1 51 Q UA RT E R _ 0 2 _ 2 0 2 6 A s the in-person experiences market continues to grow, many brands and intellectual property (IP) hold ers are looking for opportunities to engage with consumers in more experiential ways. One option is to tap into the classic location-based entertainment industry, which has proven expertise in creating appeal ing experiences. But developing location-based attractions similar to those typically seen in major theme parks (where, for instance, an IP holding can become the basis of a roller coaster or large-scale interactive space) can involve big investments and long-term commitments that could stretch some brands’ resources and risk tolerances. - - An emerging trend suggests an alternative approach. More narrowly focused regional, sea sonal, or pop-up experiences could provide various players—including those not historically active in the location-based entertainment space—with novel opportunities to create compelling attractions. This version of location-based entertainment could involve smaller investments, shorter commitments, more flexibility, and the potential for quick wins. Meanwhile, it could also help provide a solution for anyone looking to fill spaces in malls, city centers, or other areas that might be underutilized. - To be sure, smaller-format location-based enter tainment projects often generate limited profit margins when compared with those found at major destination-based attractions. With their higher levels of repeat visitation and the operational benefits that come with large-scale investments, traditional theme parks can achieve EBITDA margins of roughly 30 to 40 percent. Family entertainment centers and arcades can reach EBITDA margins of roughly 25 to 30 percent. Meanwhile, smaller-scale, short-term location-based entertainment projects tend to operate at slimmer margins—though financial returns can vary significantly based on the type of experience offered. - Importantly, however, even if smaller-scale experiences are only incrementally profitable, they can still provide an avenue for brands and opera tors to deepen engagement with their most loyal and passionate customers. “Location-based expe riences allow us to connect more deeply with our most engaged fans,” says Ken Wee, chief strategy officer for Mattel, “and we know that those most engaged fans can be significantly more valuable than the average customer over time.” - - Beyond deepening engagement with core fans, location-based entertainment is also a powerful tool for reaching broader audiences. Immersive, smaller-scale experiences can appeal to a dif ferent demographic: Recent McKinsey consumer research indicates that Gen Z is 1.5 times more likely than the general population to visit an immer sive experience—and four times more likely than older generations. - - Location-based entertainment experiences can be part of a healthy mix that includes marketing spend, loyalty programs, and other efforts that have a central goal of building deep relationships with lifelong fans and broadening exposure to new and harder-to-reach audiences. THE GROWING BUSINESS CASE FOR EXPERIENCES McKinsey research has found that 52 percent of Gen Zers say they splurge on experiences when travel ing. These consumers will look to save money on almost anything else—including flights, local trans portation, shopping, and food—before being willing to trim their spending on experiences. Meanwhile, US consumer spending data indicate that growth in discretionary spending on experiences has out paced spending on goods. - - - Additionally, McKinsey research on consumer attention indicates that live entertainment is on the “efficient monetization frontier,” meaning it maxi mizes the conversion of consumer attention into revenue. Amusement parks, in particular, generate among the highest dollars per hour consumed when compared with other entertainment media. - Major experience providers are taking note of the growing consumer interest and increasingly favorable economics associated with experiences. Universal Destinations & Experiences, in the midst of adding to its collection of Universal theme parks, has also launched new formats in new locations— including the recently opened Universal Horror Unleashed in Las Vegas and the forthcoming Univer sal Kids Resort in Frisco, Texas. On a 2025 earnings call, Disney CEO Bob Iger said, “We are building on our best-in-class parks and experiences businesses, with more expansions underway around the world than at any other time in our history.” - ADVANTAGES OF SMALLER-SCALE AND TRANSITORY EXPERIENCES Smaller-scale, location-based attractions can augment the traditional, high-capital-expenditure