UNIVERSAL CITY Behind the door to Stage 35 on the Universal Studios lot is a chaotic jumble of flashing video games and enough computer hardware to launch the Space Shuttle.
It’s not a movie under production it’s the design headquarters for a nascent chain of nightclub/arcades known as Sega GameWorks.
Backers say it will be the next Big Thing a chain of super-arcades around the country operated by three of the biggest names in entertainment: DreamWorks SKG, Universal and Tokyo-based Sega Enterprises Ltd.
“The world has changed. Kids don’t play sandlot baseball as much as they used to,” said Jon Snoddy, senior vice president of design at GameWorks. “But they are good at video games.”
But those games must be several steps ahead of the usual coin-operated fare.
“The teenager-oriented arcades of the ’70s and ’80s have definitely faded out, but there’s a huge business that has taken its place known as the family entertainment center, or the location-based entertainment site,” said Marcus Webb, editor of amusement industry trade magazine RePlay.
This week, a Hollywood-style premiere is planned for GameWorks’ Seattle site, a 30,000-square-foot, computerized environment where patrons can get hyped up on Starbucks coffee or home-brewed GameWorks beer while beating the bytes off of computer-generated bad guys.
Some estimates place the cost of each GameWorks facility at $20 million. The company plans to open 100 around the country by the year 2002 including the first local outlet, which will debut adjacent to the Ontario Mills Fashion Center this summer.
While other studios besides DreamWorks and Universal are getting into the location-based entertainment business, they seem to be taking a more conservative, wait-and-see approach.
Walt Disney Co., for example, opened its first Club Disney attraction in Thousand Oaks last month but it will be the only Club Disney to be opened this year. Disney appears to be working out the kinks before launching the chain nationwide.
By opening four outlets in 1997 alone, GameWorks is jumping in with both feet.
Its strategy affirms the growing importance of “location-based entertainment,” one of the hottest trends in the amusement and retail industries. Essentially, it is a way of bringing retail and entertainment together in convenient venues across the country.
Themed restaurants like Planet Hollywood, mall-based megaplex cinemas, entertainment-oriented stores like The Disney Store, and mini-theme parks like Club Disney and GameWorks are all variations on the concept.
“GameWorks is in a hurry because they want to be the kings of the hill in the location-based entertainment business,” said Kevin Skislock, who is compiling a report on the trend for investment bank L.H. Friend, Weinress, Frankson & Presson Inc.
“It’s clear that this location-based opportunity has been out there for the last three to five years, but nobody has yet successfully implemented it in a national way.”
When plans were first announced last year, some were skeptical. The coin-operated arcade business is in decline. Done in by CD-ROMs, the mall-based video game parlor era appears to have ended in the early ’90s.
But industry observers say arcades aren’t really dying, they’re just evolving and venues like GameWorks are the next step in that evolution.
It is the mini-theme park arena that GameWorks hopes to dominate. Although the facilities will be packed with the same video games found in many coin-operated arcades (with the difference that most will be made by Sega), they will be loaded with extras.
Each outlet will have two or three special attractions more akin to amusement park rides than video games.
For example, the Seattle facility will contain a game called “Vertical Reality” in which patrons step into see-through capsules and, armed with electronic pistols, shoot it out with thugs who appear on life-sized video screens. The 25-foot-high attraction is designed to look like a four-story highrise; successful shooters are physically raised in the capsules to the next story, with the top guns making it all the way to the upper floor.
All the facilities will be divided into three sections: the Loading Dock, a high-energy video parlor filled with competitive games, the Arena, where the large GameWorks-designed attractions can be found, and the Loft, a quieter den filled with overstuffed chairs and laptop computers where patrons can chat, send e-mail, and make personalized World Wide Web pages.
Even the Loading Dock, which borrows the most from traditional arcades, contains novel elements. A giant projection screen will hang from the ceiling along with computerized spotlights and a digital TV camera; when a player is doing particularly well at one of the games, the spotlights and TV camera will zoom on him or her, transmitting the image onto the screen.
“This puts people on stage,” said Snoddy, with GameWorks. “What we hope will happen is, you’ll get stars. I want this class of players to develop that is so good, people will line up to see them.”
Older patrons especially singles will be more attracted to the Loft, where they can seek out and find people with similar interests via personal Web pages and chat with them without the initial discomfort of face-to-face interaction.
“This place will have very much the feel of a nightclub,” Snoddy said. “This is for 20-year-olds here, this is for dates. It’s not about the 15-year-old smoking cigarettes and playing video games at the back of the 7-Eleven. This is a social experience.”
The Seattle store will have 200 employees, including a large security force to keep out undesirables. Instead of coins, patrons will buy cards from which money is deducted electronically; there won’t be a charge for admission, but a game like “Vertical Reality” will cost $3 or $4 for a five-minute experience, Snoddy said.
Critics of the growing location-based entertainment phenomenon contend that many existing venues are fads that may soon fade. “Eatertainment” outlets like Planet Hollywood and the Hard Rock Cafe have a poor record for attracting repeat business, analysts say many people go once for the experience, and never again.
Skislock acknowledged that chains like Dallas-based Dave & Busters a themed arcade/restaurant that is probably the closest existing thing to GameWorks may indeed have trouble attracting repeat customers because they don’t offer a wide enough variety of experiences for a broad enough audience. GameWorks is in less danger, he said.
“You really have to keep these sites fresh,” Skislock said. “There have to be a lot of different experiences within the site, and there will be pressure every couple of years to create a new big ride to keep the repeat business going. Clearly, that’s what a GameWorks will do.”