Out-of-Home Entertainment vs Digital In-Home and Mobile Entertainment
I want to start by identifying two major challenges to the long-term viability of the Out-of-Home Entertainment industry.
Challenge #1 – Mediocre Experiences (adding attractions and services that are similar to what everyone else is doing)
Building more of the same and putting it all under one roof is not making our industry stronger or more competitive with existing or alternative forms of entertainment.
The attraction and service experiences especially within big box entertainment centers are not getting better – they are on average getting more mediocre. As the complexity of operating a big box entertainment center goes up, the only option is to simplify everything inside. This means the attractions and services within these centers are getting more and more mediocre especially when compared to more focused operators striving to create 10x or at least 2x experiences for one or maybe two core revenue generators.
Yes, many large entertainment centers have opened with multiple attractions and services and many are successful, but more and more are starting to show cracks as the competition for prospective guests’ time and money continues to heat up. Every time a new big box opens, a bowling center converts to a BEC, or a Trampoline park adds attractions, the bloody red ocean gets even bloodier. There really is such a thing as too much competition and we are definitely seeing this happen in more and more cities and towns across the United States.
Challenge #2 – Biggest Threat Is Coming from Outside Our Industry
The biggest competitive threat is In-Home and Mobile entertainment providers. For years, In-home and Mobile entertainment content creators and providers have been sucking more and more time and dollars out of our prospective guests’ lives and pockets.
In-home and Mobile entertainment has become a dramatically bigger business when compared to the Out-of-Home entertainment industry. It generates far larger revenues and profits, is extremely competitive, growing rapidly, and is evolving much faster than Out-of-Home entertainment. In fact, In-home and Mobile competitors are spending billions on creating more addictive and habit forming ways to keep our current and prospective guests from ever wanting to leave their homes or turn their attention away from their mobile devices to visit and experience our entertainment centers.
The above is no joke and we all should be freaking out. As operators and manufacturers, we are not raising the bar fast enough. In fact, we are often lowering the bar – especially when we add another mediocre me-too attraction or service. The goal is to build something that is truly 10x or at least 3x better and has the necessary ingredients to drive large numbers of guests into our centers month after month instead of only a few times per year. How often does Netflix, Fortnite, or YouTube get their guests to sign-in and visit their entertainment offerings? Answer = several times per week and often daily and many times for hours at a time!!!
Important note: Any form of entertainment that can be digitized will not be an offering we can effectively use as a competitive advantage in our Out-of-Home entertainment centers and especially for the long-term. Our attractions and services have to provide our guests with something dramatically better and truly unique – plus it has to be something that can only be experienced outside the home.
Our core attraction experiences need to facilitate and maximize human interaction with other humans and not human interaction with a screen or any type of digital or portable electronic device. We have little to no capabilities to compete head-to-head with the In-home or Mobile entertainment industry – especially when it comes to predominantly digital forms of entertainment.
What about Virtual Reality (VR)?
Virtual Reality at its core is a digital viewing device and a trojan horse that is being marched right into many Out-of-Home entertainment centers with the blessings of the big boys of tech. In the long-run VR is likely to lead even more of our guests right back into their living rooms, bedrooms, basements, and mobile devices. If VR ever does become a mainstream digital viewing device, the big boys (Facebook, Google, Microsoft, HTC, Samsung, Sony, Nintendo, digital Content Creators, and digital Game Designers, etc.) will focus 99% of their efforts and billions of dollars on creating even more In-home and Mobile entertainment experiences, because that’s where billions of their customers already are. If VR does take off, the cost to experience it will drop dramatically overnight and so will the cost of the hardware.
What about Augmented Reality (AR)?
Depends on the definition used to define what AR actually is. If you are talking about the more accurate and broader definition that incorporates all the senses a human can experience, then holy crap yes – this is the direction we need to go – especially if we want to create 10x attractions that can only be experienced outside the home.
What is the absurdly limited definition of AR? Digital images projected or overlayed on the real world environment. This definition and the focus on digital images will lead to the creation of more digital entertainment content that will be mostly used by billions of people in their homes or on their mobile devices.
I’ll talk more about AR in a future post, but let me at least say that integrating the best of what AR actually is and can be is going to be very cool, but complicated to implement. By the way, the digital image projection part is not the most important part – it is just one part of many.
Going forward, there are going to be many more technologies used to create the very best attraction experiences for Out-of-Home entertainment, which will not only enable us to survive if we invest enough in them, but to ultimately let us thrive. Unfortunately, it’s not going to be easy – there is going to be a creation, implementation, and learning curve that both the attraction creators and operators will have to go through together.
All the above complexity causes that brain freeze feeling you get when eating or drinking something too fast that is also too cold.
Fortunately, as our LASERTRON design team develops and implements more and more of the pieces necessary to create a better and more immersive attraction experience, we are realizing we definitely can create 10x experiences that are far superior to what is currently being done.
