Consolidation

SPEAKER_02 52:50

And straight into the Tekken IP. And it is 35 years since I sat in the Ali Pally uh in London and watched the launch of the first virtual reality arcade products. Uh 35 years. Wow, feeling it. And then, you know, while I'm flicking through my usual research, I come across the usual slop AI informatics telling me how much this fantastic VR LBE market is worth at the moment. Five point eight billion dollars pulled out of someone's ass, uh, courtesy of Chat GPT. But but but but the point I'm trying to make here is it is fascinating to consider that we have survived that momentum. That even 35 years on, that there we are still very active in looking at VR and XR as strong components of the location-based entertainment industry, to the point that we're now talking about the next generation, Generation 3, 4, and 5, going forwards with this. And, you know, kind of mirroring what we were seeing at the uh LBX XR zone uh during AWE a few weeks back, but also mirroring what we can expect to see in September and in November at IALPA, where this is a very important line in the sand of what is going to be driving us going forwards within this sector.

SPEAKER_01 54:27

Yeah, uh certainly it's something you know, 35 years is an interesting marker here for this industry. Uh but uh obviously it took many, many years for the technology to catch up ultimately to be a real true industry. Um, but 5.8 billion just seems completely overvalued for what we've seen going forward. If we're talking about LBV, uh LBEVR versus um XR and all of its various forms.

SPEAKER_02 54:53

Sadly, that slopware infographics was very um sloppy in its detail uh and definition, and it was also a kind of clickbait because they wanted you to buy uh their report from a group of individuals that I'm sure can't even spell location, let alone base. So the the issue that I really wanted to point out was that virtuality doesn't appear on a lot of people's radar as the first of the VR arcade because of the baptism of fire that it went through. Company near enough lasted just under four years, crashed and burnt, and then we had a long, long period of the wilderness before the next uh uh attempt to try and establish VR. And maybe, just maybe, we're due for another period of wilderness and navel gazing going forwards. Though I don't believe that because no matter what the schlockware tells us, we know there's an industry here that needs to be fed. And feeding that industry with new content is essential in a transmedia market. And we're lucky enough to have companies like Synthesis VR, for the sake of transparency. We do some consultancy with these guys, but they are the leader at the moment in distributing content, both VR arcade content to the existing VR arcade sector, but also free roaming uh PC VR content to those venues looking at the next generation. And we're seeing that consolidation that I keep on going on about, where another uh VR distributing company, uh uh Octipod uh VR, with a selection of very well-known games, uh their owners have decided that they you know they want to focus on consumer game development, their location-based entertainment game distribution operation. Octipod is taking up too much of their cycles. They then sit down and form a partnership with Synthesis VR. Synthesis takes all of these games available, adds them to their uh developed platform, supports the existing client base, and we have a smooth transition. And one company migrates away, and another company gets a little bit bigger. And we're kind of going to be seeing that type of development happening a lot in this sector, moving away from the hype and more towards the ROI.

SPEAKER_01 57:22

Yeah, this is exactly what we talked about, I think, even at the beginning of the year. We've been talking about for a while, but during our even our uh our predictions episode, uh, where we're just going to see this consolidation amongst VR companies, both at the content level and at the uh you know facility level as well as the product and platform level.

SPEAKER_02 57:41

Yes, that's just uh just the way things are going to be for the foreseeable future. Going back to another topic that we touched upon in a previous uh sound off.

World Cup Plays In LBE

SPEAKER_02 57:53

Um, you know, I had been caught up to date with a couple of other entertainment brands that have attempted to jump on to the uh World Cup fever. One is a direct license for World Cup footage between our friends at Cosm. So uh they have sat down with Fox and uh they've signed a deal where they will be showing selected uh games from uh the World Cup uh oustings uh on their giant screen. I am sure this is going to be good business for them, especially the final. I wouldn't want to be stuck in a Cosm facility during the final. The food, the booze, and the atmosphere is gonna be amazing and electric, but also very crowded. Uh, and then on the other side, our friends at Immersive Game Box, they've just turned around and announced that they've got something called Soccer Arcade. Announcing it halfway through the the game seems a little bit weird to me, but uh anyway, they've they've announced that they have a football-inspired uh game running on their immersive uh environment. Uh and from what I've seen from the trailer uh teaser video, it's it's football.

SPEAKER_01 59:13

Yeah. Well, look, I mean, first of all, Fox at Cosm, you know, the World Cup at Cosm, exactly the type of facility I'd want to watch a World Cup game at. Um probably being at the game itself. Like just being there in a Cosm Arena is the way to watch sports. It's absolutely incredible. So, you know, good on them. Again, a little bit late, but better late than never. Um, I wouldn't have expected them to be in any of the you know, any of the group stage just because the volume of games is so high. Like, what how do you pick which ones? So it makes sense that they're showing up like now at the group, you know, 16, um, you know, 16 stage. Um, so that that makes sense um a little bit more. You know, they'll probably be at the playoffs and finals, and that will be their main focus. Um but or not, you know, the not the playoffs, but like the final four and then into the final four.

unknown 59:59

Yeah.

SPEAKER_01 1:00:00

Um, but with game box, like this one, immersive game box, this just you know is exactly one of their issues uh that I have with them is that they just continually miss the mark on things. They should have launched this significantly earlier, again, so that the venues who are using them could uh could leverage the marketing and everything else that the World Cup had leading into it. Um, but I will say the one thing that um look, the one thing that maybe they did right here is that they didn't license the FIFA name. Yeah, so they didn't like paid by FIFA or something, right? This is like actually something they developed internally without having to go and get some external IP and pay out the nose for it.

