Asian fallout hurts entertainment technology firms
Asian fallout hurts entertainment technology firms
By Michael White
LOS ANGELES (AP): The Asian financial crisis is crimping U.S. companies that built a thriving business catering to the demand for high-tech entertainment in Thailand, Malaysia, Indonesia and other countries.
Iwerks Entertainment, maker of 3-D and 360-degree movie screens and motion simulation rides, recently laid off 131 people after announcing it would lose US$2.7 million to $3.4 million in the fourth quarter because of a drop off in Asian business.
A competitor, privately held Landmark Entertainment Group, has stopped work on projects in Thailand and Indonesia.
And the Jerde Partnership, an architectural firm specializing in themed shopping centers that blend retailing and entertainment, has seen a number of its Asian projects frozen.
"Everything has either been put on hold or been canceled," said Don Savant, vice president of worldwide sales at Burbank, California-based Iwerks. "We have even had projects that were halfway paid that have stopped."
Investors backing the projects have either lost the purchasing power they need to complete projects as a result of devaluations of local currencies or have become timid as a result of the general instability.
"When this kind of thing happens, the investment community gets very cautious, and with caution comes a slowing of everything down," said Landmark chief executive Gary Goddard. "If they took 10 weeks to look at something before, they're going to take 10 months to look into it now."
Slowdown
The slowdown came after years of prosperity and an emerging middle class had turned Asia into one of the world's most lucrative entertainment markets. U.S. companies such as Iwerks and Landmark were involved in dozens of projects in the region, ranging from the expansion of the huge Everland theme park in Yongin, South Korea, to small-scale attractions at shopping centers.
"Generally for Asia in the last 10 years, especially the past five years, there's been a sense that they're passing the middle- class threshold to support theme parks," said Steve Balgrosky, an industry analyst with Economics Research Associates.
"A theme park can't get by on a thin crust of upper-class people driving Mercedes. You've got to think there are millions of people to support the kinds of entertainment projects you see in the West," he said.
The layoffs at Iwerks amounted to 13 percent of the company's work force, and followed cancellation of several projects and slowdowns at others, including development of a motion simulation attraction at Dream World, a new theme park being built in the Philippines near Manila, said Savant.
At Landmark, in Los Angeles, losses have included an assignment to develop a small amusement park at a shopping center in Bandung, Indonesia, and a project in Thailand that a company official declined to describe.
"They really didn't have enough money to pay us. So we kind of just took a step back. We're just being very cautious," Mike Sherret, an Asian specialist for Landmark, said of the Thailand job.
One project that was not affected was Landmark's development of an "Aliens 3-D" attraction for South Korea's Everland, one of the world's most heavily attended theme parks.
The Asian crisis also has brought a slowdown at the Jerde Partnership, an architectural firm in Santa Monica, California, that is under contract to design retail-and-entertainment complexes in several Asian countries.
Work has slowed on most of the company's projects in Southeast Asia, including work in Indonesia, Thailand and the Philippines. But Jerde's Asian practice focuses primarily on Japan, Taiwan and China, which have not been battered like their neighbors.
"Our business hasn't been affected that much," said Jerde Group president Eddie Wang. "The schedule may be delayed a bit. They're cautious, we're cautious, because of the (currency) devaluations. We're going with a much more relaxed schedule."
The situation in Asia is prompting the industry to turn more aggressively to Europe and Latin America for more business. In Britain, for example, lottery revenues are available in the form of matching grants to private developers to create attractions that blend education and entertainment, said Savant.
But in the long-term keeping a foothold in Asia, with its huge, entertainment-hungry population, remains paramount for each of the companies.
"We are not giving up in Asia. It has been such a source of growth for our company for the past five years," said Savant. "We know the Asian market is going to come back strong, but the timing is anybody's guess."