And most importantly, we believe our newest attraction experiences are already approaching 3x better and 5x is probably reachable within the next 6 to 9 months. It’s important to point out that different parts of our journey have been in progress for between 3 to 12 years. By the way, 10x is coming, but it’s probably about two to three years away.
One of the big obstacles to our industry’s success is finding more operators who are willing to create an attraction that is at least 3x better and unique compared to the industry norm. If you visited 100 entertainment centers today, you probably couldn’t find more than one or two examples of an attraction or service that was 10x better than the average or probably even 2x better. With that being said, you would easily notice that over 95 percent of the attractions and services were similar.
What’s the key to developing 10x attractions for the out-of-home entertainment industry?
The focus has to be on creating Real Reality (RR) experiences that integrate the right technologies to fully enhance and maximize the core attraction experience, which is to maximize human interaction with other humans. Real Reality experiences have to be ones that can only be experienced out-of-the home and are designed to be addictive and habit forming.
Cracks in the Wall – Digital Entertainment (10x Elephant in the Room)
More than a few Movie Theater operators are justifiably concerned about their future. Netflix, Amazon Prime, YouTube, Twitch, Zulu, Disney+, Direct TV, AT&T, Comcast, Apple, and more are in an epic battle to control the eyeballs and attention of every human being in the United States and the world. And… this war is escalating every day. That’s why movie theater operators are adding entertainment centers to both their existing and new theaters. Their hope is to get more dollars out of their current guests pockets while hopefully maintaining their overall foot traffic.
Movie theater ticket sales have been declining for many years and the decline is likely to accelerate – especially since consumers of digital entertainment, which includes movies, continue to spend more of their time and money with content providers who deliver what they want, when they want it, and the way they want it, which is digitally into their homes and onto their digital devices. They also don’t want to wait weeks to watch a movie after it plays in theaters. Besides, some of the very best digital content is now being provided by Netflix, Amazon Prime, HBO, etc. in highly bingeable TV formats that are often better and with more addicting plot lines than a movie could ever produce (i.e. Game of Thrones).
By the way, digital entertainment providers are investing billions and billions to create more and more content as well as developing and implementing more ingenious ways to get their customers even more addicted to their offerings.
How much are we spending to create addictive attraction and guest experiences?
Answer = NOT freaking Billions and Billions.
Here’s another question. Do we have anything that is even remotely close to, “Next episode begins in 5, 4, 3, 2, 1 autoplay begins now” all without their customers getting off the couch or lifting a single finger?!?
What’s the solution?
We have to create dramatically better and truly unique attraction and service experiences.
The focus must be on creating attractions and services that are 10x better than what exists now and are also addictive and habit forming – this is not a joke and yes I’m dead serious about the need to create addictive and habit forming experiences.
I use to be pretty active on LinkedIn about 3+ years ago and wrote articles for an industry publication about once or twice per year and then I kind of disappeared. I basically decided to stop doing a lot of miscellaneous things in order to spend a lot more time on researching what it would take to create an attraction that truly was 10x better and was also difficult to copy.
I’ve always been an avid reader, but my research led me down several different rabbit holes that often seemed very unrelated. I read dozens of books, multiple articles, and research papers on a wide variety of topics. These topics ranged from psychology, decision making, addiction, habit formation, game design (what makes certain games addictive and others not), reward programs, membership/subscription economy, social platforms (why are they addictive and depressing, etc.), How good/bad Societies/Groups are formed, how chemical reactions can be triggered within the human body and how they can affect our decisions and actions, and still more.
Since the start of this process, I’ve been working closely with our design team to figure out how to use the research to better understand what it will take to create attraction experiences that are truly 10x.
Are we getting close? I think we are, but it really doesn’t matter what we think – what matters is the actual affect or result that occurs when a guest experiences one of our attractions. When we consistently see that the demand for one of our game experiences exceeds the supply for a long period of time, then we will know we are getting close to having a 10x attraction. Plus the attraction has to be one that can evolve while maintaining its ability to be relevant, addictive, and a habitual experience long into the future – not freaking easy to figure out.
By the way, there are many pieces that have to work together to create the result we are striving to achieve. And it’s not just about the actual attraction experience, it’s about all the pieces that need to surround it and support it. Creating an attraction that enables a strong addiction and habit to occur is a very complicated process. A 10x attraction has to utilize and integrate the same types of tools used to create addictive and habit forming games (i.e. Fortnite, PUBG, and many others) and similar to what social networks have developed to make their platforms very addictive and habitual (i.e. Facebook, Instagram, Twitter, Snapchat, etc).
Remember: Not all addictions and habits are bad! It’s up to us to create experiences that provide our guests with addictive and habit forming experiences that help make their lives better and not worse.
Important note: an attraction that is fun and designed to be addictive is also more likely to become a habit.
Once again, the ultimate key to our current and future success is to dramatically set our centers apart from all the other Out-of-Home entertainment centers as well as In-Home and Mobile entertainment providers. In order to do this we must create at least one dramatically better, truly unique attraction or service experience that is 10x better, proprietary to our center, and can only be experienced out-of-the home.
