Asian demand fuels Triotech’s growth in amusement park, attractions business

Financial Post
January 20, 2014
By Quentin Casey 

Ernest Yale’s story is familiar. In his youth, he spent hours tinkering with the computers at his school and reprogramming Atari games. So founding a business that made arcade games in 1999 was a natural progression. Montreal-based Triotech, soon found it was unable to compete on price with giants such as Sega, so it pivoted to creating original technology.

Today, the company makes “interactive attractions” using large screens, 3D animation, moving seats, lasers, and wind machines, to make traditional amusement park attractions more interactive. Triotech is producing a major attraction for Canada’s Wonderland called Wonder Mountain’s Guardian, which features a digital dragon and lasers that visitors will fire at animated characters.

Growth has been happening quickly, particularly in Asia where a growing middle class is clamouring for entertainment. As well, the 100-person company is using revenue-sharing partnerships with its clients to expand faster. Mr. Yale, chief executive of Triotech, recently discussed his company’s growth strategy with Quentin Casey. The following is an edited transcript of their conversation.

Q You’re headed off to Asia. Is the trip business-related?

A I travel about six months a year. On this trip I’m technically on vacation, but we’re in the attraction business so we always visit amusement parks. Even when I’m on vacation I go to every amusement park and I try the rides. There’s a thin line between work and play in my line of business. Actually, most people I know think I don’t work.

Q You have installations in more than 40 countries. Can you give me a sense of your recent growth?

A In the past four years, we’ve grown by an average 20% to 25%. We’ve been doing very well because we offer a new type of attraction — something interactive. When times are hard, people are looking for something that’s new and different to attract customers. We’re also in new markets like China.

Q You’ve opened a small office in Beijing. Does Asia represent the biggest market for further growth?

A Yes. It’s a bit of an expensive product for the Chinese market, but we’re seeing a lot of triple-A theme parks being built in China. They want to replicate the Disneys and Universal Studios of the world, so they’re buying foreign rides, including ours.

Q You’re trying to push your technology into bigger amusement parks. How will your project at Canada’s Wonderland aid that effort?

A Canada’s Wonderland is owned by Cedar Fair, a U.S. company. They own 11 amusement parks in North America. We’re targeting all their parks. Same thing in China. We’ve been working with theme park companies including the OCT Group and Happy Valley. If you do one ride, and it’s successful, then the park operators want to replicate that ride in a lot of their parks. That is our strategy.

Q You’ve also started partnering on revenue-sharing deals. Why?

A Our customers have been very successful with our attractions. A lot of them had a return on investment in less than a year. We’re partners in about 20 attractions, including one in the West Edmonton Mall. One of our goals is to establish these attractions all over the world, and have local partners manage them. It’s an important focus for the future.

Q Why is that important?

A It ensures long-term, steady revenue every month. And it’s actually much more profitable than manufacturing a product. Our operations division accounts for less than 10% of revenue. Eventually, it could drive the majority of our revenue. Just imagine you have 50 or 100 locations and they generate revenue every month. Every time someone steps on a ride we get a portion of that revenue. And some countries have 12-month seasons. In Singapore, for example, there’s no winter. Imagine the revenue.

Q Have you made any mistakes in growing the company?

A We’ve made a lot. For instance, we wanted to become a co-owner at some venues but we lacked expertise in operations. We initially placed some of our locations in far away places. We learned that we have to partner with someone who is local. In the U.S. we have local partners now. They know the market, and they know how to advertise there. We made a few mistakes. But we’re a small company so we’re able to turn it around quickly.

Q What’s your prediction for future growth?

A Last year was a record year. It was our best so far — by far. This year will be even bigger based on the contracts we have already. I see an acceleration of our growth in 2015 and 2016 — more than 25% a year. A lot of amusement parks are looking for something new. That’s where interactive attractions come in. It’s a virgin market.