SPEAKER_02 1:00:35

And for all we know, developing it in-house has been such a baptism of fire that it's taken them this long to be able to complete it and roll it out. So there's a lot of issues here, but yeah, it's it's just good uh good to see more people uh embracing uh the opportunity here. I agree with you. You know, I would I would really like to see the finals uh for the uh World Cup. I don't like football that much, but I know that the atmosphere is going to be amazing for the final game, and doing it in a cosm where the quality of the food is not um not poor and the quality of the drinks is very high, then uh that's much better than uh uh uh overpriced hot dog and some warm beer that you're gonna get at the actual stadia.

Peaky Blinders Immersion And Apps

SPEAKER_02 1:01:21

Moving on, and IP, IP, IP, IP, IP. Constant IP, constant transmedia. If we're not talking about doing deals to get on board with uh FIFA World Cup, if we're not talking about Shack or uh YouTubers' food properties being parachuted into your entertainment sites, we're talking about taking uh a very successful TV, a successful TV series, Peaky Bind Peaky Blinders, and turning it into an immersive experience that you can leverage both with the IP, with themed environments, live actors, and tons and tons of merch. And so we've got Peaky Blinders Underworld opening um not a million miles away from where I'm sitting here in London. And this is going to really go for the tourists uh and for the audience recognition. And I wouldn't be surprised, depending on how well this themed environment they are actually building show set, uh, you know, so you can walk around. It isn't a VR experience, it is going to be an immersive live action, live actors experience. I wouldn't be surprised to see this rolled out at some other locations internationally.

SPEAKER_01 1:02:41

Yeah, but I think those locations, as we talked about with these types of live interactive, actor-led encounters and experiences, uh, these locations have to have a strong base of theater actors uh and others that uh uh you know that are looking to fill their nights and evenings in between shows and in between gigs. And so um, you know, I think it does limit the number of locations globally that they can go to. Um, but I wouldn't ex I wouldn't be surprised if this does expand.

SPEAKER_02 1:03:08

It's gonna be uh interesting to uh see. And again, I I'm uh uh hoping that the uh level of femaleity is very high because of you know, if possible, they can actually use actual sh uh film sets reconfigured for or the designs for actual show sets reconfigured for the audience that they're dealing with. This is on a kind of a similar level to the War of the Worlds without the uh the VR uh element. And as you say, the live action or live actors component is going to be a difficult one to master, but will be a major part of it. Uh, Gender Moment uh and our friends uh at Gender North Americas have announced that they've got an app for that. They've uh just released a uh Kiddleton app that will allow uh guests uh and regular visitors uh to uh hunt down the merch, see the local uh closest venues to them, and also take part in uh special uh collections and tournaments and such like. An app is essential for your repeat visitation numbers, and it's interesting that uh Genders had in Japan uh a considerable number of apps targeting their audience. Now we see that uh broached in the uh uh North American market, and I wouldn't be surprised that we will also see that uh parachuted into the European interests.

SPEAKER_01 1:04:44

Certainly. And I think the fact that it's branded as a Kittleton app just further underscores the fact that as Genda rolls out and really begins to transform their various forms of acquisit, uh, various acquisitions they've made here, uh, that it will be under the uh consumer face and Kiddleton brand.

SPEAKER_02 1:05:02

Yes, it will be interesting to see how much they push Kittleton, especially in North America, front and center. We have it on the machines, we have it on their uh smaller facilities, uh, how long before they even rebrand uh their uh entertainment facility in Chicago, Kittleton rather than enter space. We will have to wait and see.

Amusement 360 Session And Wrap

SPEAKER_02 1:05:26

And then finally, uh I'm back on the road again soon. Well, um, so we say the middle of August or near the end of August. Uh I am reprising, reprieving, reprising, reprieasing uh my uh uh uh presentation role at uh Amusement 360. Um the team has been kind enough to ask me to come over and do a special session, not this time on uh XR, but focusing on uh social entertainment and looking at how competitive socializing and social entertainment fits into the mix if you're opening a location-based entertainment or if you have an existing FEC, what you really need to be considering to get that competitive uh socializing dollar. If you're not familiar with Amusement 360, it is a boot camp for those entering the uh location-based uh entertainment market. It is also a place where uh existing operations go to get a brain dump of the latest trends and developments that happen in the market. It is also supported by a very extensive um uh uh manufacturers and distributors and suppliers uh uh component, exhibition component. And it is uh, you know, I I find it incredibly valuable uh for the audiences that we get to touch. We get one-on-one with the uh the operators and a lot of new blood that is moving into this market, and vice versa, they get a lot of value out of being able to directly speak to the presenters there. Uh, if you need more information, grab that uh QR code or uh uh use the uh uh HTML at the bottom there to uh get all of the details. And finally, uh another QR code for you regarding uh hitting us up via our LinkedIn or just using our email if you if you have any questions or any information you'd like to pass on. We have uh Stinger reports out there, a couple more sitting on my machine right now, and we will be having uh some more entertainment social arenas uh added to the list.

SPEAKER_01 1:07:56

Perfect. All right. Well, with that and uh the siren dragging you off uh wherever you're going, um it was a great sound off, Kevin, and uh looking forward to next week's as we dig into more of the ongoing trends.

SPEAKER_02 1:08:11

Thank you very much, and have a good one.