Driving Trends Reshaping the Market #1053

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Another example of the immersive projected environment was launched back in 2019, with the Electric Playbox concept. The multiplayer projection environment, with motion-tracked players entering the team adventure, was first covered during a Stinger Report visit to the initial London flagship location. The operation has continued to expand and hone its offering and brand, even in the face of the trying global conditions. The operation is taking the considerable step of opening its first US location during December at Grandscape at The Colony, Texas. The company is looking at an ambitious rollout of the interactive entertainment concept in the territory over coming months, based on investments.

The “Social Entertainment” scene has gained momentum pre-Global Health Crisis, but still sees continued considerable investment. The concept of indoor golf simulator venues, with an extensive Food and Beverage (F&B) element, has been one such example. This concept was initially seen in several standalone installations, but also gained ground as a franchise concept. X-Golf was one of the first, with some 20 franchise locations. Building on this, we have seen the explosion in popularity of the competitive Topgolf Swing Suite installation, with some 60 installations. These venues are employing a projection and player tracking system, to offer simulated golf and game experiences in a social entertainment environment.

Where Topgolf has found success with its social entertainment golf shooting range and F&B model, the Swing Suite concept builds on the brand and the social gathering element, including not just golf games but other entertainment experiences too. Sports simulators, ranging from golf, shooting ranges, and more advanced flight and racing simulator centers, have found a place in the market. The growth of eSports has seen several cockpit racing simulator centers attempt to mix competition with a social entertainment venue model – examples like the new Base51 venue that opened in California recently. It is expected that this brand of entertainment, building on more highly immersive attractions, will continue to be an attractive model for the next phase of business in the sector.

– The Entertainment Industry’s Musical Chairs!

Underpinning our recent coverage regarding the expected “Great Reboot”, and The Stinger Report has also discussed the expected “Merger”, “Acquisition” and “Restructuring” that is inevitable in the face of the tectonic upheaval which 2020 has brought on the social entertainment landscape.

– Restaurant
The initial tremors of the expected upheaval have first started to be felt in the food and hospitality industry, with major mergers being witnessed alongside permanent closures. The National Restaurant News media service ran a detailed breakdown, concerning the wreckage from the loss of business which has forced other franchise restaurant chains into declaring bankruptcy – including the corporations behind recognized brands such as Wendy’s & Pizza Hut, Applebee’s, IHOP and Golden Coral to name just four. A considered list of dine-in operations were also listed, ranging from Bar Louie to Californian Pizza Kitchen.

The media service also highlighted those restaurant chains which had seen expansion under the current circumstances, now embracing change, and running their operations as “Dark Kitchens” – only supplying meals for delivery through the sea of online delivery apps. This is a mushrooming business model that was even adopted by Chuck E. Cheese Entertainment (who had filed 11 bankruptcy protections in June, early into the global upheaval), operating its stealth brand ‘Pasqually’s Pizza & Wings’. This generated a useful revenue, and even prospered under the lockdown conditions. It was also announced that CEC Entertainment emerged from Chapter 11 protection at the end of December. This the latest example of a corporation impacted from the global crisis, which is undertaking a financial restructuring process.

Information about the “Eatertainment” sector was revealed in several of the bankruptcy filings during this period. One operation in this sector in particular cast a light on the reality of the problems that, as with many, pre-dated the COVID conditions. The revealing, in December, of the filing for Punch Bowl Social, highlights the fact that there seems to be serious reasons for concern regarding the company’s move towards Chapter 11 protection against foreclosure for an outstanding $20m loan owned to CrowdOut Capital. Reports from the filing suggested that the executives may have moved the company into protection without prior knowledge of the lender, and that it may not even be a legally supported move. The executives’ battle is compounded by the dropping of the planned Cracker Barrel corporation acquisition (after the 2019 initial $140m investment). With the shuttering of the 20 locations, a sale of one location, and further internal issues, the status of the chain is in serious doubt.

– Beverage
Mergers and acquisitions are also followed by heated corporate battles in times of upheaval, and there are suggestions by well-placed sources that one of the biggest corporate battles is about to take place in the world of the soft drinks industry (which has direct ramifications for the entertainment sector). It was reported that Coca-Cola would be making 2,200 permanent executive job cuts, fuelled by the impact of the global pandemic. This follows a streamlining of brands from its line in October, such as Coca-Cola Life and others. The distribution and consumption of the company’s product range has been seriously damaged, including its subsidiary investments into the venues where the product is consumed. Coco-Cola has shares in restaurant, cinema, and even resort businesses.

At the same time as Coca-Cola seems seriously wounded by the situation, the company’s largest rival, PepsiCo, has been linked to secret plans to release a brand new competitor to the Coco-Cola original. Well-placed sources have leaked that the corporation has been working on a release of a product that is codenamed “Cocoa”. The product, which is aimed for the “Winter Holidays”, was initially reported as a “limited time” brand being run as ‘Pepsi “Cocoa” Cola’ – including a taste like marshmallows and chocolate. Pepsi took to social media to Tweet the reveal of its new drink and saw an avalanche of re-Tweets. The move is seen as the start of a concretive landgrab in the new landscape of the international beverage market. This will include the attempts to usurp the brand’s influences in entertainment venues.

