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Discovery Zone

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Discovery Zone
Company typePublic (1993-1997)
Private (1997-2001)
Nasdaq: DZ
IndustryFast food and entertainment
FoundedOctober 1989; 35 years ago (1989-10) in Kansas City, Missouri, U.S.
FounderRonald Matsch
Jim Jorgensen
Dr. David Schoenstadt
Defunct1999; 25 years ago (1999) (general operations)
December 2001 (December 2001) (dissolution)
FateBankruptcy and liquidation
SuccessorChuck E. Cheese
Headquarters
Wilmington, Delaware
,
U.S.
Number of locations
203 (May 1998)
Area served
United States
Canada
Puerto Rico
ProductsFamily entertainment centers
OwnerIndependent (1989–1995)
Blockbuster Video (1995–1997)
Wellspring Associates LLC (1997–2001)

Discovery Zone (DZ) is an American chain of entertainment facilities featuring games and elaborate indoor mazes designed for young children, including roller slides, climbing play structures, and ball pits. It also featured arcade games. A talking robot character named Z-Bop served as mascot to the chain. Ronald Matsch, Jim Jorgensen and Dr. David Schoenstadt founded Discovery Zone in 1989, with the first location opening in Kansas City, Missouri, in October 1989. An early investor in and vocal supporter of the company was tennis player Billie Jean King.[1]

Discovery Zone became the first corporate sponsor of the PBS children's program Sesame Street in 1998, ending a 29-year long streak without on-air support from them.[2]

On February 7, 2020, a new center using the Discovery Zone name opened in the Cincinnati suburb of Union Township, Ohio at the Eastgate Mall; it is not affiliated with the original company, but is heavily inspired by it.[3] A second location was added in Florence, Kentucky, at the Florence Mall on July 23, 2021.

History

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Founded in 1989, Discovery Zone grew quickly, opening 15 stores in 18 months.[4] In April 1993, Blockbuster Video invested $10.3 million (~$19.6 million in 2023) into Discovery Zone to purchase 20% of the company with an option to increase its stake to 50.1 percent in June 1994.[5]

In June 1993, Discovery Zone went public on the NASDAQ exchange, raising $55 million (~$105 million in 2023) on the IPO. The stock rose 61% in the first day of trading.[6]

Under the leadership of then CEO Don Flynn, in July 1994, Discovery Zone bought 45 Leaps and Bounds stores from McDonald's for $111 million in stock and 57 franchised stores from Blockbuster Video for $91 million in stock bringing the total stores to almost 300. At the same time, Blockbuster bought more shares of Discovery Zone giving it 50.1% of the stock.[7]

Blockbuster took total management control of Discovery Zone in April 1995.[8] Viacom had plans to cross market Discovery Zone with its other businesses, such as Nickelodeon, Paramount Pictures, and Showtime. By the time Viacom took control of Discovery Zone, the company signed a deal with Saban Entertainment to include characters from the Mighty Morphin Power Rangers television series at the play centers.[9] Discovery Zone had also planned a new family entertainment center to compete against Dave & Buster’s, which was dubbed “Metro Zone”. The new complexes would have included dining, drinking, mini golf and VR games in addition to the indoor playground equipment that Discovery Zone is known for.[9]

Stretched thin by expansion, changes in management tried to save the company; however, Discovery Zone filed for Chapter 11 bankruptcy protection on March 26, 1996, in Wilmington, Delaware, with debts of up to $366.8 million.[10] They emerged a year later on July 30, under the private ownership of Wellspring Associates LLC.[11]

Wellspring Associates invested $20 million towards improving Discovery Zone's fun centers starting in 1998. The size of the "Mega Zone" play structure and toddler play area were decreased to make room for a sports challenge area and laser tag area themed to third-party properties and a karaoke stage, while arts & crafts activities were placed in the former Quiet Zone.[12]

On April 20, 1999, Discovery Zone, Inc. re-entered Chapter 11 bankruptcy protection. Discovery Zone abruptly closed 106 of its locations on June 25, unable to alert visitors with reserved parties, while its remaining 22 locations closed throughout 1999.[13][14] Twenty of the latter locations (thirteen owned and seven leased) and the company's intellectual properties and trade names were sold to CEC Entertainment, Inc., owner of Chuck E. Cheese's, who attempted to accommodate last minute party reschedulings over the following days.[15][13] Ten locations were converted to Chuck E. Cheese's while the others were sold to third-parties.

In June 2000, Discovery Zone's bankruptcy court judge ruled that there was no feasible way for the company to be profitable, and their bankruptcy was converted into liquidation. By the end of 2001, Discovery Zone went out of business completely.[16]

References

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  1. ^ Anderson, Susan Heller (January 23, 1991). "Chronicle". The New York Times. Retrieved April 28, 2012.
  2. ^ "Sesame Street ad plan draws fire from Nader". Edmonton Journal. Associated Press. October 7, 1998. p. 2.
  3. ^ "About Us". Retrieved 5 March 2021.
  4. ^ Grousbeck, Harold; Mukherjee, Pratap. "Discovery Zone". Graduate School of Stanford Business.
  5. ^ "COMPANY NEWS; BLOCKBUSTER TO BUY 20% STAKE IN DISCOVERY ZONE". The New York Times. 1993-04-08. ISSN 0362-4331. Retrieved 2024-07-28.
  6. ^ "DISCOVERY ZONE SHARES RISE 61.4% IN FIRST-DAY TRADING". The New York Times. June 5, 1993.
  7. ^ "McDonalds To Unite Play Unit With Discovery Zone". Chicago Tribune. July 19, 1994. Archived from the original on April 2, 2015.
  8. ^ "VIACOM'S BLOCKBUSTER UNIT TO RUN DISCOVERY ZONE". The New York Times. April 18, 1995.
  9. ^ a b "Viacom Toys With Discovery Zone Strategy : Entertainment: The new owner of the indoor-playground centers seeks to boost profit through repeat business". Los Angeles Times. 1995-07-05. Retrieved 2024-07-28.
  10. ^ Mills, Joshua (March 31, 1996). "Diary". The New York Times. Retrieved April 28, 2012.
  11. ^ POUNDS, MARCIA H. (1997-07-30). "DISCOVERY ZONE BOUNCES BACK". Sun Sentinel. Archived from the original on 2023-03-28. Retrieved 2023-07-24.
  12. ^ "Zap intruders at revamped Discovery Zone". The Morning Call. May 8, 1998. p. 65 – via Newspapers.com.
  13. ^ a b "Discovery Zones out". CNN.
  14. ^ Stockwell, Jamie (June 26, 1999). "Discovery Zone Abruptly Closes 100 Centers - The Washington Post". The Washington Post. Archived from the original on 2020-07-02.
  15. ^ "CEC COMPLETES ACQUISITION OF DISCOVERY ZONE ASSETS" (Press release). CEC Entertainment, Inc. July 29, 1999. Archived from the original on 2001-01-24.
  16. ^ "Discovery Zone, Inc.: Private Company Information - Businessweek". Bloomberg Business. 2016-03-07. Archived from the original on 2016-03-07. Retrieved 2019-10-24.
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