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All-Star Roundtable: 5 Reasons Why Disney WON'T Change to Fend Off Competition in Orlando

Diagon Alley, as seen in the movies.

Disney may be the first and the biggest operator in the theme park space, but the company just may be heading into something of a precarious situation – at least in Orlando, where its Walt Disney World Resort now finds itself having to fend off ever-increasing competition from a whole slew of would-be rivals, both big and small.

Or does it? Is the Disney brand so strong and Walt Disney World so large that it can afford to sit back and take it easy for the foreseeable future? And, perhaps more importantly, should this be the best course of action for the planet’s most popular vacation destination?

It sounds like a topic best suited for a panel of Disney experts and theme park heavyweights:

Avengers, assemble!

 

Marc N. Kleinhenz, freelancer:

Recently, Disney has been seeing competition from all corners of Orlando increase at an almost exponential rate: Universal, of course, has Harry Potter; SeaWorld is adding new water slides and dark rides (and thrill rides in Tampa); Legoland is aggressively going after the youth/family market; and Merlin’s dropping some $200 million on I-Drive 360.

So, what, if anything, needs to happen to keep Walt Disney World creatively competitive going forward?

1. MagicBands: “The entire $2 billion will be recovered just in $12 turkey legs that people are now buying on a whim”

Jim Hill, Jim Hill Media editor-in-chief:

Look, the Orlando Sentinel ran a story back on April 19 of this year which said:

Disney World's share of Orlando theme-park traffic shrank from 74.9 percent in 2009, the year before the first Wizarding World debuted, to 71.3 percent in 2012, the most recent year for which figures are available. SeaWorld's share dropped from 9.1 percent to 7.9 percent. Universal's piece of the pie, meanwhile, grew from 16 percent to 20.8 percent during the same period.

Now please understand that, in a spreadsheet-driven business like themed entertainment, losing even 3.6% of your business in just three years’ time is a matter of concern. But at the same time, take a hard look at Disney's share of the Orlando tourism market – it's over three times the size of its nearest competitor. Disney is top dog in the Central Florida destination market by a huge, huge margin.

And even if Comcast said "Okay, Universal. You can open a Diagon Alley-sized new project every year for the next two decades," Disney would still be the destination resort that people would choose to spend the majority of their family vacation at if only for the nostalgia factor (i.e., "My parents took me there when I was a kid, which is why I'm gonna take my kids there").

That's why – I think – you're seeing Disney proceed with the initiative that they've done over the past few years. MyMagic+/My Disney Experience/MagicBands is – if you want to be perfectly blunt here – just an expansion/extension of the program that began with Disney's Magical Express. By that I mean Disney World tourism can't easily get off-property to go to Universal or SeaWorld if they don't have a rental car at their disposal.

Conversely, if you had locked-in ride times booked at the Magic Kingdom for that theme park's most popular attractions (not to mention a guaranteed primo viewing spot for the Festival of Fantasy parade and Wishes), there's just no way that you're bailing out of that Disney theme park that day to go see Shamu or Harry Potter.

Disney Springs concept art. Image © Disney.Disney Springs. Image © Disney.

And that's kind of the same thinking behind the revamping/reimagining of Downtown Disney into Disney Springs. With a refreshed retail, dining, and entertainment district down at Lake Buena Vista which will eventually be (thanks to the road work which is being done along Lake Buena Vista Drive, as well as those two huge parking structures which are rising out of the ground) far easier to get in and get out off… Well, that means fewer people will head over to the Orlando Premium Outlet Mall and/or the Mall of Millenia to do their shopping.

So, if anything… I don't necessarily see Disney making a decision to move creatively forward. If anything, because management back in Burbank now sees WDW as a maturing business, the goal nowadays isn't necessarily reinvesting in the property, but, rather, making the most of what the company already has in Orlando.

Take, for example, the Four Seasons/Golden Oaks project. Given that golf is waning in popularity here in the US, it was relatively easy for the company to hand all of that Eagle Pines acreage over to real estate developers – all with the hope that the people who stay at that four-star hotel and/or live in that gated community will then go over to the Disney theme parks and spend money at the shops and restaurants.

