|
Indonesia’s economy is booming. So is the nation’s appetite for family entertainment.
Rachmat Sutiono built his first family entertainment center (FEC) in 1980. Thirty years later, P.T. Fun World Prima (his company) dominates Indonesia’s FEC market.
“I think we were the country’s first. There were a lot of game centers at that time, but none targeting the whole family,” he says.
Indonesia boasts Southeast Asia’s largest economy, home to 232 million residents. The nation encompasses 17,000 islands straddling the equator. Rachmat’s Fun Group operates a chain of 162 FECs scattered across the archipelago. Fortytwo locations carry the Fun World brand name. Company headquarters are based in Jakarta, the capital of Indonesia and the site of Rachmat’s first game center. “In the beginning, spending per head was very low, but I had a feeling that this is a future business, and I think I made the right decision,” he says.
The Right Strategy
Rachmat worked in domestic petroleum distribution before founding Fun World. He wanted to launch a company that operated on a cash basis and developed a double-pronged business strategy using two cash-based ventures: supermarkets and kids’ games. He thought: Indonesian families love to shop together; their children want to play; parents want to spend time with happy kids—bingo!
“When we started, we were building supermarkets and entertainment centers at the same time—that was the original concept,” he says. “Then I found supermarkets are not an easy business, so I sold the shopping centers, and I continued with entertainment.”
The initial logic is evident in Fun World’s current operations. Rachmat says most of the Fun Worlds are located within shopping malls. They vary in size depending on the shopping center. A Fun World location could be anywhere from 500-15,000 square meters (5,382-161,459 square feet).
“People here consider shopping centers, or malls, to be a holiday destination. They can get everything at the same time. The parents can get what they need, and we provide something for the children,” Rachmat says. “We believe parents will go where the children go. We try to convince the shopping center owner of this concept, and most of them accept the idea and consider us to be anchor tenants.”
Big malls house larger Fun Worlds with more extravagant thrill rides, with something for all ages. Attractions include roller coasters, a ride called the “Bazooka Drop Zone Tower,” and classics like carousels. They also feature arcades with simulator, redemption, and novelty sports games.
Rachmat wants every location to have a unique themed identity; these include an “America’s Wild West” and “Treasure Island,” among others. “Our themes are universal, and customers accept that,” he says.
Assessing Indonesia’s Leisure Market
Indonesia is incredibly culturally diverse. Although there is a common language, citizens speak more than 300 dialects. More than 80 percent of the country is Muslim, and Indonesia’s national constitution stipulates freedom of religion. The country’s motto is “Bhinneka Tunggal Ika,” or “Unity in Diversity.” Even so, regional differences require sensitive management. “All of Indonesia’s islands are very different, so we have to follow their cultures. That’s important,” Rachmat says.
With the nation’s overwhelmingly Muslim population, one might expect to see FECs catering to the religious demographic, but that hasn’t happened. “Since we entered the entertainment market, I haven’t noticed any competitors with religious affiliation,” Rachmat says. One thing the market does have, however, is room for growth.
“We plan to continue expanding, because I think the market is still here,” Rachmat says. “Indonesia consists of 33 provinces and maybe only one or two of the provinces have a theme park. So there are still big opportunities for any company to build.”
Rachmat says the country’s few amusement parks are not direct competitors. However, the number of rival FECs has grown dramatically in the past decade. Contributing factors include lower cost of entry and rising income levels. Fun World used to buy games from Western corporations; however, Chinese companies have begun manufacturing quality arcade products for a fraction of the price. “Chinese companies are very aggressive,” Rachmat says. “They try to penetrate to all markets, including Indonesia. So now it’s much easier for new companies to open a games center.”
Residents also have more disposable income to spend on recreation, edging on US$2,000 in 2009—double from a decade prior—according to the investment consultancy firm Euromonitor International. “As long as people have money to spend, they will like to spend it on recreation, especially on their family,” Rachmat says.
Stability Taking Hold … Finally
Rachmat cites stability and continued growth as key reasons foreign companies might consider expanding FEC or theme operations in Indonesia.
Economists have cautiously monitored Indonesia’s rebounds from a series of catastrophes: 1997’s Asian Financial Crisis imploded the national currency, and unrest followed the economic meltdown. Riots upended the lengthy dictatorship of General Suharto. East Timor rebelled and declared independence from Indonesia in 1999. Islamic militants bombed Bali in 2002. Freedom fighters resumed war in the territory of Aceh in 2003, and a devastating tsunami pummeled the country the following year.
However, a new sense of stabilization has slowly taken hold of the country. Indonesia’s first directly elected president took office in 2004—Susilo Bambang Yudhoyono—and he was reelected by a landslide in 2009. The nation emerged largely unscathed from the recent global financial crisis, a feat Rachmat attributes to lessons learned from Asia’s own version a decade earlier.
Some economists argued to incorporate Indonesia into the “BRIC” (Brazil, Russia, India, and China) nations Goldman Sachs forecasts to be power economies in the coming years. And more recently, economists have included Indonesia in the new emerging market catch phrase “CIVETS” (which includes Colombia, Vietnam, Egypt, Turkey, and South Africa).
Despite Rachmat’s confidence in the economy, he says international theme parks and FECs are not rushing to invest. He suspects the reason is the nation’s currency and spending power (which remains far below levels for developed nations). “Maybe the market is not attractive to the foreign companies yet, but I believe in a very short time, they must come to Indonesia,” he says.
Doug Meigs is a freelance journalist based in Hong Kong.
|
