MET any optimists of late? It isn't easy finding one these days. With manufacturing in the doldrums, exports sputtering, the stockmarket nosediving, commodity and real estate prices crashing, hundreds of jobs on the firing line and the consumer boom under arrest, even the die-hards are wary of talking about silver linings. Yet amidst the gloom there seems hope for a boom in one industry, as a bunch of energetic young entrepreneurs are drawing up blueprints for growth. Meet 41-year-old Rajeev Khanna, grandson of ace hotelier M.S. Oberoi. His brainchild, Chrysalis International, has set up go-karting centres at Powai in Bombay and at Faridabad near Delhi and is all set to go national with ventures in Chandigarh, Bangalore, Calcutta, Ahmedabad and Lucknow. "When other businesses are down, this will be up. In hard times, people are depressed and want to forget the pain. Worldwide spends on entertainment actually jump in such times," he says.
Khanna is not your average boy-with-his-toy motor racing driver. He's inherited his grandfather's business acumen and has trading interests in copper mining, fertilisers, electronic products, automobile engineering. But go-karting is what he's betting on.
M.K. Sehgal, 37, has no regrets about selling off his flourishing textile business in London to return to India to hawk video games and bowling alleys. The reason is simple: "This business has the scope for 1,000 per cent growth. If you see the same faces at bowling alleys and video parlours everywhere, I'd call it bad marketing. If the product mix is right and the marketing innovative, you can draw customers from age five to 50, simply because there are absolutely no entertainment options available. And the need for entertainment is becoming as basic as the need for food and clothing."
Sehgal has opened video game parlours in Delhi and Bombay under the brand-name Future Zone and plans to open 50 centres in five years. He is also expanding into bowling, with a four-lane alley at Essex Farms in the heart of Delhi which is fast becoming the most happening place in town.
At his Greater Kailash office in upmarket South Delhi, Kapil Kaul, director, business development at AMF, the $1 billion US bowling equipment giant, is extremely bullish. India presents a Rs 1,500 crore opportunity with a potential for 5,500 lanes, he says.
"What's the talk about recession? Our business is recession-proof. At the moment I am sitting on 500 inquiries from entrepreneurs wanting to get into our business," says Kaul. From the customer viewpoint, the concept of family entertainment is breaking loose from the conventional yearly holiday, to fun-filled evenings closer home. "This factor alone is enough to generate enough demand for the business," he adds.
These are the dynamics of the leisure and entertainment industry which spawns an expansive gamut—from amusement arcades run by individual entrepreneurs, to family entertainment centres, retailing and entertainment malls, amusement parks and leisure destinations, run by awe-aspiring names like Disney. Now in a fledg-ling state, it's touted as the industry of the future. "If you had a few crores to spare and were looking at high interest, where should you invest? If a sunrise industry is the yardstick, put it in the leisure and entertainment business," advises Feedback Ventures, a Delhi-based consultancy. "Leisure and entertainment will be the flavour of investments in the new millennium," says Rajat Banerjee, executive director, Feedback.Consultancy giants McKinsey are also advising corporates to take a look at the emerging opportunities.
It's not too difficult to know why. Manufacturing, once the mainstay of corporate India, is taking a beating. Unless you have world-class volumes and technology, you can't lead. And unless you offer consumers prices which better global firms, you can't survive. Result: corporate backyards littered with inventories, boardrooms resounding with debates on rethinking business.
Statistics are compelling the rethink. The latest figures (April-June '98) showed negative growth across the board in the manufacturing sector—vehicles, cold-rolled steel, processed food.... But the services sector grew at a healthy 7 per cent. With entrepreneurs veering to restaurants, retailing, amusement and theme parks. A spurt triggered precisely by factors that manufacturing lacks. Here's how:
Firstly, the leisure industry is not dependent on global markets. Unlike a steel plant that has to compete with global prices, a version of Laser Wars or Paint Balls in Delhi does not vie for attention with one in London. For businessmen hit by global competition, this factor is a balm on frayed nerves.
Secondly, the driving force of this industry is land availability. Familiarity with local laws and understanding local taste and culture is also a critical factor. So, foreign firms need active Indian partners to grow. And local corporates with real estate holdings are best poised to avail of the opportunity.
THIRDLY, as a new generation takes charge at corporate houses, a new investor mindset is emerging. Asset-building is out. Brand-building is in. Acquiring goods is out. Acquiring lifestyle is in. The new business scions are more willing to experiment as their wealth is inherited rather than earned.
The same mindset characterises the young consumers who form the backbone of the leisure industry. About 60 per cent of the customers for leisure and entertainment are teenagers or young parents in their 30s. Their parents thought: "I want my children to be better off than me." They think: "I want to be better off than my parents."
Greater spending power helps. Recession or no recession, the Asian consumer's spending on leisure has been rapidly increasing. According to a study presented at the Asian Amusement Expo '98 in Singapore, over the last three years when family income went up by 14.2 per cent, there was a commensurate increase in expenditure. And 80 per cent of this was on eating out, entertainment and non-essential activities. An NCAER study shows that the premium and mid-premium segments of every product category are increasing, regardless of the prophets of doom. Besides, India is still witnessing a growth in the salaried class and its professionals today get globally compatible salaries. Coupled with double-earning households, the demand environment seems ready to lap up the leisure industry boom.
Social forces are no less important. The nuclear family in metros is more vulnerable to social pressures of a new kind that are redefining the norms of entertainment.
First, the pressure of keeping up with the Junejas. Says Ritu Mehra, mother of 11-year-old Anubhav, who is celebrating his birthday this year by taking family and friends for bowling and go-karting at Delhi's 32nd Milestone: "No more cake-chips-cola parties at home. McDonald's, Wet N' Wild or Fun N' Food village are the venues. Kids decide, you've no option but to go along."
