Firm’s Hopes Ride on Motion Simulators : Entrepreneurs: Studio City-based Cinema Ride, which already runs a mini-theater in Las Vegas, plans to cash in on virtual-reality entertainment. But competition is growing.

At a recent amusement park industry convention in Miami, Mitch Francis, chairman of a new company named Cinema Ride Inc., felt the heat of competition. There were up to 100 companies at the International Assn. of Amusement Parks and Attractions’ annual gathering claiming to be in Francis’ field, marketing what’s known as “motion simulator” rides for theme parks, shopping malls and movie theaters.

Most of these companies, according to Francis, don’t have motion simulator equipment or the special films these attractions require or meaningful financial resources. “They’re simply wanna-bes,” Francis said.

But Cinema Ride isn’t that much further along itself. In October, Cinema Ride did open its first--and, to date, only--motion simulator mini-theater at the glitzy Forum Shops mall next to Caesars Palace in Las Vegas.

In the first 75 days, more than 85,000 people paid $4 each to experience Cinema Ride’s attraction, Francis said, and the site is profitable. There are four 15-seat mini-theaters in Las Vegas, and Cinema Ride’s computer-generated, three-dimensional films have computer-controlled seats that move in concert with the on-screen action. Cinema Ride’s patrons don 3-D glasses to experience the sensation of objects leaping off the screen. Cinema Ride’s movies are about five minutes long and are thin on plot: One is about a space trip; another is on a submarine; another is about a trip through a haunted graveyard. “What we have here is a whole amusement park in 5,000 square feet,” Francis said.

To its credit, Cinema Ride now has enough money to try to make a go of it. Last fall, Cinema Ride raised about $7 million in its initial public stock offering. And Francis hopes that a movie theater in Chula Vista will soon buy some of its motion simulator rides as well.

But the number of companies competing in what is sometimes called virtual-reality entertainment is growing, lured by talk of a trend toward “location-based entertainment,” such as motion simulator rides, under the same roof with restaurants and shops. Despite all the hype, even the field’s bigger players, such as Iwerks Entertainment in Burbank and Showscan Entertainment in Culver City, are still losing money.

Francis is hoping that the compactness of Cinema Ride’s motion simulator theaters will help it find buyers. They are built to fit under 15-foot ceilings, so the systems can occupy most existing ground floors of commercial sites, which Francis believes is an advantage over some rivals, whose systems often require larger spaces.

Real estate was Francis’ first business. During the ‘80s, the Colorado native developed office buildings and shopping centers in Southern California. Then the commercial real estate market fell apart and Francis decided to strike a new course. On a business trip to Las Vegas, he checked out a motion simulator ride at the Excalibur hotel. He was enthralled.

In 1991, Francis joined forces with Gary Packman, another commercial real estate executive, who has since become Cinema Ride’s chief financial officer. The two then began researching the motion simulator entertainment field and explored avenues of possible financing. During this period, Francis had to file for personal bankruptcy.

Finding the capital to start Cinema Ride was not easy. Francis and Packman looked to real estate clients for backing without any luck. Eventually, investment banker A.S. Goldmen & Co. lined up private investors who put in about $3 million. Then last September, the company had its public stock offering.

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Landing the lease at the well-trafficked Forum Shops was a major coup. A spokeswoman for the Forum Shops’ owner, the Simon Property Group of Indianapolis, said the company was swayed, in part, by the persistence of Francis and Packman.

Now Francis has an agreement with Nickelodeon Theater Co., an owner and operator of movie theaters, to buy two 15-seat motion simulator theaters for $910,000, and to rent Cinema Ride’s film library, for an attraction in a Nickelodeon theater complex in Chula Vista. If the deal goes ahead, there is a provision that says Nickelodeon can insist Cinema Ride buy back the equipment if the attraction does not generate sufficient profits. Nickelodeon insisted on these provisions because of Cinema Ride’s short history.

Cinema Ride’s business plan is to either own and operate these motion simulator attractions or just sell the equipment outright. It will lease the film library, which currently contains five ride films. Cinema Ride hires production companies to create these flicks, which cost from $100,000 to several million dollars to produce. But given the competition, Cinema Ride will be under continual pressure to improve the quality of its library.

At the moment, the market is flooded with simple ride films, mostly involving chase scenes, said Nick Winslow, executive vice president of Warner Bros.’ recreation enterprises unit in Burbank. That’s not enough to hook patrons long-term, because “people won’t ride simulators just for that,” said Winslow. Warner Bros. itself has experimented with this field and has built an elaborate “Batman Adventure” motion simulator ride in its movie theme park in Australia.

Then there’s the question of how much demand there is for these small motion simulator outlets. Much of the success depends upon finding the right locations, said Jill Bensley, president of JB Research Co. in Ojai, a market research company. “Finding that crossover between retail, entertainment and restaurants is not a slam-dunk. Just because people went out to dinner doesn’t mean they want to be jostled in a motion simulator ride,” she said.

Bensley also noted that all of the major entertainment companies have studied this market. “The big players are getting into it, and they’re going to do it right, “ she said. Sony Retail Entertainment, an arm of Sony Corp., for one, plans to open a number of shopping-entertainment centers around the country.