As Jon Hussman and Steven Warsh, founders of Playdium Entertainment, build their chain of upscale arcades into a dominant force in the emerging high-tech entertainment market, they’re finding that fun can be serious business.
In their latest and most ambitious step, Hussman and Warsh are set to open their fourth and biggest location, right in the heart of Toronto’s downtown entertainment district. The $20-million, 50,000-square-foot Festival Hall facility, complete with rock-climbing wall and corporate meeting rooms, opens Nov. 13.
Combining the glitz and showmanship of Hollywood with more than ample quantities of marketing savvy, the brains behind Playdium have embarked on a strategy to expand their destination amusement complexes into a chain of big-box entertainment category killers.
Over the next five years, the company plans to open another 10 locations across Canada as well as numerous Tech Town game centres, smaller versions of the Playdium concept that can be found in a number of Famous Players movie theatres. The company’s also eyeing opportunities in the U.S. and the U.K.
Positioned as The Ultimate Place to Play, there’s nothing to compare to Playdium’s showcase locations. The massive steel and neon structures are jammed with the latest in cutting-edge video games and physical attractions, such as rock-climbing walls, as well as more sedate enticements, such as lounges and restaurants, for people to decompress after experiencing a full dose of the Playdium brand experience.
As the company grows, building a national brand identity has become more important than ever, says Ron Caughlin, Playdium’s vice-president of marketing.
‘We have a big challenge here,’ he says. ‘We have to build the Playdium brand, and at the same time, the entire category, since there is virtually no one else out there like us.’
Caughlin says the majority of consumers decide where to spend their entertainment dollars only about a day in advance, so Playdium faces the task of positioning its brand of high-tech entertainment against such everyday entertainment options as movies, restaurants or bars.
It must accomplish this at a time when there is more competition than ever to gain the attention of jaded and time-starved consumers.
Playdium, however, seems to have struck a chord. Within a year of opening its prototype facility in Mississauga, Ont. in 1996, nearly a million visitors had flocked to its 33,000-square-foot facility to play games, drink and eat.
Playdium won’t say how many heads it expects to count at its new location, but given the marketing clout backing it up, it’s certain to be at least in the low millions.
‘This industry was ripe for a concept like this,’ says Hussman, explaining that Playdium has targeted the niche between huge theme parks that families might visit once a year and the dark and dingy coin-op arcades that are invariably filled with teenaged boys and unsavory characters.
‘Eighty per cent of the revenues in this category were controlled by small mom-and-pop video arcade shops,’ he says.
To bolster its growth strategy, Playdium has beefed up its marketing department from a single person to a staff of 10. In June, the company also hired TBWA Chiat/Day – the first time it’s ever had a full-time ad agency – to craft a major television branding campaign and to develop a new card-based loyalty program.
The ad campaign, shot by Hollywood director Rupert Wainwright (Stigmata), will herald the opening of the Festival Hall Playdium next month.
The use of big-budget television advertising marks a strategic shift for Playdium, which has traditionally focused its marketing efforts on local promotions and public relations. That’s not to say the company is abandoning these methods – most of its regular customers live a few minutes’ drive from the suburban facilities, says Warsh, so it makes sense to keep talking to them – only that they’ll be supported by branding and loyalty marketing.
That’s in part because Playdium’s new location in downtown Toronto is being positioned as a destination for people throughout Southern Ontario, as well as to tourists and city residents.
To attract those customers, Playdium has invested heavily in creating ‘The Big Wow’, a total sensory experience that consumers can’t get in their homes playing even the most sophisticated video games.
That sophistication doesn’t stop on the game floor, though. On the marketing side, Playdium has invested in a state-of-the-art POS data capture system that tracks and analyzes the movements of its customers while they’re on site.
When customers come into Playdium, they are issued a smart card that is used to operate the game machines as well as to purchase food and refreshments. Of course, while customers are happy to avoid having to walk around with their pockets full of loonies or tokens, Playdium is just as happy to capture data that tells it exactly who is spending how much time and money at each point of contact.
The company’s data collection and mining efforts will be extended with a new loyalty program that leverages the strength of its marketing partnerships with companies such as Pepsi, Famous Players, Roots, and Sega Gameworks.
In addition to the right to become exclusive suppliers to the growing number of Playdium sites, partner companies are being offered exclusive marketing deals that will enable them to piggy-back on in-house Playdium promotions.
For instance, Labatt Breweries, Playdium’s newest marketing partner, is about to launch a promotion that extends invitations to ‘blueline’ members – people who were on the receiving end of a Labatt cellular phone giveaway this past summer – to attend exclusive Playdium events.
‘Labatt’s whole branding idea for the blueline promotion is ‘Come play with us,’ which is a perfect fit with our brand,’ Caughlin says.
Playdium has also struck a deal with Roots Canada to sell co-branded merchandise, such as leather jackets and sweatshirts. In addition, Playdium’s on-site lounge is being re-branded as the ‘Roots Treehouse’ and will be furnished with Roots couches and other housewares sold by the upscale casual retailer.
Another market the new location will tap is Playdium’s burgeoning corporate business. The downtown facility includes a conference centre and meeting rooms.
Business clients – who rent the facility for parties, team-building events and other company functions – have grown to become the second-largest audience for Playdium after its core 18-34 demographic, says Playdium president Jon Hussman.
‘When we started, we didn’t think the business clientele would be very big for us,’ he says. ‘Now they account for about 30% of our revenue.’
Marketing the site as a business destination helps the company bring in bodies during the day, when traffic is usually slow. It also helps introduce the concept to people who may not necessarily think that Playdium is for them, says Warsh.
‘When they come,’ he says, ‘they find out that if you want to play backgammon and drink a glass of wine, there is a place for you. If you want to play the latest cutting-edge video game, there is a place for you and if you want to do wall climbing, there is a place for that, too.’
Playdium now employs a salesforce to market its downtown facility as a destination for business functions. On offer are custom-tailored games and activities, opportunities for entertaining clients and the chance to let workers cut loose.
While futurists and trend spotters predict that consumers will cocoon in their homes and stay wired to the Internet, Hussman and Warsh are confident the Playdium concept will continue to lure consumers out to play.
‘This is not a fad, this is a phenomenon,’ says Hussman. ‘For thousands of years, people have wanted to get out and congregate with other people. It’s hard to resist having fun.’