Second, the need for quality time with kids drives many parents to fun spots.Says Dr Geeta Chaddha who brought her sons Akhil and Abhey with their cousins for ice-skating at Fun N' Food: "I spend Rs 500-700 every time I come here. It's expensive. But as a working mother, a gynaecologist, I keep long hours. My hus-band travels 20 days a month. I rid myself of the guilt by spending on fun time. Call it compensatory cost. My sons, of course, just love the whirring engines, the helmets and the curvy tracks."
Third, there's peer pressure, a sense of adventure and a hunger for 'something new' that drives youngsters. "How much cinema can you see? It's passive. This is real action. I imagine I am Michael Schumacher, in no less than a Porsche, Ferrari or Nissan. Do you know Schumacher trains on go-karts when he is not doing Formula One?" says Bobby Singh, 15, who drives 30 km every weekend from his West Delhi home to spend Rs 1,000 to Rs 1,500 on go-karting. Says Nikhil Swaminadhan, marketing manager, 32nd Milestone: "The number of people who identify with different entertainment activities is increasing. See the way cinema houses are advertising and repositioning themselves and you'll realise that for the first time they are competing to draw customers who are looking at other avenues to kill boredom and unwind."
An entire industry is emerging to cater to this market. At the lower rung are enthusiastic young entrepreneurs who've opened shop in areas ranging from Mayur Vihar in east Delhi to Naraina in west; from Model Town in the north to Panchsheel in the south. These are the twenty-something variety of 'budding' businessmen, betting on papa's money and property to encash on the pool-craze of other twenty-some-things. Take 20-year-old Amit Jaisinghani who, while doing his graduation by correspondence, convinced his father to loan him Rs 10 lakh and a 2,500 sq ft basement. He bought three pool tables and one snooker table and today runs a popular pool centre called Seventh Pocket in Panchsheel Park. "It's a better proposition than renting out the property where the returns are headed southwards. I'm confident of a boom—there's been simply no good fun option available for youngsters in years," he says. And there are many more like Jaisinghani.
Result: a plethora of pool centres in the city, 125 at last count, in the basement of houses and shopping arcades, going by names like 'Drool on Pool', 'Q-Balls' and 'Snooker Booker,' that cater to the kids in the neighbourhood.
Then there are the family entertainment centres with facilities like video game par-lours, bowling, go-karting, ice-skating and other fun options, backed by corporates and professional businessmen. The scene here has been energised with the entry of world-leaders like Sega, AMF, Dacos, Brunswick and Scorpion. Sega has tied up with the Mahindras to open amusement arcades across the country in the next five years. The Future Zone Entertainment Co, along with AMF, proposes to open a series of bowling centres under the brand name Future Bowl and video par-lours under the brand name Future Zone. Chrysalis International, flo-ated by Khanna, in collaboration with Scorpion of the UK, has opened two centres to the Delhi and Bombay population and is now headed for Chandigarh. Ludhiana, Ahmedabad and Bangalore are some of the future destinations.
HIGH up the hierarchy in terms of size, complexity, integration, traffic and spends are the retail multiplexes, amusement parks and leisure destinations."There is a lot of interest in mid-sized corporates sitting on real estate to look at retailing and entertainment as a diversification opportunity. There are companies talking of devoting 5 lakh sq feet of area to retail multiplexes that include not just shopping, but recreation and food. That speaks something for the knocking that manufacturing is taking and the interest this service industry is generating," points out O.P. Chowdhury, vice-president, Feedback. On the drawing board of many companies are film cities, games cities, kid cities, horror cities, water cities, fun cities.
Those already operational are doing good business. Appu Ghar, India's oldest amusement park which opened in 1984, draws 6,000 visitors on weekdays, doubling to 12,000 over the weekends. Other such parks have sprung up like Nicco Park in Calcutta, Esselworld world in Mumbai, Kishkinta in Chennai, Wet N' Wild and Fun N' Food in Delhi, amongst others. The AGIO group of Singapore and the Barjaya Group of Malaysia are conceiving mega projects that could revolutionise the whole concept of leisure in India. At the top-end, the Rajasthan State Industrial Investment Corporation is developing a leisure city on a whopping 550 acres at Achrol, on the Delhi-Jaipur Highway. A year-round theme park, this will include a Rajasthani 'village', a theme amusement park, an 18-hole golf course and country club, an indoor entertainment centre complete with darts, pool, virtual reality parlour and cybercafe, a village bazaar and accommodation complex. "Considering that 6 million tourists visit Rajasthan annually, spending about $650 million, even if half drop by at Achrol, you have a winner at hand," says Banerjee.
Will this industry bring back the smile on the faces of entrepreneurs? At the bottom-end, there are bound to be casualties. "Not because the business has no potential but because too many wannabes are jumping in for the wrong reasons. There will be cannibalisation as the market takes time to grow. Ultimately, those who provide a complete experience will survive, while the others will wither away," points out Gaurav Tewari at Feedback. At the middle level, players will have to constantly innovate to stay ahead. "We are getting double the customers we had earlier, we are speeding up our expansion plans and we are introducing new products every six months. We are advertising and marketing more. But are we moving ahead? Let's say we are running faster and harder to remain at the same place," says Swaminadhan of 32nd Milestone. "We have restricted our membership and put on hold some of our expansion plans. More than recession, it is the archaic laws and high rate of taxes, both on land conversion and entertainment, which is the impediment," says R.P. Sehgal, MD, Wet N' Wild.
Land-availability is another impediment to growth, especially at the top-end. Singapore and Malaysia have reallocated sport stadia in tourist areas to make room for leisure complexes. The spin-offs: more private investment, tourists and jobs. India needs to show similar initiative if the fun industry is to become serious business.
