Location-Based Entertainment, 2024-2031

Immersive Video Provides Novel Experiences to Drive Transformational Growth

Location-based entertainment (LBE) refers to immersive video installations that leverage technology and a shared environment to create engaging experiences not typically achievable in homes. Immersive video LBE uses high-resolution, wide field of view domed and wall displays, and/or virtual reality (VR), augmented reality (AR), mixed reality (MR), collectively referred to as extended reality (XR), to achieve highly realistic experiences for participants.

Characteristics of immersive video LBE include: Large-Scale Visuals: Wide field of view light-emitting diode (LED)/projection domed, and wall displays Interactivity: Motion tracking, haptic feedback, and spatial computing Group Experience: Unlike at-home XR, immersive LBE fosters social engagement among participants Physical Integration: Real-world elements, such as moving floors, props, and themed architecture

Examples of immersive video LBE include wide field of view video venues, immersive art installations, theme park attractions, and VR arcades, often with mechanized components.

Revenues derived from venue ticket purchases translate to the owner's yearly revenues.

The 2023 debut of The Sphere in Las Vegas, Nevada and 2024 introductions of Cosm entertainment venues for large-scale domed theaters sparked public awareness of "beyond movie theater" immersion for concerts and sporting events with high-resolution displays and directional speakers.

While theme parks traditionally relied on mechanical rides, the inclusion of projected immersive video upgraded the experience and drew additional visitors after high upfront costs.

High-quality projected video, coupled with wide field of view domed screens similar to planetariums, expanded the feeling of immersion beyond the capabilities of traditional and IMAX movie theaters. Although most venues are location-specific, adopting modular and scalable technologies will help replicate successes across multiple locations while minimizing costs.

Cloud-based video and XR streaming can reduce the need for expensive on-site hardware, though bandwidth needs make this challenging.

Major studios like Disney and Universal combined their intellectual property from films and television to augment theme park attractions into immersive video rides and gamified, interactive areas that engage visitors beyond traditional, albeit entertaining, passive mechanical rides.

Post-COVID-19 saw a rise in live event revenue as performances returned; however, improvements in home and theater equipment led to the need to differentiate location-based entertainment.

High-quality, rewatchable immersive video experiences and/or in-demand artists and sporting events attract repeat visitors.

Generative artificial intelligence (AI) can render new stories and adapt to audiences to create dynamic, personalized experiences.

Partner with popular intellectual property franchises, such as film characters and stories, along with popular artists and creators, to drive audience awareness and brand recognition.

Immersive art exhibits draw large crowds, typically as time-limited attractions that travel between cities. Revenues from ticket sales are bolstered by physical merchandise sales of books, posters, and other items featuring the represented artists.

Beyond movie and streaming revenues, studios can engage viewers in "visiting" the locations of their fandoms in the form of immersive experiences at venues and theme parks, further extracting revenues from them.

Targeted social media and traditional advertising drive viewership and ticket sales, along with word-of-mouth marketing.

Merchandise can enhance revenue beyond ticket sales, particularly for popular IP.

Data analytics and personalization can tailor experiences and optimize customer retention.

Implement franchising/licensing models to expand globally with lower capital investment.

The Impact of the Top 3 Strategic Imperatives on the LBE Industry

Disruptive Technologies

• Why:
  • The 2023 debut of The Sphere in Las Vegas, Nevada, and the 2024 introductions of Cosm entertainment venues for large-scaled content theaters sparked public awareness of "beyond movie theater" immersion for concerts and sporting events with high-resolution displays and directional speakers.
  • While theme parks traditionally relied on mechanical rides, the inclusion of projected immersive video upgraded the experience and drew additional visitors after high upfront costs.
• Frost Perspective:
  • High-quality projected video coupled with wide field of view domed screens, similar to planetariums, expanded the feeling of immersion beyond the capability of traditional and IMAX movie theaters. Though most venues are location-specific, adopting modular, scalable technologies will help replicate successes across multiple locations while minimizing costs.
  • Cloud-based video and XR streaming can reduce the need for extensive on-site hardware, though bandwidth spikes can make this challenging.

Competitive Intensity

• Why:
  • Major studios like Disney and Universal combined their intellectual property from films and television to augment theme park attractions into immersive video rides and gamified, interactive areas that engage visitors beyond traditional, albeit entertaining, passive mechanical rides.
  • Post-COVID-19 saw a return to movie theaters and live events; however, improvements in home viewing and theater technology led to the need to differentiate location-based entertainment with immersive experiences.
• Frost Perspective:
  • High-quality, watchable immersive video experiences may draw in demand for artists and sporting events attract visitors to drive revenues in an industry competing for attention.
  • Generative artificial intelligence (AI) can render new stories and adapt to audiences to create dynamic, personalized experiences.

Innovative Business Models

• Why:
  • Immersive art exhibits draw large crowds as typically time-limited attractions traveling between venues. Revenues from ticket sales get bolstered with physical merchandise sales of books, posters, and stock images of the represented artists.
  • Beyond movie and streaming revenues, studios can engage viewers in "visiting" the locations of their fandoms in the form of immersive experiences at venues and theme parks, further extracting revenues from them.
• Frost Perspective:
  • Targeted social media and traditional advertising drives viewership and ticket sales along with word-of-mouth marketing.
  • Merchandise can enhance revenue beyond ticket sales, particularly for popular IP, for additional revenue beyond ticket sales.
  • Data analytics and personalization can tailor experiences and optimize customer retention.
  • Immersive venue owners can implement a franchising/licensing model to expand globally with lower capital investment.

Growth Drivers

• Adoption, convergence, and decreasing costs of cutting-edge technologies, such as projecting video on dome screens and interactive wearables, create more immersive experiences that entice users to visit venues.
• Consumer demand is growing from millennials and younger demographics who prefer interactive experiences that are difficult and/or cost-prohibitive to replicate at home. This broad shift in consumer preferences, particularly post-COVID-19, is often referred to as the experience economy.
• Strong investment in the LBE market enables faster rollouts of high-initial cost venues, more spending on content development, and higher marketing budgets to attract visitors.
• Crossover potential of intellectual property from movie theaters and streaming services to diversify revenue across theme parks, immersive art installations, and live event venues generates interest from studios with existing IP.
• Global tourism and increasing disposable income in some regions contribute to growth, as such venues serve as unique and memorable experiences often highlighted by cities and sought out by visitors.
• Generative AI has the potential to accelerate content development for immersive location-based entertainment, particularly for concept art, character design, and 3D models of buildings and landscapes.

Growth Restraints

• High upfront investment costs for setting up and maintaining LBE venues with advanced audio/video technologies and domed screens, coupled with licensing IP, present a significant barrier to entry.
• Rapid technology advancements and rising customer expectations for realism (and motion sickness avoidance), shortens the return on investment (ROI) window for each equipment installation.
• Limited repeat visits for locals inclines LBE toward higher tourism areas or requires continuous investment in content to maintain user interest for novel experiences and attract repeat business. High costs leading to high ticket prices can also limit users to fewer LBE experiences.
• In an emerging market such as LBE uneven returns on investments can dissuade investors as the economics of the market are still in the novelty phase in most segments, particularly if the LBE is not based on existing, popular IP.
• Architecture and building necessities along with zoning opposition can constrain development as few companies are equipped to design and build such venues, and real estate for such venues can be expensive and/or opposed by local communities.
• Regulations, such as facial recognition in Europe complying privacy laws and compliance with equipment sanitation post-COVID-19, can limit visitor enthusiasm.