Feature - Surge in South Asia - February 2019

FUNWORLD PRIMA

Rising incomes fuel growth at Indonesia’s Funworld FEC

by Michael Switow

Inside the Funworld family entertainment center (FEC) in Surabaya, Indonesia, a teenage boy tries his luck on the “Danz Base” arcade game. Lights flash in sync with the music, as he hops forward and back, mimicking the animated characters on the screen. Spread across 2,600 square meters inside the Tunjungan Plaza shopping center, the FEC is packed with imported rides and games, including many from Europe and North America.

Walk past the arcade games, and a quintet of family rides made by Italy’s Zamperla comes into view: a swinging Galleon boat, circling Magic Bikes, a Rio Grande Train, Zip Zap cars and boats, and a Family Swinger. The ceiling is high, and upstairs toward the back, you can see the “Softplay Network,” a children’s play area furnished by Cheer Amusement. 

The Tunjungan Plaza attraction is one of 250 owned and operated across Indonesia by Funworld Prima (which shares the same name but has no connection to Funworld magazine). Some are in big cities; others are in small towns. Almost all are inside malls, though the company operates a few outdoor attractions, as well. About 150 are branded as Funworld, 20-plus as Kidz Fun, and a joint venture called Amazon has 70 outlets. Not counting joint ventures, Funworld Prima employs 3,500 people. Suppliers include SBF-VISA Group, Vekoma, and Zierer, among others.

“In terms of outlets, we are the biggest FEC in Indonesia, and every single one is themed differently,” says Funworld Prima Founder and President Rachmat Sutiono, who has served IAAPA as a board member.

Mayan culture sets the tone at the Central Park Mall Funworld in Jakarta, Indonesia. At the Grand Indonesia, a few kilometers away, it’s a kids’ festival. At the Grand Metropolitan in Bekasi, a commuter city on the outskirts of Jakarta, a pier-side boardwalk provides the inspiration, while back in Surabaya, the attraction is decorated with graphics of sprawling film reels from an old movie studio.

Sutiono opened his first attraction, an arcade with games like “Pac-Man” and “Gallactica,” inside a large Jakarta supermarket in the early 1980s. The grocery store was part of a small chain that he started with partners. Before that, he sold petroleum products including lubricating oil and chemicals. An electrical engineer by training, and an entrepreneur at heart, he tired of entertaining clients, a must in the petroleum business, and found the grocery business to be too stressful. But the arcade was a different story. 

“I like to see people smiling,” the 75-year-old shares. From one location, he expanded to 10. Then, with the addition of kiddie rides in the mid-1980s, Indonesia’s first family entertainment center was born.

“At the time, there was nothing like this,” Sutiono says. “But it took time for it to catch on.”

And catch on, it has. An estimated 10 million people visit Funworld Prima’s FECs every year, according to company officials, though there are no official numbers since the facilities are ungated. Families, children, and young adults play inside for about an hour at a time, spending between 50,000-100,000 rupiah (about US$3.50-7.00). Each ride costs the equivalent of US$1-2. Redemption games are the most popular, as visitors try to win toys, stationery, or even a rice cooker or microwave.

“It’s hard to mention the specific product because it’s always changing,” Sutiono explains. “Most are seasonal. Lately it’s not easy because the trends change very fast, sometimes in just a few months.”

Funworld-Prima

Funworld Prima Founder and President Rachmat Sutiono started with an arcade, and with the addition of kiddie attractions in the mid-1980s, his FEC concept took off. (Credit: Funworld Prima)

The Funworld chain has expanded along with Indonesia’s middle class. In the early 1980s, the per capita GDP (gross domestic product) in the country was less than US$500, according to World Bank data. Today, while the country still has its problems—including capital outflows, overly congested roads, and a fragile currency—Indonesia’s economy is a Southeast Asian powerhouse, with more than 50 million people counting themselves among the middle class.

Shopping is a national pastime, but when Funworld was new, Sutiono noticed Indonesian malls didn’t offer any kind of recreation for children. So, he set about to convince property developers that times were changing, and entertainment was a crucial component for success.

