Imaginarium Toy Centers, a 46-store chain catering to the upscale specialty market in the U.S., has received an injection of capital in the form of a US$15.35-million loan from Pegasus Partners of Cos Cob, Connecticut, and Blue Stone Capital of New York City, New York.

The loan enables Imaginarium to pay off all of its debts and to continue with the restructuring efforts it began last year, says Imaginarium CEO Ronald E. Tuchman.

‘We’ll be much better off in terms of planning strategy. Now I can spend 98 percent of my time running the company, instead of looking for money,’ says Tuchman.

In February 1997, Tuchman and a group of investors called the Imagine Acquisition Corporation purchased the floundering chain, which had filed for bankruptcy just eight months earlier. In addition to the loan, Tuchman says, the company will borrow US$7 million against its inventory, providing Imaginarium with a pool of roughly US$22 million to draw on.

The company’s immediate goals are to open 15 stores this year-with a minimum of 80 stores opening over the next five years-and to refurbish seven of its existing ones. In 1997, Imaginarium opened two stores, one in Huntington, Long Island, and the other in Glastonbury, Connecticut; both represent the template for what Tuchman says the whole chain will look like once Imaginarium’s makeover is complete in the year 2003.

‘They’re more open, they’re brighter-looking and they have easier traffic lanes that allow customers to walk through [uninhibited],’ says Tuchman. Tuchman has also tweaked the chain’s merchandising mix. Gone is the children’s computer software section, which he said could not compete with the same departments at stores such as Noodle Kidoodle, and in are more books and crafts.

Tuchman says he is confident these changes will help re-establish Imaginarium as the leading chain among upscale toy retailers focusing on kids up to eight years of age, a market he believes has, up until now, remained underexploited.

‘It’s a very young industry right now, made up of mostly little entrepreneurs, and it’s one that’s hungry for consolidation. It mirrors the mass-market business when we first started 30 years ago,’ says Tuchman, who helped found Toys ‘R’ Us in the mid-1960s.

The terms of the US$15.35-million loan give Pegasus Partners the major equity position in Imaginarium, with Blue Stone Capital claiming a smaller portion. Both companies have the option of demanding repayment of the money at the end of the seven years, but before that time is up, Tuchman says Imaginarium will either go public and start selling shares or work out an acquisition agreement with another group. In any case, he says, the money will not come out of Imaginarium’s profits.

.s

.dMarch 1, 1998

.bDavid Bosworth

.pR1

.hDiscovery Zone begins repositioning

Enchanted Tales cross-promotion ushers in DZ JR

arking the first time that Sony Wonder home video titles have been available at Discovery Zone FunCenters, the two companies teamed up last month on a national cross-promotion to build brand awareness for Enchanted Tales, Sony Wonder’s original, animated musical home video series.

The promotion also kicked off DZ JR, Discovery Zone’s newest programming offering targeted specifically to preschoolers age two to six. The initiative is part of a major revitalization of the company, according to Sharon Rothstein, Discovery Zone’s senior vice-president of marketing.

The company began implementing a turnaround plan at the midway point of last year after filing for Chapter 11 protection in March 1996, at which time it owned more than 300 FunCenter locations across North America. The company, which now operates 206 outlets in the U.S., Canada and Puerto Rico, emerged from bankruptcy last summer with a new ownership and management structure in place.

Describing the outlook for the New DZ, as the family entertainment complex is now known, Rothstein says, ‘We’ll be trying to reposition [these venues] from the indoor playground of the late ’80s and early ’90s to a real entertainment center for kids and their families. We want [New DZs] across the country to be the place for kids to go to in their community for a variety of experiences that they won’t find anywhere else.’

Currently in the process of renovating all its FunCenters, the company is moving away from focusing exclusively on ‘soft play’ ball bins and mazes to a ‘series of destinations throughout the store,’ says Rothstein. Currently, such attractions include a Men in Black laser adventure that is themed on the 1997 blockbuster movie; the DZ Live stage area, which features a variety of special events; The Cage, a zone where kids can ‘experience’ their favorite TV shows, movies, music and sports; The Art Factory, where kids can ‘glue, paint and sparkle to their heart’s content’; and, finally, DZ JR.

