Culture's small theme parks to push kid-centric ventures

Foray confirms smaller indoor fun and play centers are next big opportunities

Chinese Culture Group Co Ltd's foray into indoor theme parks will further stoke fresh investments in children-centric businesses in the Chinese mainland, industry observers said.

The move follows the end of the one-child policy and the subsequent rise in the number of families with more than one child.

The culture and media company announced earlier this month that it will open more than 15 indoor theme parks in the Chinese mainland over the next eight years.

The planned parks will be Oddbods-themed, based on a cartoon series produced by Singapore's One Animation. They will have recreation facilities, restaurants and gift shops, and aim to attract children aged 3 to 9, said Xie Li, vice-president of Chinese Culture Group.

Compared with large-scale theme parks, which need big investments, long gestation periods and high costs related to construction, smaller indoor theme parks require lower costs, promise stable cash flows and decent returns on investment, Xie said.

Population data from Pingan Securities showed those aged 14 or under are increasing in number, on the back of the policy change. This has boosted related consumption.

Children's parks netted about 300 billion yuan ($44.9 billion) in sales and other revenues last year. Indoor parks played an important part in that, it said.

"Indoor theme parks are more suitable to expand with smaller investment. It's also easier for them to earn profits," Chen Shaofeng, deputy dean of the Institute for Cultural Industries at Peking University, told The Beijing News earlier this month.

Small wonder, animation companies, real estate operators and other companies began to show interest in the segment.

Domestic leading animation group Guangdong Alpha Animation and Culture Co, producer of popular cartoon Pleasant Goat and Big Big Wolf, announced in May that it will open over 50 indoor parks based on its intellectual property or IP over the next three years.

Property giants Guangzhou Evergrande and Dalian Wanda Group have also entered this segment of the theme park sector.

Li Mingyu, product director of indoor theme park operator Beijing Zhiyou Culture Communication Co Ltd, said the market has great potential for future growth.

"After all, the 200 million Chinese children need some place to play. And there aren't many public playgrounds in China compared with other countries," he said.

The company invested 10 million yuan to build a 1,500-square-meter indoor theme park in Beijing, inspired by domestic cartoon character Luo Bao Bei. The park opened for business in July last year.

Li did not share financial details like profit and rate of return, saying the firm expected to break even two years after the investment.

Membership fee, catering services, training courses for children, as well as sales of toys and other commodities, contribute 60 to 70 percent of its income. Wages and rent account for 90 percent of its operational costs. They don't have to pay for the IP, because the IP owner is one of the firm's shareholders, he said.

Li Qin, brand-licensing leader of Zhejiang Versatile Media Co Ltd, an animation producer, said the firm authorized three indoor park operators to use the images of their cartoon. (Again, Li of Versatile declined to share details like IP-related revenue.)

"Though kids are allowed to play at the park for a whole day, most of them will lose patience and leave within two hours, creating park-space for others. Besides, the membership system adopted by many operators can guarantee a stable cash flow," she said.

Shi, mother of a 5-year-old boy, said she has a small bag, filled with membership cards of various indoor theme parks. She could not resist them at promotional events where discounts abounded.

Each visit to a park costs about 100 yuan. And buying five staggered visits at one go could come in cheaper at about 300 yuan, she said.

Spending weekend at shopping malls has become a routine for Shi's family. The boy would first play at an indoor theme park for one or two hours, then they have lunch or dinner, go shopping and then home.

"Two days (over the weekend) is too short for an outstation trip, but we don't want our son to stay at home all the time watching TV or playing games on mobile phone. That's why, we go to shopping malls," she said. "Besides, playing indoors can keep the child away from the haze and bad weather."

At the indoor park, her son may slide, climb, ride a mini train or play video games. She and her husband sit outside, having some time of their own.

Among Shi's concerns are issues like the parks being overcrowded often (which could result in noise and children quarreling) and safety at the facilities.

Li from Beijing Zhiyou said operators need to innovate and introduce diverse activities like dancing and singing performances, holiday parties and training classes, to differentiate themselves from others.

Use of well-known IP such as that of Marvel Comics can also help attract more customers, but that requires big investment, he said.