The First Malaysian Attractions Benchmark Report is out

Our friends at ParkDB recently released the first of a series of country-specific Attractions Benchmark Reports. This one is for Malaysia in collaboration with MAATFA. To download the full report click here.

And now here are our thoughts on the Malaysian attractions industry.

By 2018 Malaysia will count 3 world-class internationally branded theme parks along its North-South corridor, from Johor Bahru to Ipoh, providing the destination with great tools to strengthen its positioning as Asia’s preferred family holiday destination, which will hopefully result in an increase in length-of-stay and repeat visitors. This is a great achievement and contribution from our industry, which we should be proud of.

With both LEGOLAND Malaysia Resort and the newly opened Movie Animation Park Studios, Malaysia is spearheading a new model of theme park development through partnerships between experienced private investors and/or operators and state-owned companies, which departs from the other model of private developers building theme parks in exchange for government favors or land, which is increasingly showing limitations in terms of sustainability.

Furthermore, with Sunway Lagoon’s recent extension (Nickelodeon Lost Lagoon) and the new RM200million+ water park under development in Desaru Coast, Malaysia will be home of two of the best water parks in the region, therefore competing with Thailand, which has seen the recent addition of great products e.g. Ramayana, Black Mountain and Vana Nava water parks.

Beyond theme parks and water parks we see a huge potential for indoor attractions with hundreds of malls across the country crying for a new generation of lifestyle & entertainment anchors to save them from increased competition and online retail. Maybe this is an opportunity for Malaysia to develop a unique exportable know-how with support from the government? After all Malaysia led the way for theme park (Sunway, TAR) and shopping mall (Sunway, IGB, Pavilion) development in the region. It’s time to be regional champions again.

We need to look at a new generation of indoor attractions different from traditional FEC’s or indoor theme parks, such as Berjaya Times Square Theme Park, and more adapted to new trends such as active play (e.g. District 21), edutainment (e.g. KidZania, Petrosains, Aquaria, Entopia), lifestyle-driven (e.g. The Top) and IP-based (e.g. Angry Birds Activity Park, Thomas Town, Sanrio Hello Kitty Town). But we should always be careful to build the right product for the right audience and in the right location. If all projects announced or rumored get developed, Malaysian malls will offer lots of exciting new indoor entertainment concepts including wind tunnel, wave house, indoor skiing, VR theme park, RDE (Retail Dining Entertainment) and fun museums.

Now, as mentioned above the role of government in regulating, guiding, supporting and funding our industry is critical for its sustainability and long-term impact on the country’s economy. This is why we believe government should increase the Tourism Development Infrastructure Fund available for our industry, attract more talents, suppliers and investors through incentives and special programs, and reconsider its proposed entertainment tax, which goes against all required support.

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2 major trends shaping the visitor attractions industry in Asia

Recently Celebrating Life co-organized with blooloop.com the third blooloopLIVE Asia event in Singapore at the Asian Civilisations Museum. The attendees’ feedback was overwhelmingly positive, especially on the quality of the content. Among the highlights were Wonwhee Kim from The ParkDB who shared with us a very well put together history of Singapore attractions and Kevin Barbee who took us on a journey into branding and theme parks.

This put me in a reflective mood and I started looking back at what happened in our industry in the last few months. I thought I would share with you two of the major trends I believe are affecting us and could shape our industry in the future.

A new model of theme park development

In the last few years we have seen the emergence of a new model of theme park development through partnerships between experienced private investors and/or operators and state-owned companies to develop world-class theme parks in better locations and in more integrated ways.

Shanghai Disneyland is the proof-of-concept with one of Disney’s best parks and 11 million visitors in the first year of operation. Universal Studios Beijing seems to be following the same path with a product expected to be of the highest quality. In Malaysia, LEGOLAND Malaysia Resort as well as the newly opened Movie Animation Park Studios are other examples of such partnerships. In Indonesia we are excited about the $200million Sea World announced by Ancol in Jakarta.

These partnerships are not easy and all the above mentioned projects have taken a long time and gone through much pain but the outcome from a product and sustainability perspective is by far better than the alternative model of private developers building theme parks in exchange for government favors or land. The best example of such failure is Wanda Movie Park, which was forced to close after only 18 months of operation.

