FECs: Reflections on 1995 and a Peek into the Future
by Randy White
The family entertainment center (FEC) industry both expanded and evolved in 1995. Like any new industry, the evolution has been incremental since 1989, considered as the birth year of indoor FECs and the start of the entire FEC industry's rapid growth. A one year time frame of reference (1995) is really too short a duration to identify significant advances and new directions. Nevertheless, the following are some random observations, opinions and thoughts on what 1995 has meant to the FEC industry, as well as where it indicates FECs many be headed.
Legitimacy
The FEC industry is now recognized as a legitimate, long term industry and not just an experiment or fad. The FEC form of location-based entertainment is now appearing as part of larger entertainment complexes; including ones anchored by cinemas, casinos and tourist attractions; and as part of what are now referred to as Urban Entertainment Complexes. FECs are even pairing up with retail concepts and being used as anchors for enclosed malls.
Serious Players
The FEC industry is no longer the domain of 'ma and pa' operators and start-up entrepreneurs. Substantial corporations are now developing FEC concepts, including large cinema chains and Melvin Simon & Associates, the real estate development company. Larger mall arcade operators such as Namco, Nickels & Dimes and Fun Factory are also branching out into FEC development.
Public Money
When Blockbuster took the Discovery Zone chain public, it opened the door to a plentiful source of public and institutional financing for the industry. Although Discovery Zone is now showing the signs of its seriously flawed concept and execution, the public and institutional money markets have not satiated their appetites for family entertainment venues. Edison Brothers has spun off its Dave & Buster's chain to go public. Mountasia had a successful public offering and Jungle Jim's Playground successfully tapped the institutional market to fund their expansion and remodeling. The opportunity to tap this plentiful OP (other peoples') money market is giving rise to strategic alliances between established companies in order to create the credibility and respectability these financial markets require of owners. Many smaller FEC chains are also gearing up to tap the IPO (initial public offering) market.
Million $ Plus Entry Level
In its earlier years, many FECs were developed by laid-off middle management executives for around $500,000. That early 10,000± square foot size and bare bone's formula FEC has demonstrated that it does not have legs. Today's FECs are being developed with a minimum of 20,000 square feet and development costs of $2 million or more.
Niche Markets
Early FECs were rather generic in concept. There was the soft modular play center or indoor amusement park for children, and the FEC with a little bit of everything for everybody. The industry quickly evolved, allowing the guest to choose among the many options offered. Niche concepts have continued to evolve to better satisfy particular target markets and draw them out of their homes on a regular basis. 1995 saw the emergence of two new concepts, the technology based center primarily targeted to teens and younger adults and the edutainment center focused on learning through play for pre-school and primary grade children.
Virtual Reality Fizzles
Virtual reality, the highly hyped "FEC killer ape," failed to attract any solid following. Its lack of presence was very noticeable at the ACME and Fun Expo shows. An 'early majority' market segment failed to follow in the footsteps of the 'innovator' and 'early adopter' users. The industry quickly learned the time proven marketing lesson that the early majority does not share the tastes and values of innovators and early adopters. Virtual reality will probably not find a place in FECs, which are so dependent on a high repeat visitation from a community market, until the virtual experience equals the actual reality and price-time value of a go-kart ride.
Coin-Operators' Expertise
Few FEC operators have succeeded in matching the expertise of experienced coin-operators in maximizing the game revenue in FECs. Although potential game revenue is a function of attendance, most FEC owners who own their games have not been able to tap their FEC's full potential. Coin operators have repeatedly taken over FEC games on a revenue share basis and produced higher net revenue for FEC owners than when those owners had 100% of the game revenue. In 1995, probably the most respected FEC coin-operator and expert on redemption, Alpha-Omega Amusements & Sales of East Brunswick, New Jersey, grew to become the largest nationwide operator of games in independently owned FECs.
IFECA Stakes Its Claim
In 1995, The International Family Entertainment Center Association (IFECA) staked its claim to the industry under the leadership of Joey Herd. Membership has grown to over 500 firms. IFECA also became the official sponsor of Fun Expo, the only show geared strictly to FECs, and established a full time office and staff with an executive director. IAAPA (International Association of Amusement Parks and Attractions), which has long treated its FEC membership as the stepchild, reacted by beefing up its FEC committees and programs and expanding publication of its FEC Magazine to bi-monthly.
International Phenomenon
1995 saw FECs as no longer a uniquely American phenomenon. FECs can now be found in the Far East, Canada, Europe, Australia and Central and South America. Foreign expansion shows all the signs of being even more significant to the industry than potential growth in the United States.
Quality Prevails
Early FECs were throw together in warehouse finished spaces for $50 per square foot. 1995 saw the death of most of these early formulas and the emergence of high quality FECs, finely tuned to the needs, wants and expectations of targeted markets, with strong attention to ambiance, acoustics, finishes and service. A focused assortment mix of events and attractions targeted to a niche market has emerged as the successful formula. And although the mix and physical facility are important components of any winning formula, 1995 saw both programming and organization culture emerge as additional critical success factors.
Learning-Based Entertainment
Although not yet clearly established as a trend in the FEC industry, knowledge workers' (who now compose the majority of American workers) desires in improving themselves during their leisure time is emerging as a significant trend and driving the development of learning-based entertainment venues. The earlier mentioned children's edutainment center concept is but one indication of this shift in Americans' value perceptions of entertainment. Learning-based entertainment is showing all the signs of becoming a major niche in the FEC industry and perhaps a necessary ingredient in every entertainment venue.
Hybridization
It is becoming increasingly difficult to identify and label location-based venues, including FECs. Product sales, service, entertainment, learning and food service are hybridizing into many new combinations. Previously clearly defined industries like cinema, restaurant, retail, education, hospitality, gaming, sports and entertainment are merging into many unimagined and exciting formulas. And language is trying to stay in stride with terms like 'edutainment,' 'eat-a-tainment,' 'entertainment retail,' 'theme based concepts' and 'eco-tourism'.
Technology
Although technological innovation is trying to drive many new FEC concepts, the ones proving to have the most staying power are those built on the time proven formula of human social interaction combined with the marketing principal of quality and value as perceived by the guests, rather than the egocentric viewpoints of owners and designers.
The Future?
Yogi Berra said it best:
"The future ain't what it used to be."
