Commentary

Acquisition frenzy marks the birth of a new OOH entertainment era

The OOH industry has reached a point where players will either evolve and adopt the new or be replaced by those willing to adapt and be inclusive.

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May 16, 2022 by Kevin Williams

There are momentous developments across the social media, videogaming and location-based entertainment markets. The time for acquisition, restructuring and more is at hand.

Only a matter of days after the videogame industry was rocked by the momentous deal by Microsoft to acquire Activision Blizzard and their associate components for $68.7 billion, as well as the fallout from the Amazon acquisition of MGM Studios for $8.4 billion, a feeding frenzy erupted in the industry that seems to mark a pivotal point in its history — what some have labelled the "videogame consolidation." However, it may be better to see this as an "entertainment consolidation" as the ripples widen towards creating true multi-media corporations.

Sony Interactive strikes

Sony Interactive Entertainment this year agreed to acquire videogame studio and developer Bungie for the sum of $3.6 billion.

Clearly, the videogame division of Sony, responsible for its content and console releases including the PlayStation 5 and PSVR platforms, was in serious shock from the earlier acquisition by Microsoft of Activision — developer of titles that are a major revenue stream on the Sony PlayStation consoles as well as the Microsoft Xbox series. A need to protect their ecosystem and future content supply chain sees Bungie as the latest acquisition victim.

It is important to also add to the possible consolidation funfair taking place that of alliances and investment deals. Undertakings include those such as between Microsoft and Sega, which have signed a strategic alliance towards building future technology and the sharing of IP and brands for strategic titles, referred to as a "super game."

Meanwhile, Tencent has invested stakes (40%) in the likes of Epic Games and other major independents. These moves allow the creation of close alliances and direct the development of these parties without the need for rolling them fully into the corporation.

The investment in creating a walled garden towards consolidation in controlling the ecosystem was seen to extend into the theme park and amusement scene, as was to be expected.

SeaWorld Entertainment made an unsolicited $3.4 billion offer to acquire Cedar Fair — a move that would have seen shares in both operations skyrocket had the offer not been rebuffed. The combining of the entertainment venue empires would have created a brand-new entity in the market.

Apple dips its toe

One of the big areas of interest in the markets is the entry of Apple into the choppy waters of virtual reality. The mega-corporation has been secretly working on its own lightweight VR headset, codenamed "Project Star," offering a high-performance platform that is expected to be launched in 2023.

While Meta may have hoped they could buy in early and create a walled garden to control the VR space, the reality may be that all they have achieved is to create a landing strip for others to profit from. The founder of Meta had warned investors of a long haul for the company in this space, suggesting annual investment of up to $10 billion.

We have suddenly been seeing editorials that, rather than painting doom and gloom, are charting a sudden growing resurgence in the general public's interest for social entertainment and the revisiting of family entertainment and adult entertainment venues. At the same time, certain media have been forced to report the new investment being placed in entertainment facility business, and the opening of the doors to new venues.

Entertainment chains bounce back

The bounce back of entertainment chains such as Chuck E. Cheese and Dave & Buster's, from uncomfortable financial conditions, started the ball rolling towards a positive reporting on the entertainment landscape.

We are at a point where, for all intents and purposes, there are two industries. One representing what is called the "traditional" amusement scene, and the other which is labelled the "new" entertainment scene.

While these "new" entertainment venues still have amusement hardware, and many of the services that the "traditional" amusement scene represents, the new industry offers a distancing from older perceptions and allows for a chance to repackage and resell the concept of OOH entertainment as viable. All parties are happy.

To better define what is seen by "traditional" amusement, we can look at operations that have ignored the adoption of social media marketing and connected technology, and still relied on 1990s business practices.

We have the usurping of the 1990s arcade scene aesthetic, with Meta's "virtual arcade restaurant" experience, called "Questy's" and the zeitgeist for traditional (nostalgia) arcade experiences is still strong — as can be seen by the explosion in new "barcade" style venues. That said, an industry does not live by nostalgia alone, and the need to modernize and maximize the amusement offering has engendered a new breed of business.

In defining the "new" amusement scene, we must look towards the deployment of social entertainment, new technology, e-payment connectivity and the ability for social media integration with full gamification of the product — from championships to e-sports — and less wedded to outdated practices, while looking at a new commerce landscape.

Sadly, it took a pandemic for the industry to reluctantly adopt frictionless e-payment and the smart card. This is the same intransigence that blocked the adoption of online play and connected machines that hampered the adoption of connected competition play, forcing successes like Golden Tee Golf to the hospitality scene, only now for the amusement trade to see others benefit from competition gaming and the ascendance of e-sports.

Two amusement industries

But what will happen to the traditional amusement scene?

Well, that is the big question — an association with "old think" — a lack of social media presence and no savvy promotion will see a reversion of the industry into irrelevance, and we shall see those once-profitable operations leave the market.

This will result in a moving on to create a "new" association of operations and suppliers. The sudden investment into social entertainment businesses is a case in point, with those involved in this new investment already looking to hold trade events and conferences of their own, avoiding the already existing traditional trade trappings.

We stand at a crossroads, exiting one of the most momentous periods in any industry's history. While others have suffered, the out-of-home entertainment industry looks to be able to stand tall following the global health crisis.

We now face a point where we either evolve and adopt the new or are replaced and removed by those willing to adapt and be inclusive.

(Editor's note: Extracts from this blog are from recent coverage in The Stinger Report, published by Spider Entertainment and its director, Kevin Williams, the leading interactive out-of-home entertainment news service covering the immersive frontier and beyond.)

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About Kevin Williams

Along with advisory positions with other entrants into the market he is founder and publisher of the Stinger Report, “a-must-read” e-zine for those working or investing in the amusement, attractions and entertainment industry. He is a prolific writer and provides regular news columns for main trade publications. He also travels the globe as a keynote speaker, moderator and panelist at numerous industry conferences and events. Author of “The Out-of-Home Immersive Entertainment Frontier: Expanding Interactive Boundaries in Leisure Facilities,” the only book on this aspect of the market, with the second edition scheduled for a 2023 release.

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