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Arcades offer more bang for your pennies

By DONALD FINLEY

It's not your old pinball machines anymore. Going to the "arcade" in some shopping malls now is big time high-tech, interactive entertainment.

Or as Skip Paul, chairman and CEO of the fledgling Sega GameWorks -- and a longtime electronic-games fanatic himself -- put it: "As kids, we loved going to arcades. But as we grew up, the arcades never did. At GameWorks, we're building the entertainment 'end all' we never had."

Whether GameWorks is the ultimate in video entertainment remains to be seen, but the company has certainly made a spectacular splash since it was formed last year.

Backed by the creative inspiration of movie director Steven Spielberg, Sega GameWorks has exploded onto the interactive entertainment scene with modern, multifaceted mega-arcades.

The company has opened five GameWorks entertainment complexes, each 30,000 square feet or more, including three at value-oriented megamalls. The company has plans to open several more this year, and worldwide expansion is expected in the next five years.

"It's a blast, an adrenaline rush. It's pretty wild," was the reaction of one long-time electronic game player in his early 30s who visited the freestanding GameWorks in downtown Seattle. "The Indy 500 racing game was the most intense video game I ever played. After I got off, my knees were shaking."

It's that kind of enthusiastic reaction that mall owners are looking for. Many today are trying to increase foot traffic and profits by expanding opportunities to combine shopping and entertainment in the same trip.

GameWorks complexes go far beyond traditional video arcades, which mainly attract teenagers. GameWorks, which include restaurants and bars, are big facilities that can appeal to all ages, but are designed to cater mostly to young adults, including couples and families with children.

"The GameWorks design team is creating a high-energy fantasy world for people -- from the diehard 'twitch' gamer to the 30-something couple looking for a cool new hangout," said Melissa Schumer, vice president, communications for Sega GameWorks, Universal City, Calif. "GameWorks is the premier club where guests can play, eat, drink and socialize."

The arcades offer a broad selection of games, ranging from the most technologically advanced to the most traditional, she added. In addition to photo-realistic racing and fighting games, and networked multiplayer adventure and strategy games, GameWorks feature arcade classics of the 1980s such as Pac-Man, Asteroids and Donkey Kong Jr. The sites have a "SportsZone" featuring basketball, bowling, golfing and batting games, as well as traditional table games such as pool, Skee-ball and air hockey.

"Playing is about fun, excitement, competition and bringing people together. It's also about escape, adventure and connecting," Mr. Spielberg said. "It gives each person the chance to prove that he or she can be a star."

Some games, such as the virtual-reality game Vertical Reality, have been created especially for GameWorks. In this game, 12 players at a time battle sinister forces while "climbing" up to 24 feet.

"Vertical Reality is the most intense gameplay experience imaginable, combining the high-tech thrills of video gaming with the visceral excitement of amusement park rides," Ms. Schumer said. "[It] is the only game in which players experience physical consequences based on their actions -- ascending as they succeed, descending as they get hit."

GameWorks' freestanding unit in Las Vegas offers Surge Rock, which Sega calls the world's tallest freestanding rock climbing structure at 75 feet.

Unlike the old penny arcades of long ago and the nickel and quarter arcade games in later years, GameWorks is pricier, ranging from 50 cents for the simpler games up to $4 for the Indy 500 racing game.

Sega GameWorks is not modest when it outlines its vision.

"The goal of the GameWorks design team is to raise interactive game playing to center stage, to make it intrinsic to today's social fabric," the company says in its promotional material. "As the levels of technology in daily life increase and the comfort level with interactivity becomes universal, GameWorks' creators believe that GameWorks will actually change the way America plays and interacts."

The formula must be working. Ms. Schumer said that since the first GameWorks opened in an entertainment complex in downtown Seattle in March of 1997, more than 4 million people had visited the five units by the end of 1997.

Visitors are now averaging about 900,000 per month at the five sites.

Besides Seattle and Las Vegas, the other three GameWorks are in value-oriented megamalls owned and managed by the Arlington, Va.-based Mills Corp.: Ontario (Calif.) Mills, Grapevine (Texas) Mills and Arizona Mills, Tempe, Ariz.

Has GameWorks increased overall foot traffic in the Mills centers? Comparison data is not available at Grapevine and Arizona Mills because GameWorks were in those malls when they opened. But the figures look good at Ontario Mills, said Dennis McGovern, assistant general manager.

Ontario Mills, which opened in 1996, added the GameWorks unit in July 1997.

"The mall's entrance next to GameWorks is now the busiest in the center," Mr. McGovern said. "Foot traffic at that entrance increased 15% to 20% after GameWorks opened and jumped up another slight notch when American Wilderness Experience opened adjacent to GameWorks a short time later."

GameWorks and American Wilderness Experience also will be neighbors in Sawgrass Mills, a 300,000-square-foot entertainment complex that Mills is opening later this year in Sunrise, Fla.

American Wilderness Experience, a unit of Ogden Entertainment, New York, features live animals and a wilderness experience including sights, sounds, climates and smells that put customers into the world of animals and their habitats.

Another GameWorks is scheduled to open this year in the Shops at Sunset Place, an upscale entertainment complex in South Miami, Fla. owned and managed by Simon DeBartoto Group, Indianapolis, said Ms. Schumer. Several more GameWorks sites are possible this year, but leases have not yet been signed.

GameWorks is looking to locate in urban locales and other areas with high tourist and resident foot traffic.

The creative center for Sega GameWorks, Soundstage 35, is on the Universal back lot. The sign on the door reads "Absolutely No Visitors." Inside, a staff of more than 100 designs and tests new games, Ms. Schumer said.

Two top officers at GameWorks were formerly Disney employees. Jon Snoddy, senior vice president, design, founded the Walt Disney Virtual Reality Studio in Glendale, Calif.; and President and COO Michael Montgomery was a former vice president and treasurer of Disney, and former executive vice president and CFO of EuroDisney near Paris.

Skip Paul, the chairman and CEO of Sega GameWorks, is a former president of MCA Enterprises and Atari.

Sega Gameworks was formed by three partners: Sega Enterprises, DreamWorks SKG (Mr. Spielberg, Jeffrey Katzenberg and David Geffen) and Universal Studios, which is a unit of The Seagram Co.