In-mall themed attractions

With the retail environment changing fast due to the rise of online retail and oversupply of malls, developers are increasingly looking at themed attractions as new anchors for a more lifestyle offering. This is probably the biggest growth opportunity for our industry in the region in the next few years.

Taman Safari Indonesia partnered with Aquawalk (Aquaria KLCC) to open Jakarta Aquarium at one of Jakarta’s busiest malls, Central Park. Aquawalk is also working with the Central Group to open an aquarium in Phuket’s largest mall and back home it is working on a variety of FEC projects with the first one opening in one of Kuala Lumpur’s largest mall (Midvalley Mega Mall) end of 2017.

In China, the first SEA LIFE aquarium and LEGOLAND Discovery Centre recently opened in Chongqing and Shanghai respectively. Shenyang K11 will also see these two popular in-mall brands by Merlin Entertainments together with a new concept by IP2 Entertainment under National Geographic license.

KidZania is continuing its expansion; after opening Manila and Singapore the popular franchise recently announced Surabaya, Indonesia.

The question is who will be the next KidZania or LEGOLAND Discovery Centre in the region? A lot of IP owners (BBC, Cartoon Network, Mattel, Hasbro, Line, etc) are keen to enter that space but they will need to establish a winning concept before rolling it out in the many malls crying for help.

Unlocking the Preschoolers Market in South East Asia

Unless you have a child under 5 it is a market you might easily know nothing of and yet it’s probably one of the biggest kids entertainment markets in the region.

A country like Malaysia has over 10% of its population under 5 and these kids don’t go to school, they don’t work (obviously) so they play!

You won’t find a single mall in South East Asia without a kids playground, and often times several of them or even entire floors dedicated to kids activities from playground to classes and gyms.

There has been so far a gap between the operators of such young kids facilities and the family entertainment operators (e.g. Disney, Merlin, etc) but things are changing and I think I know why: the opportunity is big!

In a recent Destinology study PGAV Destination looked into the preschoolers and their impact on the design of attractions overall. One of the points made is on the necessity to understand a category of guests undergoing great changes over the age of 0 to 5 and to integrate them in the family journey for them to associate some of their first memories to a specific venue or attraction.

Theme parks and other family destinations have started addressing preschoolers in their offering. For example Universal Sudios Japan worked with Imagination Playground to create a Block Room at Abby’s Magical Party and Albert Docks recently opened Mattel Play in Liverpool.

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So back to the market potential for preschooler-dedicated venues in the region. I think it’s the combination of the retail environment and the nature of parents and caretakers, which brings huge opportunities.

South East Asia is big on malls; developers love mixed-use concepts and so there are malls popping up everywhere, from neighborhood malls to regional malls, with some of the biggest in the world. Mall operators have long understood they need facilities for young kids to lure families in. Aeon for example, through its subsidiary Aeon Fantasy, operates 170 outlets in South East Asia under the brands Molly Fantasy and Kidzoona.

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Our region is also known for its ‘tiger mums’ who push their kids to be super successful and because children develop 85% of their intellectual, skills and personality by the age of 5 these mums are great clients for edutainment. But these days we see the emergence of another kind of mums, the millennial mums. They are fast technology adopters and hyper social; they like to share everything! For them preschoolers venues should be an opportunity to bridge the online and the offline.

Let me explain. Nowadays babies know how to use a smartphone before they can walk. YouTube has probably become the No.1 entertainment destination for kids with six of its top 10 channels aimed at kids and family content being its fastest-growing category. I personally see great potential in building on this success to come up with venues kids can explore the same way they explore YouTube and where parents/caretakers and kids can have a bonding experience. This implies working together with digital content providers on a 360o strategy and a lot more smart play such as the great NEOS® playgrounds.

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So let’s have a look at some of the existing trends.

Of course the biggest is edutainment where you find a number of concepts focused on skills development with a mix of playground and classes. Gymboree is market leader with 700 locations in 40 countries.

