ONES TO WATCH in ’94 : Company Has Virtual Lock on Reality of Theme Parks : THREE THAT MAY BE KEY
Iwerks Entertainment Inc. wants to take you on an underwater voyage, send you on a rollicking roller coaster ride and fly you through the Grand Canyon.
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After that, you can shop and have a bite to eat. And you can do it all without leaving a building smaller than the typical department store.
This is “location-based entertainment”--best described as a theme park in a box. And Burbank-based Iwerks is helping lead the charge in this new entertainment genre.
Iwerks plans to develop a chain of urban entertainment complexes, called Cinetropolis, that put theaters with big, 360-degree screens, moving seats and digital sound under the same roof with restaurants, shops and--get a load of these buzzwords--interactive virtual reality games.
“We simply believe that people are looking for new forms of entertainment,” says Stan Kinsey, Iwerks’ chairman and chief executive. “Taking the best theme park rides and bringing them closer to the people is something that will be broadly appealing, especially to the kids of the Sega-Nintendo generation, who we believe want to be interactive.”
Kinsey founded Iwerks in 1986 with another former Walt Disney Co. executive, Don Iwerks. Since then, the company has built a small but profitable business selling its motion-simulator theaters and big-screen theaters to theme parks, expositions, museums and malls, leaping ahead of rivals such as Showscan Corp. and Omni Films International Inc.
But there are no major world expositions planned for the next two years--a market that Iwerks has depended on for nearly half its revenue. What’s more, neither Iwerks’ equipment sales nor its traveling simulator theaters will ever be billion-dollar businesses, says analyst Keith Benjamin of Robertson, Stephens & Co. in San Francisco.
With Cinetropolis, however, Iwerks has a “home-run business,” Benjamin says.
Each Cinetropolis will cost $12 million to $18 million to build. The first is due to open Jan. 19 at the Foxwoods casino in Ledyard, Conn., owned by the Mashantucket Pequot Indians. The huge Japanese trading concern Itochu Corp., which owns 9.1% of Iwerks’ stock, has agreed to develop Cinetropolis centers in Asia. Iwerks wants to form other alliances in the United States and Europe, where it would co-own some centers and also pocket licensing fees for its films and computer software.
The concept was a hit when the company went public in October with a $50-million stock offering.
On the first day of trading, Iwerks’ stock opened at $33 a share--nearly double the $18 offering price. It hit $37 before settling back to its current perch at $23, which still gives the company a lofty market value of nearly $200 million. Never mind that Iwerks lost $1.5 million in the first three months of its current fiscal year, taking in just $6.6 million in revenue. The company blamed the loss largely on the costs of developing and marketing its new attractions.
Iwerks has high hopes, too, for a virtual reality attraction called Virtual Adventures, which it created with Salt Lake City flight-simulation developer Evans & Sutherland. Virtual reality uses computers to create artificial, three-dimensional environments in which participants can manipulate images at will.
Over the past three years, dozens of companies have rushed to produce arcade-style virtual reality games in which individual players don elaborate headgear that immerses them in a simulated, 3-D environment. But Virtual Adventures is a multi-player game that uses 3-D glasses instead of headsets.
In Virtual Adventures, 24 players divide into teams of six that compete to rescue the eggs of the Loch Ness monster. Players man “underwater craft” equipped with large, 3-D video screens, each assuming such roles as captain, pilot or periscope operator.
“If you talk to theme park operators, there’s a lot of excitement about virtual reality and interactivity. But these parks can’t use the single-operator headsets,” says Kinsey.
Will it sell?
Rick Zeckman, vice president of entertainment at Pavillion Amusement in Myrtle Beach, S.C., liked Virtual Adventures when he saw the game at a recent trade show. But at $1.2 million per unit, he says, “They’ve got to sell it to us practical people first.”
Iwerks, At a Glance
* Company name: Iwerks Entertainment Inc.
* Headquarters: Burbank
* What the company does: Founded in 1986 by former Walt Disney Co. executives Stan Kinsey and Don Iwerks, it designs and builds specialty movie theaters for theme parks and expositions. It now plans to incorporate the theaters and its new virtual-reality ride into urban entertainment centers.
* CEO: Stan Kinsey
* No. of employees: 180
* Revenue: $32.2 million (year ended June 30, 1993)
* Earnings: $1.3 million (year ended June 30, 1993)
* Quote: “We simply believe that people are looking for new forms of entertainment.”
--Stan Kinsey
