Amusement Parks & Arcades
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Industry Overview
The US amusement parks and arcades industry includes about 3,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $16 billion. Major theme park companies include Walt Disney, Six Flags, Cedar Fair, SeaWorld, and Universal Parks & Resorts; major arcade operators include Namco Cybertainment, Dave & Buster's, and CEC Entertainment (Chuck E Cheese's). The industry is highly concentrated: the 50 largest companies generate about 85 percent of revenue.
Competitive Landscape
Demand is closely linked to the health of the economy, especially consumer income. The profitability of individual companies depends on good marketing. Large companies can build expensive rides and have economies of scale in operations and advertising. Smaller companies can compete by serving smaller markets or offering special rides. The industry is labor-intensive: average annual revenue per employee is about $100,000 for large parks, $50,000 for arcades.
Products, Operations & Technology
Amusement parks get about 55 percent of their revenue from admissions and about 30 percent from food and merchandise sales. The remainder is made from a mix of parking fees, commission income from third-party exhibitors, advertising, and fees for hosting parties and other events. Many parks operate only for a portion of the year because of weather. Half of amusement parks, including 70 percent of water parks, are closed during the cold months. Parks open year-round may also operate hotels, stores, condos, golf courses, or other facilities in the vicinity.
Amusement park operators offer various types of rides such as roller coasters, tower and "kiddie" rides, and water slides. Six Flags operates 30 to 40 rides in each of its amusement parks, including several roller coaster and other "thrill" rides. Rides, shows, shops, and food outlets are generally intermingled to encourage cross-selling. A typical park is spread over 100 to 200 acres; flagship parks that include hotels and multiple attractions such as water parks and safaris may be several hundred to thousands of acres.
New rides may be developed internally (the norm for Disney) or bought from manufacturers like Premier Rides, Huss, S&S, and Vekoma. Some large rides are custom installations, but most can be disassembled and transported by truck. Many park operators regularly buy or develop new rides, or switch rides among several parks they own, to attract repeat customers. The market in used rides is active. Major rides may cost up to $20 million, but most rides cost less than $1 million and many kiddie rides cost under $100,000. Electricity is the major energy cost. Arcades and family entertainment centers (FECs) typically have dozens, sometimes hundreds, of video games that may cost from $500 to $2,000 each.
Many rides are technically sophisticated and rely on computer controls. Computerized sensors have become important safety features of rides that feature high speeds or sudden turns. The larger park companies operate sophisticated Internet sites that encourage potential customers to buy tickets online. Large operators are also linked to computerized hotel reservation systems that allow customers to buy tickets as part of a travel package.