Also edutainment but with a twist is role-play, which has become very big. KidZania started the category with very a successful franchise relying on strong systems and a unique business model. The recent openings in Manila and Singapore have proven the concept is still very appealing when well executed and despite the proliferation of copycats.

A new and fast developing trend is active play a.k.a. kids gyms. With already 12 outlets in Indonesia, Rockstar Gym is establishing itself as a one-stop centre to enhance physical, socio-emotional and cognitive skills in a fun, caring and safe environment for children 6 months to 16 years.

More recently IP’s have shown a strong interest in this market too. Following the very well received CBeebies Land at Alton Towers, BBC is exploring rolling-out an indoor CBeebies concept. Pororo has opened its first kids park in the region in Singapore and Mattel has big roll-out ambitions for its 13,000sft and £1.5m Mattel Play concept.

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Now, how can we make even more the difference and fully explore the potential of this market?

I think membership is the way to go. Preschoolers have a lot of ‘free’ time and it’s easy to keep them coming back. Also they can be unpredictable so with a membership, no matter what happens during their visit, parents are not stressed about the value-loss of their ticket because they can come back ‘for free’. Some of the most successful concepts are membership-based such as Gymboree and Rockstar Gym.

Another path to explore is transferring concepts that work for adults, for example gyms, to preschoolers. Adults go dancing, singing karaoke or listening to live music, why not kids?

Little Baby Bump is one of YouTube top 10 channels and in Malaysia DiDi & Friends is also a YouTube phenomenon. What they have in common is they produce nursery rhymes much loved by young kids. Going back to my point earlier about working together with digital content providers on a 360o strategy; imagine a complete ecosystem based on Little Baby Bum or DiDi & Friends addressing kids at home, at the mall and on-the-go and based on singing, dancing and other activities that can be shared by kids and their parents/caretakers. That would be cool! What do you think?

Laying new foundations for our industry in Asia

The first of a series of reflections on the recent evolutions of the Asian attractions industry, here I look at how our industry has gained incredible traction and become much more integrated. In this pivotal moment new foundations were laid: money, brands and synergies.

Money

For anyone who does business in Asia, it’s easy to experience the constant obsession with money. But the money I am talking about here is not the ‘making money’ one but the ‘capital money’ one; what every business needs to be able to innovate, transform and create value. Well, good news, this capital money is definitely coming to Asia. Investors from the region and beyond seem to have decided it is time to seriously look at Asian attractions.

Take Shanghai Disneyland for example – the project in every mouth at the moment. Together, the Chinese government (Shendi Group) and an American investor (Disney!), decided to embark on Asia’s biggest theme park project: a US$4.6billion investment (incl. hotels and additional facilities). A US$2billion loan from 12 banks – syndicated by the China Development Bank – was already secured. Now, that’s a leap of faith! But like for other theme parks, Disney and its partners are expecting great economic impact from Shanghai Disneyland. Recently, the Shanghai Statistics Bureau said the park was behind much of the 30% increase in FDI in Shanghai this year.

Going down the list of the world’s largest attractions companies, let’s look at Merlin. 2012 was a big year for the Blackstone-owned group in Asia: 3 new Madame Tussauds (Bangkok, Busan, Tokyo), Legoland Discovery Centre in Tokyo and the first Legoland in Asia (Malaysia) at a cost of US$240million and for which Merlin already said they want to increase their equity share to 20%. Here the message is the same: now is the time to invest in Asia. The company is not afraid of sharing its ambitious development objectives: more attractions in Malaysia (maybe Madame Tussauds in Kuala Lumpur), Legoland in Korea and Japan (Nagoya), Legoland Discovery Centre in Bangkok, Hong Kong and of course entering the Singapore market!

Beyond foreign investors confidence, the story of Themed Attractions and Resorts (TAR) is even more revealing of the overall climate. The leisure arm of Malaysia’s sovereign fund Khazanah – which portfolio includes KidZania Kuala Lumpur, Legoland Malaysia, Hello Kitty Town and 2 other attractions – has already, together with partners, fueled US$290million worth of investment. And it recently announced that it was exploring to grow via public offering: the ultimate sign of confidence. The combination of strong tourism growth in South East Asia, good performance of recently opened attractions and long term views when other industries can’t offer the same have made Asian attractions hot even for small individual investors.