“Maybe during my time, children went wherever the parents went,” he recalls. “But I told them that [now] parents go where the children go.”

After convincing a few developers to give Funworld Prima a chance, Sutiono quickly encountered another challenge: sourcing for rides and other attractions.

“No one sold these sorts of items in Indonesia,” he recalls. “I didn’t know where to get the equipment.”

But as he grew his network and began to import from elsewhere in Asia as well as farther afield, Sutiono also planted the seeds for a complementary business: distribution. Funworld Prima sells redemption games and simulators—mainly from China but also the United States—to other entertainment centers. With an estimated market size of more than 1,000 FECs in the country, this is becoming an increasingly important part of the company’s business.

Today’s challenges are more regulatory in nature. Sutiono cites a high “entertainment tax” of up to 35 percent of revenue, which municipal governments like Jakarta levy on attractions on top of the national corporate tax. Import duties have fallen over the decades—from as much as 70 percent in the ’80s—but can still reach 30 percent for products from Europe.

The biggest potential constraint to further FEC expansion, though, is one that is largely outside of operators’ control: a slowdown in the construction of shopping centers.

“We have too many shopping malls already,” Sutiono explains. “I believe developers will stop building new ones. We started at the right time, when developers were building new shopping centers everywhere.”

That doesn’t mean, though, that the industry is stagnating. Instead Sutiono believes Indonesia’s growing wealth will fuel larger attractions.

“The future is outdoors,” he says. “Indonesians’ disposable income is growing. With more money, they will spend more time for recreation and plan better vacations. A theme park can be one of their holiday destinations.”

In addition, Indonesians’ love for photos and social media is more conducive to the outdoors.

Funworld-Prima

Almost all of Funworld Prima’s FECs are housed inside malls, but the company also operates a few outdoor attractions. Jakarta’s Central Park Mall features a Mayan-themed Funworld FEC. (Credit: Funworld Prima)

Funworld Prima already owns and operates four outdoor amusement parks, one of which is a joint venture. Future plans include outdoor edutainment. Other companies are also capitalizing on this trend. CT Corp., for example, is set to open its third Trans Studio theme park—this one designed by Hollywood-based Legacy Entertainment—in Cibubur, Indonesia, about 30 kilometers south of Jakarta. And the Cartoon Network is behind a branded indoor/outdoor park due to launch in Bali in 2020.

If there’s one lesson Sutiono has learned over the past three and a half decades, it’s “Be friends to everyone, even your competitors,” he says.

“I think that’s what I’ve done so far. We have very good relationships with our suppliers, manufacturers, and other operators. Most importantly, we need to have good relationships with other IAAPA members,” Sutiono says.

Over the past decades, Sutiono has become a role model. Asked whether he cleared the way for other FEC operators, he replies simply, “Yes,” then adds, “in Indonesia, almost all the new investors look for me. I’m always willing to share with them, even if we don’t go into business together.”

And now instead of spending time away from his family, as his previous career in the petroleum sector required, Sutiono works together with them. His sons run Funworld Prima today, and their children are engaged in the industry as well.

“I’ve been following the growth of the industry in Indonesia since I was 6,” says Rachmat Sutiono’s 20-year-old grandson Melvyn Sutiono, who is currently studying in the United States. When home, Melvyn works part time at Funworld Indonesia in digital marketing. “There will be a lot of new innovation that surely can be implemented in the company. I want to expand and diversify the business and the industry as a whole.”

Meanwhile, Rachmat Sutiono’s son David Sutiono changed his career path to join in the business of fun.

“I worked in my family’s other business before, distributing oil lubricant, but I didn’t have a passion for that,” says David Sutiono, who is the director of Funworld Prima. “Funworld is a fun business. There is opportunity, and I am proud to follow in my parents’ footsteps.”

http://funworld.co.id


Michael Switow is a Singapore-based writer who covers the Asia-Pacific attractions industry for Funworld.