The indoor family entertainment center industry began in the U.S. in 1990. Since then, thousands of indoor family entertainment centers (FECs) have been built and FECs have spread worldwide.
Indoor family entertainment centers generally range in size from 1.200 m2 to 22.000 m2. They contain multiple anchor attractions such as rides, soft-contained-play equipment (the plastic maze of tubes, slides and ball pits), children's play areas, laser tag, bowling, animatronics, mazes, roller skating, and impulse sale items including video and redemption games and food and beverage. Birthday parties are a significant part of almost all FECs. Unlike tourist attractions or theme parks that draw customers on a regional basis, FECs are highly dependent on repeat business from residents living in the surrounding community. FECs can either be free standing or part of a retail/entertainment complex such as a shopping mall.
Indoor FECs have a competitive advantage over outdoor amusements since they are fully climatized facilities with air-conditioning and heating. Customers can be entertained regardless of the weather. Indoor FECs have proved successful in all type climates - from cold climates such as Canada to hot rainy areas such as Central America to the hot arid Middle East.
As with any new industry, the early FECs were not the long-term winning formula. Most early generation U.S. FECs failed or required significant renovation and investment to survive. Many early owners thought that since their FECs were the first and only game in town, quality was not important. Soon, new and better competitive FECs appeared in their trade zones. Customers then had a choice and quickly abandoned the poorer quality FEC. In situations where no new competition appeared, the FECs still failed as they did not offer the quality and value required to create repeat business. Even if a FEC is the only one in town, customers still have a choice of spending their leisure time somewhere else or just staying home.
The FEC industry has learned from experience. Unfortunately, many international FECs are failing to take advantage of the lessons learned during FECs' first seven years. Many international FECs are only a copy of some Western FEC the owner saw, often during a busy weekend in the FEC's first year of the operation. The copied FEC was sometimes already in financial trouble, unbeknownst to the observer.
FECs are always busy when they first open as everyone in town comes once out of curiosity. The long term test is not initial weekend opening business, but whether customers will become repeat customers and whether the FEC will generate sufficient weekday business. Even worse in the international market, many FECs that are being copied are early generation Western FECs, not the more evolved and improved versions. As a result, many international FECs are failing, not only resulting in a substantial financial loss for its owner, but also creating a black mark on the owner's business reputation or the project the FEC was part of..
An excellent example of this copy cat phenomenon is Discovery Zone (DZ), a type of children's indoor FEC that started in the U.S. in 1990. DZ's formula of relying on soft-contained-play equipment as the anchor attraction quickly proved unsuccessful. However, the chain rapidly expanded with the backing of Blockbuster Video, and later with Wall Street when the chain went public, all on the mistaken belief that DZ would gain first mover advantage and could later correct any flaws. Simultaneously, many independent U.S. operators opened their own copycat versions when they saw the initial crowds at new DZs. Many international business men bought and opened international franchise units, even though the chain had never make a profit. Even today, with most of the DZs closed and the chain in Bankruptcy proceedings, our FEC design and consulting company, the White Hutchinson Leisure & Learning Group, continues to get inquiries from international businessmen who want to open a copycat version.
The early Western FECs that tried to be all things to all people were not successful. Many of the newest FECs are proving highly successful. These newer FECs are focusing on the market niche of either families with pre-teenage children, or alternately on teenagers and young adults. Some of the problems with a FEC trying to be all things to all people is that:
Families with young children, and especially mothers, do not find that groups of teenagers create a welcoming environment.
Designing and satisfying younger children and their parents has completely different requirements than satisfying teenagers. It is impossible to do a good job for both groups at the same time.
Different socio-economic groups do not always mix well in an entertainment center. Lower socio-economic groups can drive away higher class groups.
The successful FEC formula is to be focused and offer an in-depth assortment of attractions, products, programs and services tailored to a market niche of customers. Our company calls this "focused assortment." Think of it as shooting with a rifle instead of a shotgun.
Our company has been assisting clients with development of international FECs for over four years. We have learned that successful international FECs are not copycat versions of a Western FEC. Instead, to succeed, an international FEC must be tailored to its country and city's unique culture, including its traditions, customs, values and patterns and settings of leisure, family life, entertainment, socialization, education and play. Although many cultures embrace Western concepts, those concepts, when appropriate, still must be adapted to the unique character of the culture to be successful.