– Cinema
The repercussions of the impact on the cinema sector were one of the many blows that impacted the Coca-Cola corporation. The movie theater business a major buyer of the brand and, likewise, the brand was keen to support these empires. The company has made major investment into studios in its history, and more recently, struck major partnership deals with operations such as the Coca-Cola China partnership with Wanda Cinema Line. For the cinema sector, the mounting body blows continued. One of the listed restaurant chains to file Chapter 11 protection was the dine-in cinema chain Studio Movie Grill – comprising some 33 venues.

Just as the year ended, the momentous news was revealed that the veteran movie studio, distributor, and producer MGM, was placing its operation up for sale. The Stinger Report had already covered the failure of the studio to find interested buyers for its 26th James Bond motion picture (‘No Time to Die’), in behind closed-door discussions. But the situation brought on by outstanding debts and a roster of big budget movies unable to be screened proved too much for the executive board, that now turned to sale as their only option. A price tag of some $5bn has been placed on the operation that, along with blockbuster movie releases, also comprises a vast library of classic movie and television content and IP. This was the first major studio victim of the inevitable COVID situation – with industry speculation that Apple and Netflix are the most likely interested buyers. This may be the first, but is obviously not going to be the last.

MGM has a considerable history in the resort and entertainment venue business, having licensed its IP such as with the MGM Casino Resort operation license, and negotiations towards full partnerships to open licensed parks, such as the Disney-MGM Studios, or the never-completed MGM Studio Theme Park project in South Korea, alongside numerous other licensed attractions.

The need to have access to capital has never been less serious – that leads to the consideration of sale of assets as well as businesses. Again, in the cinema sector, news broke that Cineplex Entertainment, one of the largest North American movie theater chain operators, revealed that it had started the process of selling its Toronto headquarters office building to raise some $90m. The corporation was doubly wounded by the current Global Health Crisis, seeing the closure of the majority of its cinema locations and loss of revenue, but also the collapse of an agreed acquisition by Cineworld Group, in a $2.1bn deal that has now been abandoned and involves an ongoing legal dispute. The ability to have access to actual funds through the sale of the property is expected to be essential to Cineplex’s continued operation, having already struck an agreement with creditors for relief into 2021, of the outstanding debt of $350m.

The momentum of this move, with new investment to support a changed landscape, continued soon after the Cineplex news broke. Rival and market leader AMC Entertainment Holding was linked to information that it had managed to secure a commitment to receive $100m in cash for January 2021. This came after a long period of speculation that the corporation would have to consider bankruptcy protection. The last-minute deal to inject liquidity into the corporation comes as new first lien debt financing from Mudrick Capital Management and is supported by other lenders. AMC had been reported to have debts of some $2.3bn in senior subordinated bonds, while being the largest movie exhibition company in the EU and US, representing some 960 theaters.

Along with a long line of Western investors, AMC had a majority investment made into the international operation by Chinese conglomerate Wanda Group in 2012, and had depended, before the pandemic, on funding from this partnership. Now, following the new cash injection, major restructuring and a significant investment in Cinema Entertainment Center business is expected on the back of current developments. While at the same time, not all the company’s cinema business is impacted. For example, AMC Entertainment Holdings announced the opening of its sixth movie theater in Saudi Arabia in December. The UAE market is showing strong signs of recovery following its period of lockdown, and AMC is also promoting an ambitious schedule to open another 50 locations in this territory by 2024 – as the remaining Western operation teeters on the brink.

– Theme Park & Expos
The reality of the COVID business impact has, as previously stated, heightened pre-existing financial problems in projects globally. While many may try and hide behind the impact of the Global Health Crisis, many of the projects that are at the front of restructuring and acquisition can trace serious cash problems and business fault lines to long before March 2020.

One of the most recent developments was the news that Dubai government-backed holding corporation, Meraas Leisure and Entertainment, had made an offer to the majority shareholder of DXB Entertainments, owners of Dubai Parks & Resorts – operators of some four parks, six FECs, and two hotels in the region, including Bollywood and LEGO Dubai parks. In an agreement supported by the government, along with outstanding bonds, they would convert some $1.6 billion in debt and take control of the problem project (buying back shares and taking them private). DXB Entertainments has been mired in difficulties since its creation in 2014, with recent grandiose plans for the development of new amusement park projects abandoned, such as the highly publicised Six Flags theme park project that was later scrapped.
The operation depends heavily on tourism and the postponement of the Dubai Expo was the final straw, compounded by poor management and an inability to raise funding as the brand softened – placing DXB in this spiralling condition that required the indirect emergency governmental bailout. It would be later revealed that the board of directors have accepted the resignation of the CEO, who would be stepping down upon this news, and major restructuring of the operation would be commencing.

This concludes our latest Stinger Reports, we thank all our subscribers and advertisers for their support, and the next report will follow shortly.

Erol Huseyin

Erol Huseyin

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About Me

Kevin’s consultancy KWP Ltd specialises in helping international clients develop immersive and interactive entertainment. Kevin has recently become Co-Founder and Technology Director for Spider Entertainment, a Global leader in Out of Home Entertainment for retail destinations.

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