Location-Based Entertainment Market Size, Share & Trends Analysis Report By Component (Hardware, Software), By End-User (Amusement Park, Arcade Studios, 4D Films), By Technology (2 Dimensional (2D), 3 Dimensional (3D), Cloud Merged Reality (CMR)) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2023-2031

Market Overview

The global location-based entertainment market size was valued at USD 5.49 billion in 2022. It is estimated to reach USD 77.50 billion by 2031, growing at a CAGR of 34.2% during the forecast period (2023–2031).

Location-Based Entertainment (LBE) is a consumer-facing industry category incorporating hospitality, leisure, and retail elements. Location-based entertainment venues are exactly what they sound like, places where people can have fun. Naturally, different people have varied entertainment tastes, which change greatly throughout LBE encounters. Large-scale LBE destinations, such as Disney World, offer a variety of entertainment, hotel, dining, and retail options intended to appeal to various age groups.

Smaller LBE venues might only provide one or two primary experiences, such as a themed restaurant and a casual sports venue, live performances coupled with an arcade or other self-service entertainment, or live performances with live music. The LBE experience typically entails establishing a physical location with all the props, tools, and equipment required to create a genuinely immersive setting. Various firms are making an initial investment to create an experience that piques customers' interest and compels them to return. The possibilities are endless, with various experiences like bowling, arcade games, rides, and virtual reality.

Highlights

• Hardware dominates the component segment
• Amusement parks dominate the end-user segment
• 3-dimensional dominates the technology segment
• North America is the highest shareholder in the global market

Market Dynamics

Global location-based entertainment market drivers

Increasing consumer spending on games and video content

Consumers continually look for various sources of entertainment. As the concept of Virtual reality is taking a hike, more consumers are spending on playing games at VR parks. Apart from that, they invest more in purchasing subscriptions to such entertainment parks that can provide them with an immersive experience. Vendors in the market are creating content suitable for adults and children. Likewise, companies focus on delivering free user movement, escape rooms, and other content categories to cater to consumer demand for high-quality content. Apart from this, content from well-known franchises such as Transformers, Jurassic Park, and others is created to provide a different user experience whenever they come to play. With the availability of diversified content categories, users are compelled to try and play all of them, spending more of their entertainment budget on these experiences. Such factors increase consumer spending on games and video content, thus driving market growth.

Increasing adoption of innovative concepts with vr expertise

Significant players in the market focus on developing innovative concepts in the market based on VR. The LBE VR hosts virtual reality experiences. Generally, to gain an immersive experience through VR, a person has to invest too much in VR / AR hardware and software. This is where the concept of LBE VR comes in. It allows today's designers to take advantage of the gap in technology and provide users with a customized space, VR headset, and a personal VR backpack computer.

Additionally, various companies are developing innovative concepts to expand their offering and attract customers. For instance, in February 2019, Exit Reality, a VR infrastructure provider, announced the installation of X Arc in a trampoline park based in New Jersey. The X Arc is an LBE VR that allows up to four users to play the game and provides live feedback from the environment. The concept of LBE VR has evolved rapidly, and its adoption is expected to rise.

Global location-based entertainment market restraint

High-budget infrastructure

The location-based entertainment is an out-of-home entertainment that leverages virtual reality technology to provide users with an immersive experience outside their homes. Significant investment is required to set up the infrastructure for such an entertainment center. The LBE model is deployed in three forms: VR arcade, VR escape rooms, and Free-roaming VR. In the VR arcade, vendors set up a cyber-café. The café owners must invest a lot in providing VR headsets to multiple people.

In addition, Free-roaming VR requires a lot of space to set up. It is very costly to set up the infrastructure since a person requires an area of approximately 100-200 square meters to set up space for more than one player. Various types of equipment are also needed, which further adds up to the cost. The process of developing high-quality content is also very costly. Such factors restrain companies from investing in this technology, hampering growth.

Global location-based entertainment market opportunities

Rapid technological innovations

VR solutions, including the VR headset, pose immense technological development and innovation potential. Technological developments and networking and connectivity advancements are expected to fuel the market demand over the next few years. Most available solutions are limited to head tracking, leaving tremendous opportunities to develop new technologies that increase users' sense of immersion and presence. There have been immense technological developments in head tracking, eye tracking, hand tracking, and position tracking, which help give a greater sense of being in the virtual environment.

