As an industry, location-based entertainment (LBE) experienced a big boom in business last year as parents sought out new types of experiences for their families to enjoy. And brand owners of all sizes capitalized by inking deals to install their properties into theme parks, live shows and retail activations. But there’s one type of attraction that incorporates elements of all of these popular experiences into one convenient and scalable business: family entertainment centers (FECs). And the market for these facilities is hotter than ever.

The global FEC business generated US$30.9 billion in revenue in 2022, and is expected to grow by 11.5% annually to hit US$88.7 billion by 2032, according to a report published last May by Allied Market Research (AMR). While most existing FEC businesses cater to teenagers with offerings such as arcades, VR boxes and themed cafés, the report forecasts that families with tweens will eat up the lion’s share of this market over the next 10 years as new kids brands enter the space.

The two regions where FECs are the most lucrative are North America and Asia Pacific. In 2023, the North American market accounted for US$10.86 billion in total FEC revenue, and forecasting has that figure growing by 10.7% annually over the next nine years. Meanwhile, the APAC market is expected to see significant FEC growth during this same period because of the rapid development of retail spaces in Asian nations including Japan, India and China. Nearly 80% of all construction projects in the broader territory are new malls where FECs can be installed with other retailers, according to AMR’s report.

This opportunity has not gone unnoticed by WildBrain CPLG, which launched its own dedicated LBE division in Shanghai last year to translate its portfolio of original and third-party IPs into new experiences for the APAC region. The initial game plan will focus on rolling out its first range of FECs based on Teletubbies, Peanuts and In the Night Garden across China starting as early as 2025.

But WildBrain CPLG isn’t entering this market blindly. The company has about seven years of experience gleaned from installing its IPs into existing FECs around the world, including bringing the Teletubbies to Hong Kong’s YOHO Mall to play hide-and-seek, and Strawberry Shortcake making her appearance at the Rockefeller Center’s Candy Cottage of Christmas Magic last year.

The division has also hired LBE veteran Kevin Suh as a consultant to help develop its global strategy (he managed more than 20 theme park programs for Paramount during his tenure as the company’s president of themed entertainment and consumer products). Once it has established a foothold in the market, WildBrain CPLG plans to offer its LBE services to new and existing clients in order to strengthen its position as a best-in-class licensing agency.

The most appealing element of these attractions is that FECs can scale quickly and roll out in multiple cities, as long as the brand owner has a good concept. By contrast, theme parks can take billions of dollars and several years to get off the ground, says Maarten Weck, WildBrain CPLG’s EVP of global partnerships and licensing.

“Family entertainment centers are generally built where there is already high-density foot traffic across all demographics,” says Weck. “In principle, an FEC doesn’t necessarily sell products; it’s more of an immersive experience that is laid on top of an existing retail concept, like a mall or a museum.”

WildBrain CPLG’s strategy for adapting kids brands into FECs focuses on developing interactive attractions that surprise the audience while invoking memorable moments from the content’s lore, adds Weck. During early development, WildBrain CPLG’s blueprint includes adding AR screens and tech to create an immersive theater experience where kids can interact with characters and feel like they’re part of the brand.

To help bring this vision to life, WildBrain CPLG partnered with Beijing-based MaxMatching Entertainments. Its president, Owen Zhao, has more than 25 years of experience in the LBE industry and has already ushered several kidcos into China, including Mattel and British studio Aardman Animations. The Chinese market is an emerging but growing hotspot for FECs, compared to other established countries such as the US and UK, notes Zhao.

“The Chinese LBE industry only has about two decades of history,” he says. “The huge population and incentives to encourage birth in China and many other Asian countries have given rise to an expansive market. And the rapid economic development in recent decades has created the need for high-quality tourism projects for citizens with stronger purchasing power.”

Max-Matching has also signed deals to build and operate new FEC projects with Hasbro and Crayola in 2025. These include Hasbro’s NERF Action Xperience (ranging from 16,000 to 48,000 square feet) and the first international venue for the Crayola Experience (40,000 square feet). These two FECs will launch as part of the developer’s Top Park mall in Beijing, which will also host three additional centers and a themed hotel.

Hasbro opened its second-ever NERF Action Xperience to families last year, and three more are already in the pipeline for the US and China

Despite this lucrative market potential, Zhao notes that the standards for FEC entertainment are at an all-time high. “The pandemic has heightened visitor expectations, placing increased value on their out-of-home experiences, and raising demand for comfort, ease, quality and satisfaction. Haphazard moves, such as label-slapping, will only lead to brand dilution and disappointment for guests.”

Because FEC concepts can be very broad, there’s no one-size-fits-all strategy or business model that brand owners can apply to get into the business, adds Matt Proulx, Hasbro’s LBE VP. “There are people who want to go into FECs who do not quite understand that just because you open it, the hard work has only just begun.”

He says brand owners need to constantly monitor which facilities families are spending the most time in, and also where they’ve lost interest—especially during the opening weeks when first impressions are critical. If a game, food item or piece of merchandise is failing to attract an audience, the team will rework it or replace it with something completely new. While this increases investment, it can motivate guests to return to the FEC, says Proulx.

To help mitigate these challenges, Hasbro invests significant time into researching partners and then working with them to develop a potential business plan before signing a deal. This process involves budgeting, identifying the cultural needs of each market, showcasing where the IP can stand out, developing a marketing plan that runs postlaunch, and outlining the complete consumer journey while at the facility.

Hasbro has utilized this model multiple times since opening its first FEC, Monopoly Dreams, in Hong Kong five years ago. And its newest entertainment center launches range from the second-ever NERF FEC in the UK (2023) with long-time partner Kingsmen Xperience, Hasbro City in Mexico (2023) and Playocity in Saudi Arabia (2022), a joint-venture with the Al Hokair Group.

While Hasbro has access to several high-profile kids brands in its portfolio that it can tap for new FECs, Pennsylvania-based Crayola is leveraging its 120-year expertise in crayons and crafts to attract guests. Crayola has been in the FEC business for 25 years and uses these in-person experiences as a way to showcase products to existing and potential customers. A good example is its Scribble Scrubbie line of colorable and washable pets, which kids can play with at the Crayola Experience FEC and then purchase later on-site.

To date, the arts & crafts giant has opened five Crayola Experience locations across the US, with six more set to roll out in the next seven years in partnership with BrightColors. The venues feature more than 25 interactive attractions, ranging from kids making and naming their own crayons, to AR activities, jungle gyms and live shows with guest participation.

“Creativity matters in this industry,” says Warren Schorr, Crayola’s SVP of business development, global licensing and experiences. “A critical component for us early on was identifying the core pillars of our brand and leveraging our existing products. These experiences are the physical manifestation of our mission to help parents and teachers raise creative kids.”

This story originally appeared in Kidscreen‘s February/March 2024 magazine issue.