Innovative ideas needed for matured party house market
The business of party house has been growing in Hong Kong since 2010, when the Development Bureau implemented revitalization measures to industrial areas allowing party houses to operate in these lower rent buildings.
After enjoying eight good years, now the market has become mature and entrepreneurs have to be more innovative in order to survive in this red ocean market with more than 150 operators.
Instead of providing homogeneous services like board games and Mahjong, V-owl Station and LARPHK are introducing something new to attract customers.
Ideas inspired by overseas
V-owl Station, a party house in Kwun Tong, made a difference in 2016 by getting participants involve in experience 4D Virtual Reality (VR).
By using a large monitor and futuristic VR goggles, Sean Chan an owner of V-owl Station said it makes their services different from others. Mr Chan said that they are one of the first five VR experience party houses in Hong Kong. Although they are not using the same management style as the similar operators in South Korea and Japan, Chan and his partners have tried different VR games from overseas.
Targeting broader market
After trying various VR games, Chan found that VR may help to broaden their customer base. “It could considerably fulfill the interests of different age groups. Not only games for young adults, but also for the elderly and children, they can also enjoy extraordinary experiences through VR like traveling to space or diving,” said Mr Chan.
Being different from competitors, V-owl Station targets families as key customers, challenging the assumption that young adults would be the majority of customers of party house business.
“Instead of the youngers, families spend more time in our party house. To catch this chance, we decided to provide VR workshops cooperating with A Star Coding. Parents and children can not only experience the VR devices, but also learn how to create VR scenes and make use of simple coding," said Mr Chan. Although these workshops could not boost the sales of V-owl Station much, they have received warm and encouraging responses from customers.
Another newly-opened party house LARPHK also got inspiration from overseas, creating unique Live-Acting Role Playing (LARP) experiences for Hong Kong participants. Howard Lam, who founded LARPHK in April this year, has three-year experience in the board game industry. He found that LARP is one of the most popular family games among Western countries, especially in Northern Europe. Meanwhile, LARP games have become trendy after being introduced by TV reality shows in both South Korea and China. With constantly increasing attention to LARP, he decided to bring this new trend to Hong Kong.
In order to control the quality of the game, LARPHK has a standard on the gender and number of participants. “LARP games have less flexibility that the characters are fixed in every script. It is hard to change the number of participants at the last moment. Therefore, we have a strict limitation on the gender and number of participants,” said Mr Lam.
To face the keen competition among other party houses with VR services, Mr Chan trusts that updating the game list timely, together with meticulous selection among the sea of VR games would be one of their advantages. “When there is a new game published, we will purchase it within two weeks. Then, we will evaluate the game before our customers reach it as there are always some games too complicated for beginners”, he said.
Mr Chan also believes the diversity in gaming could lead V-owl Station to success. "Some of our competitors are merely offering a few kinds of VR games. They may only focus on one specific theme while we get a great variety of game collections”, he explained. Referring to the website of V-owl Station, it provides over 250 game collections, including “Job simulator” and “Fruit Ninja".
On the other hand, Mr Lam has confidence in the quality of their services and scripts provided. As it is assumed that each participant would not attempt to the same storyline more than once, Lam and his partners put a lot of effort into perfecting the scripts. “When participants finished the game, we would collect their feedback and check if there is any bug discovered throughout the game. It actually requires a lot of human resources to edit the scripts, which is far more than customers expected. It is also why we charge a relatively high price that many participants frequently questioned on it,” Lam said.
Higher initial costs affect break-even
Regarding the sales performance of V-owl Station, other than the rental services of party rooms, nearly 60% of their revenue came from the rental service of VR devices. Mr Chan said that the service is mainly provided to companies for their annual events. However, he did not disclose any financial details of V-owl Station.
But Mr Chan said V-owl Station also offers team-building events to companies to expand its revenue stream and as a type of advertising. “We have organized team-building activities with VR devices for more than 10 local companies. It is great to hear that some users got back to our place due to those experiences,” he said.
LARP games are relatively new to people and Lam is likely to be the pioneer in Hong Kong. Luckily, LARPHK grabs the publics’ attention successfully after promoted by the media. “We provide five to six LARP sections per day. All of our room bookings are full in the coming two weekends,” said Mr Lam. However, no further financial details were disclosed. Referring to the standard charges shown on the website of LARPHK, their estimated revenue at a weekend would be HK$4,500 for 6 LARP games in general, assuming the minimum charge per person is $150 and the least participant number of 5 for each game.
Comparing to the traditional party houses, both V-owl Station and LARPHK apparently have a relatively high initial cost. LARPHK invested almost HK$400,000 in room decoration; while V-owl station has invested nearly HK$160,000 for four VR devices and spent regular expense on purchasing new games. Although Mr Chan and Mr Lam declined to reveal the revenue of their firms, both companies are still operating below break-even point.
Unique themes grab customers’ interests
Mrs Lee, a mother of an 8-year-old boy, said that she rented a party room for a birthday party before, but never try one mainly providing VR devices. She thinks that a VR coding workshop is an interesting learning experience for her kid.
Michael Tang, a graduate who was a frequent customer of party room during his university life. He agreed that the newly created LARP games are more creative in nature comparing to those static traditional games in other party rooms. He would like to make an attempt in the near future.
《The Young Financial Post 新報人財經》
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