Friday, November 07, 2008

5 Reasons For a Dark Future at the Disney World Empire

When the Walt Disney World empire begins to crumble, you know the economy is in serious trouble. Yesterday, the entertainment and theme park leader announced fourth quarter net income fell 13%. An excerpt from Rueters' article summarizes the gloomy scenario for Disney.

The global economic downturn hit Walt Disney Co's quarterly results harder and faster than Wall Street expected, with... a sharp decline in hotel bookings and softness in advertising revenue at its networks. 

Disney Chief Executive Robert Iger, who replaced Michael Eisner in 2005, offered several solutions for 2009, including more discounts to theme parks, and a possible venture into the video game industry, but he was skeptical about any chances for a quick recovery. In a conference call with analysts, Iger said.

 

Consumer confidence is the lowest we've seen in over three decades, and even the best product out there is feeling the effect...We are seeing a marketplace that is clearly tougher than it was in the fiscal year 2008 and our ability to predict is very limited

Here are five reasons why I expect Disney's downturn to continue well into 2009:

Cheaper Vacation Alternatives

Many tourists scoffed when Disney World raised its ticket prices this year, and for good reason.Visitors over the age of 10 must fork out $75 per ticket, kids aged 3 to 9 cost $63 per ticket.  After families tack on airfare,lodging,food costs and miscellaneous expenses, Disney's higher prices could force them to consider cheaper destinations including theme parks such as Six Flags, which has several parks throughout America.

Stronger Competition in Orlando

When Mickey Mouse hit Orlando in 1971,Disney had a monopoly in amusement parks. Eventually,Disney to Epcot Hollywood Studios (Formerly known as MGM), and Animal Kingdom, but during that same time,SeaWorld, Universal Studios and Wet N Wild established their own parks. In the late 90s, Universal also added several resort hotels and Islands of Adventure, a park geared toward an older audience, featuring thrill rides and roller coasters.

Quiet Leadership

Iger's introverted style leaves many analysts wondering where the park is headed. His vague reference to the video game is a perfect example. His predecessor and for CEO Michael Eisner had his  share of enemies within the corporation (What major CEO doesn't?) and was known for his heavy-handed, overbearing management style, which ultimately led to the "Save Disney Campaign" which forced him to resign. However, if there was one positive about  Eisner's era (1984-2005), you knew where he stood and Disney's ambitious expansion plans were proudly boasted. Whether it was positive or negative, Disney's direction was much easier to gauge during Eisner's reign.

Downtown Disney's redesign.

Disney closed Pleasure Island from Downtown Disney, the nightlife center of Disney's base in central Florida. Again, they've chosen to remain silent about their future plans with the land, but the rumor is that they're planning more family-friendly stores and shops to supplement the rest of the downtown stretch. As a result, they've cutoff a significant amount of their clientele. Young adults looking for late night entertainment at one of Pleasure Islands many clubs will now head to other places such as Church Street Station and Disney's arch rival- Universal City Walk.

Forgetting the other markets

I believe the Pleasure Island decision essentialy shuns the 20-30 year old market , which shows poor judgement on Disney's part.. 70% of downtown Disney was already family friendly attractions, and Imagine all of the revenue Disney will lose from 11 p.m. to 2 a.m. They'll also lose a significant amount 20-40 year old locals and tourists who will opt for Universal City Walk. I consider downtown Disney's redesign as a microcosm of Disney's entire philosophy- which is hyper-focused (no pun intended) on children and family, (their bread and butter). I just don't think it was a good idea to turn away the other market in the process.

Universal City Walk balances the two. The layout with shops for kids and family friendly restaurants such as Nascar Cafe, NBA City and Emeril's, but it also offers plenty of entertainment for the 20-30 market with late night live music clubs and Hard Rock Live.

Posted By Matt O'Hern at 10:57 AM
Permanent Link: 5 Reasons For a Dark Future at the Disney World Empire | Comments (3)

(3) Comments on 5 Reasons For a Dark Future at the Disney World Empire

I think closing Pleasure Island was a great idea. You should always go with your strengths and Disney';s strength is family friendly entertainment. Whenever they would diverge from that they would hurt themselves.

By the way, Disney could really help themselves by bringing back the original Tiki Room show as the current one is a piece of royal dung.

Comments by Jack : Tuesday, February 03, 2009 at 01:49 PM

Wrong, Jack. The Disney parks and resorts used to be about having something for everyone.

More importantly, while the parks and the rest of the resort were always child friendly (and still are), they were never until recently simply childish.

At this point I have nearly NO reason to go to Downtown Disney. Even the Studios, which were my favorite at one time, have become way too NOW and kiddie oriented.

A park that used to really give the original Universal Studios a run for its money in terms of depth and history has now become largely an add for the most trendy and boring aspects of today's entertainment. The only part of the park I'm interested in these days is Hollywood Blvd., the Brown Derby and the ToT--all parts of the park that point back to Hollywood's golden age.

I get synergy. I get that these are theme parks and children will always be part of the equation. But they used to be able to handle both AND offer a multi-layered experience for adults as well.

What possible sense does it make to eliminate variety of experiences and replace it with even MORE shops and restuaruants (especially when so many Disney folks seem to be such timid eaters--don't get me started on how many interesting and delicious restaurants have either toned down what was great about them (Morocco, Akershus) or been eliminated altogether because Disney guests only seem to order spit-roasted chicken!!!)

The Adventurer's Club was as great as any of the Disney Classics (Pirates, Haunted Mansion included). It was a colossal mistake to have closed it.

Comments by Rob : Saturday, July 04, 2009 at 02:17 AM

Disney's national marketing was all about Family. The local marketplace however isn't served. Combine this with an overweight economy of scale and an inability to adapt to local markets and you have the basis for another CEO. They are getting eaten alive in Hong Kong by a more adaptive American-run park.

Comments by Richard : Tuesday, December 29, 2009 at 05:11 PM

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