A step further in technology development is 3D audio, which makes users believe they are a part of the virtual world's scene. The affordability of stereoscopic displays, motion-tracking technology, and super-fast GPUs enable devices to deliver high performance at a reasonable cost. The Open-Source Virtual Reality (OSVR) initiative by Razer Inc. is a step toward commoditizing VR devices. Technology development also opens a plethora of VR solutions with varied capabilities that allow users to experience maximum immersion. Investment in the R&D of unique solutions is expected to serve as a critical driver for market penetration.

Regional Analysis

Based on region, the global market is bifurcated into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.

North america dominates the global market

North America is the most significant global location-based entertainment market shareholder and is estimated to exhibit a CAGR of 31.02% over the forecast period. The North American region is expected to dominate the industry, owing to the growing popularity of LBE and the existence of major industry participants. North America consists of the U.S., Canada, and Mexico; the U.S. has registered the largest revenue share and is anticipated to dominate the regional market over the forecast period. In addition, key players, such as Microsoft Corporation, Google LLC, Facebook LLC, Springboard VR, IMAX Corporation, and others based in the U.S., make the region a prominent market. The increasing awareness of advanced technology and the rising adoption of location-based VR among consumers have increased the demand for location-based entertainment in the region. The effective deployment of location-based entertainment across various industries, particularly gaming and media and entertainment, is also expected to drive the growth of the LBE market across the region.

Asia-Pacific is anticipated to exhibit a CAGR of 37.5% over the forecast period. The growing trend of progressive lifestyle with the rising demand for fun activities in the Asia Pacific region has made it a highly profitable and one of the fastest-growing LBE markets. The region is anticipated to register the quickest CAGR due to the increased demand for location-based entertainment in theaters, arcades, and amusement parks. In the Asia-Pacific region, China leads the market with the most significant revenue share and is estimated to sustain its dominance throughout the projection period. In addition, India is anticipated to account for the highest CAGR. The region, with most developing countries, is continuously evolving in technology with recent technological advancements and penetration in the industry. The incorporation of LBE technology is also high in the region due to increasing tourist activities at certain locations.

In South America, Brazil registered the largest revenue share due to the rising adoption of advanced LBE software and augmented demand for VR/AR—based content in the gaming industry. The rising demand for suitable hardware to experience immersive technology drives the growth of the LBE market in the region.

In the Middle East and Africa, the growth is attributed to the high adoption of LBE technology at tourist places to increase the footfall of potential customers in the entertainment sector. The rising adoption of VR/AR technology at various tourist spots, the proliferation of LBE technology at arcade studios, and the demand for 4D films in the region are expected to drive the growth of the LBE market.

Segmental Analysis

The global location-based entertainment market is bifurcated into components, end-user, and technology.

Based on components, the global market is segmented into software and hardware. 

The hardware segment is the highest contributor to the market and is projected to grow at a CAGR of 32.9% over the forecast period. The demand for the hardware LBE market profoundly increased after the introduction of VR headsets. Several LBE industry participants acknowledged large investments for technology improvements in these headsets to attain a competitive edge in the market. The technology paved the way for the popular concept of arcade studios offering a simulated experience to visitors in limited physical spaces. This LBE hardware that has enriched the premium out-of-home social experiences is expected to contribute to the market share of the hardware LBE segment throughout the forecast period.

Software developers continually improve the LBE systems to assist their clients in creating unique content without letting end-customers move naturally at the end-use locations. The integration of immersive technology, such as virtual reality, 3D mapping, augmented reality, and mixed reality, is expected to drive the growth of the software segment in the LBE market. The proliferation of high-quality immersive content such as games, movies, videos, advertisements, programs, and others with various applications drives the software segment in the LBE market.

Based on end-user, the global market is segmented into amusement parks, 4D films, and arcade studios. 

The amusement parks segment owns the largest market share and is predicted to exhibit a CAGR of 32.0% over the forecast period. The amusement park segment is expected to dominate the market owing to the significant adoption of VR/AR-based immersive technology in theme parks to draw potential customers' attention and provide them with a memorable real-life experience in a virtual world. The rising concept of theme-centric experience in an attempt to attract a target audience has favorably driven the deployment of LBE solutions in amusement parks. In addition, the continuous efforts by the owners of conventional theme parks by heavily investing in the integration of VR solutions to promote attendance and capture more foot traffic have augmented the dominance of this segment during the forecast period.