Oh, sure – over the next few years, we'll see things as big as Pandora: The World of James Cameron's Avatar or as small as a new Frozen-themed sequence being added to Mickey's PhilharMagic all in an attempt to keep WDW theme parks somewhat fresh and relevant to would-be visitors. But, at the same time, you're also going to see things like Hamarabi Nights and that after-hours Epcot dessert party thing, which are all about finding new ways to pull additional revenues out of the resort's pre-existing assets.

Shanghai Disneyland's Storybook Castle. Image © Disney.Shanghai Disneyland's Storybook Castle. Image © Disney.

Now, if you want to talk about places where Disney is genuinely moving creatively forward, take a look at what's going on over in Shanghai. In particular, look at how the Imagineers have turned Storybook Castle into this multi-purpose venue (i.e., it's home to a ride, a Bibbidi Bobbidi Boutique, a restaurant, and a walking tour, not to mention a fountain show out in the moat).

Disney's being innovative over there because – again, to be blunt – there's a feeling among Disney Company management that the American market is kind of tapped out. Whereas in China and/or Brazil, you've got a burgeoning middle class that’s in their late 20s/early 30s and which is just now having kids, and has some money to spare. So in those parts of the world, it's Anaheim in 1955 all over again.

Whereas in Central Florida, Disney's thinking is… Well, take, for example, MagicBands. In spite of the enormous cost over-runs on that project, do you know why Mouse House managers and Wall Street are still delighted with MagicBands? The huge up-tick in impulse purchases that they've seen. I had one Disney World exec joke to me at the Seven Dwarfs Mine Train that they expect to recover the entire $2 billion just in $12 turkey legs that people are now buying on a whim because waving your wrist for what you want right now doesn't quite hurt as much as reaching into your pocket and pulling your wallet out.

Sorry if this is seen as a downer by the other roundtable participants, but that's honestly where I see Disney World being creative these days. Not in the rides, shows, and attractions that they built at the Parks – but, rather, in the wide variety of ways that Mickey now slips that three-fingered hand into the guests' wallets.

2. There’s already some stuff coming down the road: Avatar, Star Wars, Frozen

Robert Niles, Theme Park Insider editor-in-chief:

Walt Disney World enjoys such dominant market share, backed by so much capacity and creativity in its parks and resorts, that it could coast for the next decade and still remain number one in the Orlando theme park market. So Disney doesn't need to do anything to remain competitive.

Of course, Disney didn't get to this level by playing passively. Avatar's coming in 2017, with additional stages for that land after that. Disney Springs is on its way. Once Shanghai's complete, I expect to see Star Wars Land go back to the front burner. Frozen eventually will get much more than an Anna and Elsa meet-and-greet, as Disney looks to use its immense Florida platform to support its hottest property.

As much as fans would love to see Disney adopt Universal's hyper-aggressive, new-big-thing-every-year development schedule, Disney World's a much more mature development than Universal Orlando; there's no need for it to move as quickly.

So while I expect Universal to continue growing faster than Disney and keep taking market share from Disney, Disney's attendance and income will continue to grow and it will retain its market leadership for many, many years to come.

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There are 19 comments.

I find all the comments interesting, however one thing Disney does better than any other amusement park including Universal is crowd control and movement. Recently went to Universal and found the lack of attention to crowd control and movement what I missed most of not being at Disney that day. Also, while universal is focussing on older visitors, it does lack for those under 6 in my view. One really needs a good mix. I will try universal again but Disney is where my loyalty lies until someone can convince me otherwise.

I just returned from a trip to both Universal and WDW. For the first time I stayed on grounds at Universal and the lack of customer service is amazing. You had to pay for parking at the hotel, and pick up tickets at another location. Universal express pass who have to pay for and over all get nickel and dime to death. $100 a person for express pay is a joke! Universal is a ride park if Taft is all you want to do. As a visitor that has been to WDW at least 20 times and Universal 10 there is no competition. WDW treats every guest weather at a value resort or deluxe hotel the same. You are welcomed at Disney , Universal you are a $. When I drove from Universal to check in at WDW I felt at home. Disney is not prefect and I would like some more new attractions however the reason I will always go back to Disney is the original attractions. I will always ride Its a small world, haunted mansion and Soace Mountain. Why because it brings back the memories of my first trip, my aunt first and only trip and taking 3 of my little cousins to Disney the first time seeing the look only Disney creates.,

You hit the nail on the head! We did both for daughter's 18th birthday and after bussing over to universal for 2 days, we couldn't wait to get back to Disney. Even the guests at Disney seem nicer. Universal was fun but Disney is where I'll keep my annual pass.