Elements of DZ JR include video segments, play activities and coloring time built around specific entertainment promotions, several more of which will be announced in the coming months, according to Rothstein. Each DZ JR program runs approximately 30 minutes long, three times each weekday.

Stating that ‘there’s no other environment like Discovery Zone,’ Wendy Moss, senior vice president of marketing for Sony Wonder, says she is ‘really enthusiastic about the possibility of reaching millions of kids through this promotion.’

Scheduled to run for eight weeks, the joint promotion is marked by a retail component in every one of Discovery Zone’s outlets. The campaign, which began early last month, features high-profile in-store visibility, interactive games and contests, with in-store POP that includes posters and a multiscreen television wall that airs an Enchanted Tales clip reel.

The interactive games and activities, which also highlight selected episodes from the series, include Match Game, Tug o’ Fun, Make a Scene Puzzle, Pin the Tail and Coloring Fun. ‘The games encourage interaction and really take things to a new level,’ says Moss.

Enchanted Tales debuted on television last fall and now airs weekly in more than 70 percent of the U.S. The program is distributed in national syndication by Summit Media.

Titles in the Enchanted Tales series have included such hits as The Jungle King, Pocahontas, Snow White, Peter Rabbit and The Night Before Christmas. More recent titles include Hercules, Tom Thumb Meets Thumbelina, Gulliver’s Travels, Treasure Island and Anastasia. Upcoming titles include Camelot, The Legend of Su Ling and Tale of Egypt.

.s

.dMarch 1, 1998

.bDavid Bosworth

.pR1

.hTotal Entertainment Center introduces reading reward program

Total Entertainment Center (TEC), the 40-outlet retail chain owned by Coon Rapids, Minnesota-based Video Buyers Group (VBG), has introduced a promotional program that rewards kids with free video rentals for reading books. And, if everything goes according to plan, the program will also soon be run out of the 2,000-plus stores that are part of the VBG network of independent video retailers across the U.S.

Pointing out that it is typical of VBG to pilot projects in its TEC stores before they’re rolled out to the entire network, company president Ted Engen says he expects to have a number of major co-sponsors on board when the program is expanded in time for the new school year. Although he won’t divulge who those sponsors might be, he indicates that at least one of them is likely to be a major children’s content producer.

The way the Be Our G.U.E.S.T.-an acronym for greet, understand, excite, smile and thank-Reading Rewards program works is that any child who reads 10 books from a selection that has been approved by his or her teacher receives a certificate that can be redeemed for a coupon book of five free video rentals from a participating Total Entertainment Center.

Because the program, which is targeted to kids from kindergarten to grade four, requires the support of local schools, individual store owners and managers must present the program to the schools in their area. Supporting materials for the program include classroom posters, coupon books, teacher certificates, store employee buttons and supporting POP.

Engen says TEC has worked with schools on several past promotions, but nothing to the extent of the Reading Rewards program.

‘We felt that as people who are involved in the entertainment industry, it was probably a good idea for us to support parents, teachers and schools to get kids to read,’ he says, adding that local libraries will be brought on board to continue the program through the summer, and that the program will also be adapted to reward parents for reading to their kids.

‘We think there is a happy medium between the time we want kids to spend in front of a TV set and the time that they need to be reading or doing schoolwork, or whatever else,’ says Engen, adding that as an employer, the issue of literacy is especially important to VBG.

Pledging that VBG will champion reading in more of its promotional programs in the future, Engen says plans are in the works to soon make a wide variety of children’s books available at TEC locations, which already carry a range of licensed merchandise, electronic games and other non-video products.

‘Reading is a form of entertainment,’ he says, ‘so we feel it fits well within the scope of what we specialize in.’

Stressing that Reading Rewards is a community service program first and a marketing program second, Engen says, ‘foremost, it supports the teachers, schools and parents with helping the kids read, and it shows that we’re concerned about the communities in which we operate.’