Fun Key to pursue bricks-and-mortar revenue through software downturn

A Montreal-based 3D software firm is buying up bricks-and-mortar entertainment companies to generate the operating capital it needs to survive the sales slump for new Internet tools. Yves Marmet, president of Fun Key Studios Inc, capped a series of 3D design acquisitions last week with the purchase of a controversial entertainment complex in downtown Montreal. Its all-share purchase for an undisclosed price of Metaforia will add another theme-park to its original 1997 acquisition of the SOS Labyrinthe, also in Montreal. That same year it also set up a new interactive Fun Key Town complex in Cancun Mexico, and two new complexes in the Middle East. In all, the existing parks and contracts to build new ones should generate more than $20 million in revenue over the next year, freeing the company to pursue a showcase partner for its 3D tools. MMI bought, closed, bought againSharp-eyed Canadian NEW MEDIA readers may have looked askance at a recent CNM update item which reported that Fun Key had purchased a company called MMI Multimedia Interactif Inc in July. In March 1999, we reported that Behaviour Communications Inc had purchased, then shut down, a company by the same name. Fun Key president Yves Marmet explains that Behaviour had originally purchased MMI from multimedia developer Jean-Maurice Duplessis. When it was shuttered as an operating division, Duplessis resurrected the name with permission from Behaviour, and began designing video games. This summer, he again sold the company, this time to Fun Key in an all-stock deal.A year ago, Fun Key was touting its Virtual Studio suite of 3D authoring tools as a new way for online operators to attract and retain audience share. The suite allows designers to create three-dimensional worlds in which users can interact online, all at a fraction of the bandwidth required by alternative technologies such as VRML. But since its last annual report and despite demonstrating the technology to heavyweight RealNetworks Inc and Microsoft Corp guru Paul Allen, the company is still without a portal or other partner for the product. Marmet says Fun Key needs such a partner to showcase the product’s potential to generate demand. For the time being, though, he’s "too poor and too preoccupied" to pursue the opportunities. Instead, the company is taking part in a Team Canada-style exchange of Quebec technology companies to demonstrate its theme park concept and software tools in the United Arab Emirates. The Fun Key concept has proven a winner in the Middle East. The company has already won a $20-million contract to build two of the complexes in Saudi Arabia. The educational nature and "not too Americanized" themes have broad appeal in the conservative country, says Marmet. The UAE trip is being sponsored by the Quebec Ministries of Industry and Commerce, and Finance. The Societé Générale de Financement (SGF) du Québec is also involved, and will likely become one of Fun Key’s largest shareholders as a result of its participation in the Metaforia acquisition. That deal will also see the involvement of third-party investment, yet to be announced. Marmet says that while he’s in favour with the Quebec government’s financing bodies, it can be a double-edged sword to have venture capital provided by public bodies. While dollars can flow freely from multiple sources during good times, he notes that a company out of favour with one government agency will likely find itself shut out from others. Besides providing immediate revenues, the first for Fun Key since its inception as a junior capital pool on the CDNX in 1997, Marmet says Metaforia and the other bricks-and-mortar properties may ultimately become the most important customers for its interactive 3D development tools. He hopes to upgrade the facilities at Metaforia and in the other theme parks with 3D, virtual reality exhibits.

Fun Key to pursue bricks-and-mortar revenue through software downturn

News | 09/06/2001 4:00 am EDT

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