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."