Again, our core offering has to be something that is very difficult to replicate. 10x is much harder to replicate than just 2x. Our guests also have to instantly recognize that our offering is dramatically better and truly unique. Plus it has to be designed to be addictive and habit forming for a large enough number of the type of guests we are targeting.
Are there any examples of Out-of-Home centers that have successfully separated themselves from the out-of-home entertainment industry?
I think there are.
Dave and Busters continues to work to raise the bar higher than the industry average when it comes to operating a large arcade. D&B has diligently worked to separate themselves from everyone else by focusing on their core strength and using their size to purchase newly released games first and weeks before their competitors. D&B also works closely with game creators to design and develop their own proprietary and unique arcade experiences that are often branded (i.e. Rock’em Sock’em Robots, Jurassic Park, Men in Black, etc).
By the way, Dave and Busters is a great example of a long-term success story that has continuously invested a significant amount of time and money into their one core strength, which is continuously maintaining and improving their arcade experience. By focusing on their core strength, D&B has become the largest out-of-home entertainment operator in the United States and is solidly profitable.
D&B’s arcades are far bigger than the average arcade and as I said above, they introduce new arcade games first as well as provide their guests with unique and proprietary games they can only experience at D&B.
On average D&B’s arcades are 2x to 10x better than their arcade industry competitors. You might be thinking, “Yes, but our center has several or even many other attractions that D&B doesn’t have.” That may be true, but if a guest wants to play arcade games, have a beer, watch the big game/fight, or get something to eat in an adult environment, well they are much more likely to go to Dave & Busters.
By the way, D&B’s other big revenue stream comes from their food and beverage. Food & Beverage for D&B is not an industry leading strength. D&B does not offer a significantly better or truly unique F&B experience – especially when compared to other high quality restaurants and bars and yet they are still a dominant player in the out-of-home entertainment industry.
I’m not trying to diminish the success of D&B’s accomplishments. I’m just saying that operating an industry leading F&B experience is really freaking hard – especially when D&B has such a large volume of people entering their centers during peak times and often during times that are different than an industry leading restaurant has to deal with. What I am specifically trying to point out is how hard it is to be great at more than one thing – especially when operating a very large chain of entertainment centers.
Important note: trying to be great at more than one thing is almost/probably impossible to do.
I think D&B has smartly spent the majority of their resources on creating a better and truly unique arcade experience by introducing games first and creating proprietary games that can’t be purchased by their competitors. They have continued to do this even with the stress of being a public company and having to worry about their next quarterly report.
A depressing and important point: All of us including D&B are far from winning the battle against In-Home and Mobile entertainment. We will continue to lose more and more time and dollars from our prospective guests if we don’t create more 10x attractions and guest experiences that can only be experienced outside the home.
What’s another successful Out-of-Home entertainment company with a core strength that is basically the opposite of D&B?
Answer = Punch Bowl Social – What is Punch Bowl Social’s core strength? Food & Beverage and it is totally obvious on their website and it’s baked into their culture starting with the people at the very top of the company. Punch Bowl Social is obsessed with their F&B experience and it shows in their revenue. Their F&B revenue totally dominates their entertainment revenue.
In fact, it can easily be said (and it has) that Punch Bowl Social’s competitive advantage isn’t about competing with other types of out-of-home entertainment operators as it is with other restaurants. Punch Bowl Social’s strong competitive advantage over traditional high quality restaurants is its unique offerings of fun, social, and often retro entertainment experiences along with a very high quality food and beverage experience.
Dave and Busters and Punch Bowl Social are two companies that focus most of their attention on one revenue source and both are extremely successful – how is this possible if the concept of more stuff under one roof is supposedly the better way to go??? Well – maybe it’s not or at least not in the long-term or in markets that are getting more and more competitive with similar offerings.
If the Out-of-Home entertainment industry somehow survives its self-inflicted mediocrity trend, overbuilding of way too many me-too big box centers, and the continuous damage that In-home and Mobile entertainment is causing, what is likely to survive and even thrive for the long-term?
The answer is likely to be more types of D&B and Punch Bowl Social concepts that focus on being great at just one or maybe two key revenue generators that are 10x or at least 3x better, truly unique, and set them far apart from all the others.
The success of new, dramatically better, and truly unique entertainment concepts will create a much more dynamic out-of-home entertainment environment. One that will hopefully show those who dare to be great a much better way to go.
Ultimately, we have to stop the in-home trend of more and more people choosing to simply stay home to watch their favorite new TV show, movie, or play video games along with the convenience of being able to pause their digital forms of entertainment to answer the door when UberEats, Door Dash, etc shows up with their favorite food or the convenience of pausing their digital content to use the bathroom and with no fear of missing a split second of their favorite TV show or movie.
Next post… A few examples of what is and is probably not 10x.
Thanks for reading,
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