Both the FEC's physical facility and its operations must be custom designed to the unique considerations of its local culture. Even such basic design elements as colors, finishes, shapes and scale of space vary from culture to culture. For example, every culture and city has a preferred scale of space and territorial space that is comfortable for its population. The wrong scale and spacing makes customers uncomfortable, probably without them even knowing why. Other important considerations that must be taken into account include how the two genders relate, how parents and children relate, values, traditions, customs and religious beliefs. One example is birthday parties, a major source of revenue for FECs. In some cultures, the entire extended family will attend. A Western-size birthday party room for 12 children and about 6 adults will not meet that culture's needs.
Another example is weekday business. FECs cannot survive strictly on walk-in weekend and holiday business. They must attract weekday and other types of business as well. This can include weekday attendance by mothers or maids with preschool children, school field trips, children's workshops and classes, company parties and holiday camps. However, what works in one culture for any of these will not necessarily work in another.
Another important cultural aspect of FEC design is the FEC's storyline and theme, which often includes a mascot costumed character. To be successful, the storyline and theme must be relevant to the local population. A storyline and theme that has a connection to the culture and customers will not become dated and obsolete. We call this cultural- and value-based theming.
The secret of developing a successful international FEC is planning, planning and planning. It is the extensive up-front work that produces long term success. Before our company even begins the design process for a FEC, we spend time in the country and location observing, researching, analyzing and immersing ourselves in its culture and customs. We visit every type of leisure, restaurants, shopping and cultural attractions that the target market patronizes. We study architecture and design styles and materials. We visit schools to see how children play and to understand the education system. And we interview potential customers, especially the mothers who most often make the decision to attend and accompany the children. Without understanding the unique needs, wants and expectations of customers, and tailoring the FEC to them, no FEC will have long term success.
Financial planning is an important first step to developing a FEC. This includes
a market feasibility study;
a financial proforma of revenue, expenses and profit;
a concept plan and
a realistic detailed cost estimate.
Full design and development should not proceed unless the FEC will produce the owner's required return on investment.
One real life example of the difference between research, planning and customizing versus just cloning a Western FEC design is Dinotropolis, a 5.000 m2 indoor FEC our company designed in Caracas, Venezuela. We first did extensive cultural research and found that although Venezuela does have extensive history, most people there place no value on the country's past. Instead, they are very futuristic thinking. But we found that children there were fascinated by dinosaurs. So we developed a storyline about an intelligent civilization of dinosaurs called Momosauros, named after King Momo that appears in many local children's fairy tales. The storyline is about four Caracas children who find a space ship that transports them to the planet of dinosaurs and its capitol, Dinotropolis. There they made friends with the Momosauros and visit the magnificent Play Palace built for the dinosaur children. The four children return to Caracas and build a replica of the Play Palace that they call Dinotropolis in honor of their dinosaur friends.
Our company then developed a unique design theme which we called "dino-tropical-deco." The design has elements of Miami deco style, which many Caracas parents are familiar with. We then went on to custom design every element of the FEC for its target market, including the mix of attractions which includes interactive learning through play activities for preschool children and birthday party rooms with pi-ata breaking areas, some for parties of 100 people.
At the same time Dinotropolis was being developed at a cost of US$3.5 million, another business person was building Alpha-tropolis in Caracas, a US$5.0 million indoor FEC modeled after some other FECs the owner saw in the U.S. The owner did not seek out any FEC experts, but instead designed the FEC himself, following the advise of equipment manufacturers.
One year after opening, Dinotropolis is very successful:
It has achieved first year attendance of over 400.000,
12.000 children come monthly on school field trips,
The FEC is generating a profit higher than the original projections, and
Its attendance and revenues are still growing.
Alpha-tropolis has already closed its doors.
The moral of this lesson is very simple. Successful international FECs are not copies of Western designs. Instead they learn from the experience of Western FECs, but custom design the FEC for the area's unique culture and target market. This results from three critical success factors - research, FEC expertise and planning.