Category — t. Disney’s MyMagic+ Project and Expansion Plans

xPASS TO SCHEDULE AWAY ROPE DROP?

Something Jay Rasulo, Disney CFO, said at the 2/28 Morgan Stanley Technology, Media and Telecom Conference resonated with something Jim Hill said in part of his recent series on the xPASS, and with something I wrote in November about Disney’s 5th gate.

The three items together made me think that the strategy of arriving before the parks open–before “rope drop”–because crowds are so low then, may have a much lower payoff in a few years.

THE END OF LOW CROWDS AT PARK OPENING? [Read more →]

SORCERERS OF THE MAGIC KINGDOM

Sorcerers of the Magic Kingdom is a new interactive game with roots in Kim Possible’s World Showcase Adventure and the series of books the Kingdom Keepers.

The game begins in the Fire Station just inside the Magic Kingdom, and to the left.

Here you’ll see a training animation inside a magic window, get instructions from a cast member, surrender your ticket, and be given it back.

You’ll get as well a map of magic windows, directions to your starting point, a key card for you to use to activate other magic windows, plus five spell cards to use vanquishing villains trying to take over the Magic Kingdom.

There’s about 20 magic windows in total, scattered across the Magic Kingdom except Tomorrowland and most of Frontierland.

See the image, which shows Fantasyland.  Sorcerers windows are marked by the orange circles.

Overall, Sorcerers of the Magic Kingdom is a very minor adventure.

Given the 20 windows, about 80-100 families at a time can be engaged in a window, waiting for a window, or walking between windows–a tiny addition to the Magic Kingdom’s entertainment capacity.

Moreover, the impact of the game, slight as it is, is lessened by the fact that you’ll usually find yourself waiting at a window for another group to finish, and hence see what’s coming up before you need to deploy your spells.

So why did Disney World bother?  My guess is that the game is a beta for NextGen technology, and a precursor of potential places for personal recognition.

SORCERERS OF THE MAGIC KINGDOM: A TEST OF DISNEY WORLD’S ABILITY TO FOLLOW YOU AROUND? [Read more →]

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WON’T CANNIBALIZATION KILL THE ECONOMICS OF THE FIFTH GATE?

The most common argument presented against a fifth park at Walt Disney World is that cannibalization means its economics can’t work.

“Cannibalization” is the issue that comes up when a business releases a product related to its current product line. 

Some of the revenue of the new product comes from people who would have bought the old product had the new product not come out.  So the new product’s revenue isn’t all “new” revenue.  Meanwhile the new product has all of its associated new costs, and the old product’s fixed costs still have to be paid for.

You can infer this from the Animal Kingdom’s first year.  The park is estimated to have drawn six million people that year, but attendance at the other three parks dropped an estimated 3.3 million people–suggesting that only 2.7 million people represented new revenue.

See the chart, where the red line represents total attendance and the blue line the attendance at Epcot, the Magic Kingdom, and the Studios, added together. (All numbers are based on industry estimates.)

The chart starts the year before AK opened, and goes through 2010.

There’s a lot behind this chart–two recessions, the dot-com bust, Harry Potter, and especially 9/11. 

But regardless of these external factors, you can see that attendance at the three older parks dropped immediately and didn’t catch up to pre-Animal Kingdom opening levels until the last few years.

But you can take another point from the chart–attendance at all four parks is up by 20% since the year before Disney’s Animal Kingdom opened, and that’s not just 20% more park days, but also more room nights, more meals, more ponchos…

Moreover, that’s money that people were willing to spend on vacation in Orlando that Disney did not let slip through its hands and into someone else’s pockets.

And this brings up the key point–cannibalization is a fact to be analyzed, not an argument.  A decision always needs to be compared to the next best alternative.  And not investing in the Animal Kingdom could have led to a decline in attendance. 

A new park gives a new reason for people to come who might have deferred, and a reason for people to stay longer when they do come.  And if they are staying longer within a fixed pool of total spending, then they are spending less money at non-Disney options.

Especially Harry Potter.

The investment decision is not just about the direct returns to Disney.  It’s also about starving the funds flows of its competitors. 

A family that spends $32 on tickets, plus more on souvenirs, food, Disney hotels, etc., for an extra day to see a fifth park is a bonus to Disney. A family that just spends a day at a fifth park that they would have spent at one of the other four anyway is not.  But a family who spends an extra day at Disney instead of at Universal takes a lot out of Universal, given first day vs. last day ticket price structures.

So cannibalization means that return on invested capital takes longer than it would have otherwise.   The numbers have to work…but it’s not as simple as “cannibalization means no fifth park.”  A new park enables long term growth, and has the potential to reduce funds available to competitors. These to me are the best arguments for a fifth gate…one that could include the Beastly Kingdom after all…

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THE LITTLE MERMAID: ARIEL’S UNDERSEA ADVENTURE

Business took me to Southern California in earlier November, so I had the chance to ride Ariel’s Undersea Adventure at the Disneyland Resort.

This ride is basically identical to what will be opening in late 2012 as Under the Sea: Journey of the Little Mermaid, part of the Magic Kingdom’s Fantasyland expansion.

I was curious if the ride was enough of a powerhouse to be a good reason for people to frame their trips around its opening, or for me to have to change my itineraries.

The short answer: nope.

ARIEL’S UNDERSEA ADVENTURE: COLORFUL, CHARMING, NOT A BIG DEAL

Without giving away the details, Ariel’s Undersea Adventure is a short re-showing of key scenes from The Little Mermaid.

Younger fans of the movie will love it. 

Everyone else will likely find it colorful and fun, but not particularly special. This is definitely not an “E” Ticket ride–it’s more like a “C” or a “D.”

It’s charming and loaded with Ariel, including some nice allusions to the effects of traditional Disney “dark rides” like Snow White’s Scary Adventures.

But in all honesty there’s not a lot to it, and it’s not worth framing your travel dates around its opening.

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JIM HILL PREDICTS A FIFTH GATE BY 2021

As noted a week or so ago, Jim Hill speculated recently at the end of this article that Disney World will open a whole new fifth park sometime near its 50th anniversary in 2021.

Jim Hill is usually reliable on what people at Disney are actually talking about and working on.

That does not mean, however, that what he reports must come true.

Like any other creative business, Disney generates many more ideas than it can possibly act on (and discusses these ideas…and thus engenders rumors).

So a fifth park by 2021 is a real possibility, but not even close to a certainty. And as explained here, the earliest official confirmation would come, in my judgment, is mid-2015.

Given that, there’s three things worth addressing whenever the fifth gate question comes up:

• Is there space?
• Aren’t there better things to do with the capital?
• Won’t the new park have horrible economics from cannibalization?

IS THERE SPACE FOR A FIFTH PARK AT WALT DISNEY WORLD? [Read more →]

Disney released and discussed fourth quarter and fiscal year results last week. Overall, Disney shot out the lights, particularly in parks and resorts.

In domestic parks and resorts, small increases in attendance–and small declines in hotel occupancy–were more than made up for in higher realized prices.

The discussion of the these results in the associated earnings call reinforced what Disney has been saying for a while now–discounting will continue to be cut back, and there’s no out-of-the-ordinary domestic theme park capital spend currently planned for after 2012. [Read more →]