Should SEGA Orbi buy Chuck E. Cheese in 2 years?

Today's blog entry is about the failing long running kid's/Family Restaurant Chuck E. Cheese.

We all grew up on Chuck E. Cheese, whether your an 80s kid like me or a 90s kid, Chuck E. Cheese is a vital piece of American childhood, in Japan SEGA has always had alternatives to CEC mainly Joyopoils, Amusement Centers with built in Restaurants, e.t.c

Latest financial reports show that CEC Entertainment is struggling and seeing revenue nose dive. 2010 and 2011 saw two straight years of dipping revenue and rising operating income.

http://www.pizzamarketplace.com/article ... akes-a-hit
http://news.yahoo.com/chuck-e-cheese-tr ... nance.html

To add insult to injury, Chuck E. Cheese is receiving very negative consumer feedback. Many consumers are reporting that the Animatronics are old,unappealing and spastic. The game machines and parlor are outdated,un fun and useless to young children and the elementary school demographic that Chuck E.Cheese has become increasingly disinterested in its brand.

But the worse response, is reports that Consumers are growing TIRED of Chuck E. Cheese's original recipe. Its Pizza is reportedly losing among taste tests.


Its clear that the Chain's problem is simply this: Ever since Showbiz Pizza,Inc was purchased by CEC Entertainment in 1999, little to no changes have made, the same Arcade machines from the late 1980s continue to fill each store, the parlor machines from 1991 are still there, the Mascot has grown tired and old and the marketing has cheapened completely. But Chuck E.Cheese's BIGGEST problem is simply "Dave and Busters" D&B's commitment to making it a mostly all ages Arcade experience is stealing CEC's Elementary School Demographic.

Chuck E. Cheese needs to shape up. A new approach,new vision. Newer more up to date Arcade machines and Parlor Machines. Better prizes for kids, an older demographic. The failed Approach of "Discovery Zone" of the 1990s offering mom and pop rides sans tasty food fun and fun Arcade games helped Showbiz CRUSH its first serious competitor like a bug, but D&B is different. Way better at marketing and unlike Chuck E. Cheese, doesn't take Arcade gaming for granted.



Atari Godfather Nolan Bushnell founded Chuck E. Cheese in Silicon Valley in July of 1977, his original vision at 35 years of age was trying to pioneer the approach of merging video games with Family Entertainment. Of Course after the Crash of 1984, Showbiz ignored Bushnell's beliefs in gaming and scaled completely down on Arcade video gaming. For 15 years, Showbiz was able to downplay the importance of Arcade Gaming to family entertainment, and pretty much throughout the 2000s, but times change. And after 35 years of operations, it seems that Chuck E. Cheese is still partying like its 1984.


If Chuck E. Cheese takes 2 more years of losses, they'll be up for sale. I believe in 2014, SEGA Orbi should and will probably take a serious look into to outbidding CEC Entertainment for purchase and takeover.

It wouldn't be difficult to do at all now. CEC Entertainment estimated net worth and Assets are only $788 Million, this budget would be a bit lower than the exact amount it will cost SEGA to build a Dreamcast successor which is $800 million(I believe they already have done this) Since they obviously already put $850 Million into Sega Orbit/Pyzhercast in 2009-2010, paying $790 Million for Chuck E. Cheese would be a convienant if not important purchase for SEGA.


We also need to remember the risky and DANGEROUS Amusement investment SEGA/CSK made in September 1996, when they pumped $2 Billion into starting "SEGA Game Works" even though their revenue was sinking, the Arcade market had pretty much imploded in America and the production costs of Model 2 combined with their new Model 3 pre-Dreamcast technology ballooned SEGA's Operating Income.

Chuck E Cheese would be less expensive, but if SEGA Orbi were to wait until 2014, the purchase would be easier and swifter.

CEC needs SEGA. They need a NEW leaf and SEGA Orbi buying them would completely reinvent them in my opinion. Chuck E. Cheese needs to be tied to gaming. Its been 28 years since they have, maybe they should consider going back to Bushnell's dream.