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Our full descriptive report dated May 3rd


and our update on June 19th  (   https://www.liptonfinancialservices.com/2018/06/dave-busters-play-up-38-in-one-month-whats-going-on/ )

after PLAY stock had run up 38% in one month, presumably because of enthusiasm from the Virtual Reality introduction, can be reviewed.

It seems to us that the hope surrounding a recovery in both amusement and F&B comps revolves around the recent introduction of the Virtual Reality game/ride based on Jurassic Park, and timed to coincide with the latest movie. Now that the game/ride has been in the stores for about a month, we have visited locations at both peak and light dayparts, so we present here our “anecdotal” observations.

In general, the game/ride is often located on the periphery of the amusement section, manned by at least one attendant to check people in with their special $5 ride card (which inconveniently has to be purchased separately at the front desk), seat them, and help them adjust their helmet/goggle. While many riders express enthusiasm as they are bounced around, “scan”, not “kill” the dinosaurs, and get wind blown on their face, we don’t find a great level of excitement by the onlookers. It seemed to us that the “buzz” seems less around this particular attraction than around many other amusements, even if there is a waiting line. While the attendants have indicated that some do come back, the departing riders seemed to have enjoyed it, but don’t seem to be wild about another ride immediately. Quite a few people wander by, look it over, and keep walking. Not many are intrigued enough to linger, though no doubt some will buy their $5 card and come back.

On June 19th, we went through a calculation to show that, based on four sessions per hour ($20.00 for the four seats) and five hours per day, $146,000 per year could be generated or 1.5% of sales in a $10M location. We have observed a waiting line at peak periods, but much lighter use at mid-week times (both day and evening) and some locations are closing it down at 8pm. (This possibly conflicts with a report by SunTrust Robinson Humphrey last week that their field research shows “PLAY is offering this game every day and most hours”, whatever “most” means.) Since the ride is only 5 minutes, we think more like eight sessions per hour (including changeover) is realistic at peak times, but we think an average usage of perhaps 2.5 hours per day (with all four seats occupied) would be a reasonable approximation. That would be 32 riders per hour for 2.5 hours or 80 riders per day generating $400 per day or the same $146,000 per year. We could obviously be off in this rough approximation, but we believe the order of magnitude is close enough. Even if we are low with this approximation over the first several weeks, and we might be, considering the successful Jurassic Park movie premier and the TV support from PLAY, we doubt that it will be any higher than this just a few months from now. One of the key observations by an attendant was that the frequency of use is not building materially, so the necessary word of mouth to build long term usage doesn’t seem to be in play. The “game” aspect of this game/ride does not seem compelling. Riders can “scan” the dinosaurs, and create a personal competition to outscore your co-riders, but the skill level or satisfaction from this aspect is hard to pinpoint. We have taken the ride, and the visuals are impressive. We are admittedly far from the “target audience” but feel like “you’ve seen one dinosaur, you’ve seen them all”.

An important consideration here is whether this new amusement, the updated software when it comes, and other Virtual Reality offerings will reverse the now established negative trend in the amusement section. Management also hopes that customers will stay longer, and spend more, as they wait for their turn with the VR experience. Our guess is NO and NO. Management, and optimistic analysts, have expectations that an exclusive “Halo” game (not VR) to be introduced in late July and additional chapters of Jurassic Park (for late summer and early fall) will re-establish momentum. We have no insight relative to amusements to come, but we don’t believe the Jurassic Park Virtual Reality game/ride, and its future iterations, if they are comparable to what has so far been introduced, will prove to be a “game changer”.

One last thought: Neither management, nor the analytical community, is talking about what the new VR platform has cost to develop, and what the depreciation schedule looks like. There is also a labor component on an hourly basis that is not a factor with most of the other amusements. An attendant, or even two, at peak times, is not a huge factor, but the necessary attendant even when there is light usage becomes a noticeable expense. There has to be an obvious attendant standing by, at virtually every moment of operation.

Roger Lipton

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