In a recent episode of “The Being Virtual Show,” I had the pleasure of interviewing Brent Bushnell, the co-founder of Two Bit Circus. We covered a wide range of topics, from the challenges of traveling popup events to the future of location-based entertainment (LBE). Our conversation provided deep insights into the evolving entertainment landscape, highlighting both the obstacles and opportunities that come with innovation.

The Challenge of Traveling Popup Events

Two Bit Circus started as a traveling concept, with attractions moving on a train from city to city. After running huge pop-up events in San Francisco and Los Angeles, they realized how moving items frequently led to damage, a reality that anyone who’s worked in the carnival industry is all too familiar with. This constant wear and tear is a significant issue, highlighting the need for robust infrastructure and meticulous planning to preserve these valuable exhibits.

It’s similar to the challenges museum and traveling exhibits face. Often costing hundreds of dollars per square foot to build, they’re designed for the rigors of setting up, tearing down, and repeatedly shipping across the country. Two Bit didn’t have the resources to engineer their homemade attractions to that rigor. But there was a more compelling reason to trade the box cars for a big box.

Permanent Locations are a Bigger Opportunity

Brent emphasized that the real opportunity lies in creating permanent attractions that draw visitors repeatedly. He cited movie theaters as a prime example. Their trillion-dollar success story is attributed to their ability to draw audiences back continually. The longevity of movie theaters, which have enjoyed a hundred-year run, illustrates the power of repeat visitation.

But the challenge here is that movie theaters are almost entirely based on a frequent content refresh model. The snack bar and seats have remained consistent over the decades, while the movies change monthly. Keep that in mind as you read on towards the end of this report.

On Positioning and Creating a Category of One

Two Bit Circus positioned itself as a “Micro Amusement Park,” allowing it to define a new entertainment category. However, this came with its challenges. People don’t have established habits for something they don’t fully understand, so a significant amount of market education is involved.

Brent pointed out the downside of creating a new category: breaking people’s habitual responses. People don’t know what to expect from a Micro Amusement Park, which makes it harder to attract them initially.

On Marketing, the Event Flywheel, and Creativity

Marketing is a tough game in the entertainment sector, especially in a competitive geography like Los Angeles. Brent shared valuable lessons on how to navigate this challenging landscape. He emphasized that there is no one-size-fits-all approach to marketing; it requires constant experimentation and creativity.

He said the “event flywheel” was particularly strong for them—creating a cycle where individual admissions feed into larger event sales and vice versa, driving continuous engagement. This is why the most successful FECs have dedicated group sales personnel.

Creativity in marketing is crucial, as well as experimenting and substituting traditional methods with innovative ideas. This approach helps stand out in a crowded market. We talked about their Clio award-winning campaign, where they painted a map pin on the roof so that they had a constant free advertisement when Google Maps refreshed their Satellite Data.

Building a Culture of Innovation at a Startup

Creating a culture of innovation is essential for any startup, and Brent shared insights on how they foster this at Two Bit Circus. He emphasized the importance of being accountable and willing to take risks. As a startup, decisions often come down to the leadership’s vision and willingness to experiment.

Brent spoke about being the final decision-maker and being accountable for those decisions to protect staff who take risks. Creativity and risk-taking drive innovation, ensuring the company remains agile and responsive to new ideas and challenges.

On Scaling Too Early

One valuable lesson Brent shared was about the dangers of scaling too early. He reflected on their experience in Dallas, where they built their second location before fully understanding their product and the major flywheels driving their business.

Scaling requires a deep understanding of the business model and ensuring that it can sustain growth. Part of their identity was home-grown experiences that fostered social, shoulder-to-shoulder play. This made them two businesses: a game designer and a location operator. Unfortunately, in the early days, their game design business only had one customer: themselves.

Companies like D&B can afford to create their own experiences, like The Arena, over which they can amortize the development cost to 100 locations. For a startup like Two Bit Circus, it’s far more challenging.

Gamification of the Player Experience

Brent also discussed their decision to avoid redemption games, opting for intrinsically fun experiences. Prizing, as he put it, can be a crutch. They offer a prize to induce play if the game isn’t inherently fun. But Two Bit was focused on ensuring visitors are drawn back for the sheer fun of it, not just for a reward. That said, Brent lamented their inability to develop some of the digital rewards and gamification they envisioned tied to their card system.

Pivot to a Smaller Location: Two Bit Circus Sideshow

The pandemic forced many businesses to rethink their models, and Two Bit Circus was no exception. Brent shared how they are pivoting to a smaller, more intimate location in LA called Side Show. The original 40K square foot venue was expensive to build and hard to scale to lots of locations. Going smaller opens up smaller, less competitive entertainment markets.

Side Show focuses on delivering a curated selection of games and experiences, emphasizing quality over quantity. They’re leaning into Augmented Reality experiences, using the Meta Quest 3 with the head strap removed. Customers can dip in and out of social mixed reality experiences, like their inaugural game, Cocktail Shooter, which comes with every drink ordered.

Above: A scene from Cocktail Shooter.

Brent continues to believe in live concurrent gameplay, bringing his third iteration of a game show to the Side Show. He’s developed a simple wireless cube with big buttons connected to a server. Each table is a team competing in trivia, video games, and other exciting but short-duration events.

Current State of VR in LBE

Virtual reality (VR) played a major role in the original Two Bit Circus, but it suffered under the weight of the massive infrastructure required for games like Hologate, Hyperdeck, and others.  Brent is a fan of the smaller, unattended VR games and loves how haptics and environmental effects differentiate LBE from what people can do at home. He’s extremely excited about the promise of AR and mixed reality, as they are less isolating and keep people “in the physical space.”

Minimal Viable Atoms: The Downloadable FEC

Brent thinks for VR to continue to grow in LBE, we need to figure out the “minimal viable atoms” needed to deliver a compelling experience. What’s the smallest amount of infrastructure needed to deliver an experience that gets people off the couch, into the car, and across the threshold?

Nicholas Negroponte introduced the concept of Atoms vs. Bits in his 1995 bestselling book Being Digital to describe the move from physical to digital. He proposed that every industry would be impacted by this transition and gave many examples that became true. When was the last time you picked up a phone book? But it’s been slow to impact the amusement industry.

As I mentioned above, movie theaters are a great example of what’s possible with digital content delivery for location-based entertainment. They struck the perfect balance of durable infrastructure and swappable content. The seats lasted forever, snack bars were simple to operate, and labor rates were low. For a century, the movie theater business didn’t need to evolve because it just worked (and was protected by an exclusive content distribution window.)

Join Me in Dallas?

With new developments in virtual reality, the possibility of a downloadable amusement park is here. I recently experienced a 30-minute story-driven free-roam entertainment experience in Europe. Up to 30 people were led on a journey through a 1000-square-foot space through animated scenes reminiscent of a Pixar movie. The economics of this installation rivaled those of any movie theater auditorium.

I am considering hosting an event in Dallas during the week of August 5-9 to explore the possibilities of building a downloadable location-based entertainment business. If you’re interested, drop me an email and let me know.