The arcade studios segment growth is subjected to heavy investments made by the key industry participants to offer an immersive experience to their end-customers in these arcade studios and the lack of high-fidelity immersive content in VR headsets at home. Further, the ability to offer seamless physical experience and virtual animation videos through technologically advanced equipment to enhance the consumer's experience is expected to contribute to the segmental growth of arcade studios. The major feature of arcades for collecting several VR experiences in one commercial setting is expected to drive the arcade studios segment.

Indoor entertainment centres serve a wide range of consumers seeking interesting and immersive experiences in enclosed spaces. These facilities offer a range of activities like trampoline parks, laser tag arenas, escape rooms, and interactive gaming zones. These centres are a popular choice for leisure and entertainment across a variety of demographics as they provide a wide range of entertainment options in an enclosed atmosphere. Safety and convenience of indoor activities, all-season activities, and consistent accessibility drive the growth of the segment. Key Players in indoor entertainment centres are Dave & Buster’s, Escape Hunt, Chuck E. Cheese, etc.

Outdoor entertainment centres serve a wide range of consumers looking for exciting and adventurous activities. These centres offer attractions such as go-kart tracks, mini-golf courses, zip-lining facilities, and outdoor adventure parks. These centres mostly cater to outdoor enthusiasts, families, and groups of friends seeking outdoor recreational activities. Consumer demand for outdoor activities, the trend of experiential entertainment, and enhanced safety in outdoor entertainment centres drive the growth of the segment. Key players in outdoor entertainment centres are Disney Park, Six Flags, etc.

Based on technology, the global market is bifurcated into 2-dimensional, 3-dimensional, and cloud-merged reality. 

The 3-dimensional segment dominates the global market and is predicted to exhibit a CAGR of 36.5% during the forecast period. The most prominent audiences of the LBE market, millennial visitors, necessitate collaborative solutions for more engagement towards a particular set of visual applications. This has led to a subsequent shift from 2D to 3D entertainment modes by the park, arcade studios, and theatre owners to significantly increase their footfall. The increased deployment of 3D technology in the entertainment industry is expected to impact the LBE market positively. Furthermore, the increasing demand for a streamlined development platform for creating complex 3D virtual environments and visualizations to offer visitors a natural experience is expected to create enormous opportunities for the 3D segment over the forecast timeframe.

The deployment of 2D technology has increased majorly in the learning and training sectors for providing visual lessons to students and medical schools to offer healthcare students a more authentic and practical education. Moreover, 2D technology is extensively deployed in designing and creating 2D game characters in the gaming sector, which is expected to drive the market for 2D technology for the LBE market.

Cloud Merged Reality (CMR) is a revolutionary technology segment that combines physical and virtual environments using cloud computing. This technology improves user experiences by combining augmented and virtual reality features into real-world environments, which are commonly seen in entertainment venues such as theme parks, museums, and gaming centres. The segment's growth is driven by the increasing popularity of immersive experiences, innovative content production, and advances in AR and VR technology. Key players are The Void, Secret Location, Dreamscape Immersive, VR Studios, etc.

Based on revenue, the global market is bifurcated into Ticket, subscription, and pay per use.

Ticket ticket-based model generates revenue by selling entry tickets to a variety of entertainment venues and activities including amusement parks, theme parks, indoor entertainment centres, and immersive experiences such as virtual reality (VR) or escape rooms. Ticket-based revenue is preferable because it provides a simple approach to pricing and revenue generation, with customers paying for individual entries or specific time intervals. This model benefits operators as it provides predictable income and allows for tiered pricing strategies, such as premium tickets for exclusive access or experiences.

The Subscription-based revenue model is gaining popularity as a way to generate consistent, recurring income while improving consumer engagement. This strategy involves providing clients with subscription access to various entertainment experiences, such as theme parks, Immersive experiences or virtual reality centres. The subscription model not only offers regular revenue streams but also increases consumer loyalty by promoting return visits and deeper engagement.

The pay-per-use revenue model is a popular and flexible choice for both operators and customers. This model allows customers to pay for each experience or attraction they participate in, rather than committing to fixed entry fees or membership. This method is useful in places such as amusement parks, VR arcades, and immersive entertainment centres, where various attractions cater to varying interests and budgets.

Recent Developments

• March 2023- The second Peppa Pig theme park in North America will open in North Texas in 2024. The Peppa Pig attraction will be built and run by Merlin Entertainments, a global leader in location-based entertainment, under a licensing agreement with Hasbro, which owns the Peppa Pig brand.
• April 2023- Netflix announced that it is opening its first location-based entertainment (LBE) experience at KidZania in Japan based on its upcoming animated series Rilakkuma’s Theme Park Adventure.