Not just fun and games: Amusements industry to top $31.8b by 2017

Entertainment is a must have, it's as essential as toilets," said Prakash Vivekanand, managing director of Amusement Services International LLC.

It seems the need for speed and adrenaline is just as pressing in a region where outdoor activities are limited by the weather for half the year.

Amusement parks may be all fun and games, but the global industry's growth is serious business: the world market for these parks is expected to reach $31.8 billion (Dh116.8 billion) by 2017, according to a recent report.

The Middle East, Asia-Pacific and Latin America are poised to see the biggest growth rates during this period, says Global Industry Analysts in its study Theme Parks: A Global Strategic Business Report.

Dubai's Aquaventure and Wild Wadi have already made it to the Top 20 Worldwide Waterparks in the 2010 Theme Index report compiled by Aecom. Spanish football club Real Madrid recently announced plans for a resort with a theme park component in Ras Al Khaimah, where other amusement parks have flourished.

But the adrenalin-fuelled theme parks market has yet to reach greater heights in the Middle East. Industry insiders say there is potential in adding more specialised theme parks in the UAE with good planning. But for the moment, that growth is now mainly driven by family entertainment centres (FECs) in shopping malls, they say.

Back in the boom years a licensing frenzy took hold in Dubai and major industry players were trying to clamber onto the bandwagon when waves of optimism buoyed business sentiment.

DubaiLand announced a $64 billion development project that would include theme parks with Universal Studios, DreamWorks, Six Flags, Legoland and Marvel. But when the bubble burst, these grand plans were quietly shelved. The dismal attendance during Ferrari World's first year was another word of caution for the industry.

"If you are looking at outdoor parks, there are examples where that has not been successful. Abu Dhabi is trying very hard with Ferrari World. But in future, it's going to be good. Where else will people go? Malls and family entertainment centres," said Abdul Rahman Falaknaz, chairman of the International Expo-Consults (IEC), which is organising the upcoming Dubai Entertainment, Amusement and Leisure (DEAL) show this month.

Given the baking hot weather in Dubai, large outdoor amusement parks are not viable year-round.

"We are in the Middle East and we know that due to the climate we cannot have outdoor theme parks as in other parts of the world. We have to be logical in our approach and take into account cost benefits and feasibility analysis. We have to create facilities indoors for a 365-day approach so that people can enjoy the facilities throughout the year, regardless of climate," said Falaknaz.

Water parks seem to be the cooling exception to the weather constraints. According to the latest data available, in 2010 the number of visitors to Dubai Wild Wadi grew 2.2 per cent to 690,000, according to the report by Aecom. Aquaventure recorded 6.1 per cent growth to just over 1.04 million visitors.

Others that capitalise on the winter months, such as Global Village's amusement rides, are also avoiding the weather constraints.

Good business

"About 10 per cent of the Global Village revenues comes from the rides. It's good business and there's a lot of demand for it," Saeed Ali Bin Redha, chief executive of Global Village, told Gulf News.

The UAE's amusement and leisure segment is sourcing most of its growth from family entertainment centres at shopping malls where residents and GCC tourists are driving demand, suppliers say.

About 7 to 8 per cent of footfall in smaller shopping malls heads to the entertainment sections whereas larger malls see 3-5 per cent of footfall secured by entertainment zones, Vivekanand said.

ASI is currently setting up another Sega Republic gaming zone at the Dubai Marina Mall with 4,000 square feet and 50 games, he said.

It would cost $60-$70 million to set up the larger Dubai Mall Sega Republic, he added. Smaller arcades of about 5,000 square feet would cost about $1.5 million.

"Entertainment is a must have, it's as essential as toilets," he said.

"Leisure in general is an important component of malls: it brings family and the kids, who have an influential role on where parents go."

The trend is towards "retail entertainment" where a large retail entity supports an entertainment zone that includes not just rides but cinema and food and beverages, he said. Consumer preferences are geared towards adrenalin-pumping rides, redemption games and high-tech video games, he added.

"It's about providing an element of entertainment that they can't get at home. The machines we handpicked for the region, realising that most people have Nintendos and WiFi and Playstations, are designed for experience you can't get at home, simulation and value."

The industry is moving towards more interactive entertainment and 3D simulation, he said.

Ages 2-12 are the biggest spenders on the entertainment segment but the past couple of years have seen a strong emergence of the market between the ages of 14 and 21, he added.

Best performing segment

Industry experts said indoor entertainment was the best performing segment in the amusement parks market.

"Indoor theme parks are here to stay... You can go to an outdoor theme park about twice a year, but you're more likely to go to the mall every week and then the indoor theme park," Vivekanand said.

Already per capita spending on entertainment increased from Dh40 to Dh50 in large malls last year and jumped to Dh75 in the first quarter, he said.

The local amusement industry is set to grow about 10 to 15 per cent, reviving from the economic downturn that took it to a low of 20 per cent decline, Falaknaz said.

"The world market for theme parks, which saw growth sag in 2009 as a result of the recession's impact on consumer spending, staged a recovery in 2010 and 2011," according to the Global Industry Analysts report.

But the revolutions in the Arab world have seen these leisure projects put on hold.

"There was optimism about Syria, but because of the current situation, projects are put on the back burner. That's the area where we see slowness," Vivekanand said.

North Africa's potential

As Egypt and Libya recover from political instability, these huge markets will uplift North Africa as a major entertainment zone to look forward to, Falaknaz added.

Industry experts say the future lies in adding more specialised theme parks in the UAE, but in a more measured way compared to the licensing frenzy of the boom years.

"I believe the timing would be perfect to get some of these planned projects back online. Look at the influx of tourism, especially from the GCC countries," said Nabeel Kassim, general manager at Warehouse of Games.

Investment in mega entertainment centres can cost about Dh2-Dh3 million and requires planning that depends on market demand and supply, said Falaknaz, adding that projects like Disneyland and others can still come to the region as the market develops.

Whether the mega projects will take off remains to be seen — if the Middle East industry is to grow in measured ways to catch up with global standards.

DEAL Show

The Dubai Entertainment, Amusement & Leisure Show (DEAL) show takes place on April 17-19. Last year it recorded deals worth over Dh200 million. It has grown 15 per cent since last year with 200 companies from 30 countries, organisers have said.