In summary: get started with visible projects, create some buzz, attract institutional investors and then maybe go for IPO! Isn’t it the same for any other established industry?

Wonderla, which operates a theme park in Bangalore in India and is building another one in Hyderabad, also has dreams of IPO. But will it be possible without an international brand? And this leads to my second point: our industry has become very brand conscious in Asia.

Brands

Yes, Ocean Park is beating Hong Kong Disneyland in attendance. But who would put their money on such a big non-branded theme park today!? Let’s face it. We have become obsessed with brands and IPs.

Universal Studios Singapore does not have enough of its own IPs that they had to acquire more from Dreamworks (Madagascar) and Sesame Street. Hong Kong Disneyland went with Marvel for its new zone announced for 2017.

Smaller regional parks also see a huge advantage in branding and are prepared to pay for it. In Pattaya, the Cartoon Network water park will benefit from a definite advantage over its competitor the Ramayana water park when they both open by 2014-15. And in Perak (Malaysia) theme park developer Sanderson Group is counting on the strong appeal from international IPs for its animation theme park set to open in 2015.

IPs that had gone a bit quiet are coming back such as Hello Kitty (Malaysia, China) and IPs that I would consider more like a short term phenomenon even have their own theme park: Angry Bird in China.

In China still, where everything is bigger, large theme park developers are courting the few big international IPs left to stand a chance to compete against Disney. The newly formed Oriental Dreamworks joint venture plans to build the US$3billion ‘Dream Centre’ around Shanghai. Game on!

Local IPs participate in the trend too. Asian attractions are now used to build visibility and appeal for local IPs. This is no different than what Disney or Universal Studios did early days in the USA, Asterix in France or Lego in Denmark. China took the lead in Asia with the 2 largest theme park operators, OCT and Fantawild, being also media companies. In fast developing South East Asian countries local IPs also have big ambitions. Ask the owners of Upin & Ipin in Malaysia and they will tell you how much they would love to have their own theme park!

With the entry of new players like Trans Studio (Indonesia) and Wanda Group (China), the model just described – and prevailing in China – of integration with a combination of theme park, media company, ride manufacturer and developer is evolving towards a new model more based on synergies.

Synergies

Actually OCT probably started the trend. In a big announcement in late 2011 they said they were evolving from a ‘traditional business model’ to become a champion of the culture industry in China with new businesses in art museums, art performances, high-tech entertainment and education.

Next was the Wanda Group, one of the largest property developers in China, who announced, following the acquisition of AMC Theatres in September 2012, the creation of the Beijing Wanda Culture Group featuring film, TV, theatre and theme parks. Wanda’s chairman said he wants to bring his group in the top 10 of global culture industry players, not too far from Disney! Beyond the use of a theme park to complement (or justify) a new residential area – which China was blamed for doing too often – it is about creating sustainable synergies between cultural & entertainment content and the group’s other activities.

In Indonesia, Trans Studio took everyone by surprise when it opened first in Makassar and then in Bandung 2 huge indoor theme parks. The owner, CT Group, is one of Indonesia’s biggest conglomerates, which started in natural resources and diversified in consumer market industries: bank, insurance, media (TV), retail (Carrefour), lifestyle, travel and now entertainment. For its owner, Mr Chairul Tanjung, theme parks are a way to leverage his other businesses. Take Trans Studio Bandung for example: the content comes from the group’s 2 TV channels and it is integrated with the Bandung Supermal (featuring Carrefour and owned by the group). To this add further cross-promotion opportunities with the group’s bank and insurance customers and its own travel agencies, coffee shops and hotels on site.

But thinking about it. It all comes from the growing Asia middle class. It brings domestic growth therefore confidence of foreign investors, new levels of wealth for local tycoons and disposable income for small local investors to look at new industries. It brings growing domestic consumption therefore an overall climate where brands perform well and are in demand. It brings more sophisticated consumers who seek a more cultural and holistic form of entertainment.

So let’s all thank the 1billion+ middle class in Asia for allowing our industry to lay new foundations.