As a former annual Passholders at both Disney and Universal I can agree 100% with you. There is a complete difference in the cast members at both companies. The guests reflect the attitudes they receive which is the reason Disney guests are friendlier.

If you stayed on property at Universal, you received express pass for FREE unless you stayed at Cabana Bay which was far cheaper than the others. The caveat is you stayed in lower class hotel that beats almost anything Disney has in that price range. Stay at Disney, you obviously are filled with their kool aid.

The problem with the Magic Bands that Disney is not seeing is the same problem often seen in the cruise industry: You don't find out how much you've spent until the end of your trip, and the higher amount can often mean a return trip will be postponed. Or cheapened. If a family that usually spends $3000 on their annual trip to WDW, spends $3500 to $4000 this year, will they be able to afford to come back next year? Or will they come back and stay in a Value Resort? Or maybe even offsite?

This is something greatly affecting the cruise industry right now. Things never end up costing what you think they're going to, so many people are starting to shy away from cruises. This summer, the cruise industry's best season, is filled with insane deals and discounts. Because Disney is so desperate to further bilk their most loyal customers out of their hard earned thousands, I predict that by 2020 that Disney is going to be losing more share and not making as much of Magic Bands as current projections.

Charging to the room has been like that for ages. To better control the spending, ask the resort to change the limit and not to take payment when it gets close to it. That way you'll know when you have come close...because the transaction will decline. Or if you don't want that embarrassment: gift cards work great like times when food and wine festival comes around.

Just returned from probably my 40th trip to WDW since 1974 and had one if the greatest trips ever. The magic bands worked great and is the only way to go!!... To say I was treated as a guest would be an understatement. I look forward to another 40 visits.

Well, I usually visit the parks non summer, but service Disney has down but I enjoy the rides more at Universal. And the resorts needs some TLC badly. At least some of them are getting it, but the expansions are coming up short in creativity. I'm am not a fan of 'new' fantasyland, the detail is great but the mermaid ride is not, nor is tales with belle. You do them once and don't do them again.

Great panel, and a great topic for discussion. I agree with much of what's been said, Disney has a huge advantage in the property they've built in Florida, and the ability draw, handle and hold massive crowds. With 4 major theme parks, 2 water parks, hundreds of restaurant choices, and almost 30,000 hotel rooms on property, why should they be worried? Sure, their nearest competitor has a lot of great IP that they're using in highly creative and entertaining ways to draw crowds, but at their best, there's still an estimated difference (based on 2013 TEA report) in turnstile numbers of almost 35 million visitors. There's just no comparison there. Universal might be able to add another million or so to that number, but from what I understand, their parks have a capacity issue and unless they can purchase more land, will likely top out short of the 10 million that 2 of Disney's least attended parks draw. And while they might be building some great new attractions, many who visit Central Florida, will spend time at both Disney and Universal. So, while Disney might lose just a little bit, I don't think it's going to make a big enough difference to change anything. I believe it was Jim Hill who said awhile back that the average returning family visits Orlando/Disney once every six years, which means they don't need to have something big/new opening every year to maintain their growth rate.

Something I have to wonder about though, is the impact of other attractions that seem to be working their way into Central Florida. Things like Legoland and the recently announced Skyplex mini park. None of these pose any kind of serious threat to Disney, but every little bit does have an impact when it comes to how and where tourists spend their money. It's hard to know just how much these smaller parks and attractions will draw, because they don't make the radar of the TEA report. Regardless, Disney has lost some market share over the past 4 years, shrinking to 71.18% in 2013 from 74.86% in 2009, while Universal has gone from 16% to 21.59% in the same period, taking market share from both Disney and Seaworld. I would expect those numbers to continue in the same direction for at least the next couple of years until Avatar opens.

The Orlando tourism market overall, has continued to grow over the past 10 years at a rate averaging just under 2.5% and rounds out to 70 million visitors for the past year. At this continued rate of growth, the market could see as many as 91 million visiting annually by 2024. Can the current parks, resorts and infrastructure maintain this growth rate and if so, can they sustain it if it does continue with this kind of growth?

Those are excellent questions, and they just may find themselves into one of our next roundtables.

=)

~M.

I have two things to say. First Creativity in General. I believe that Creativity is like a mental Muscle that has to be exercise to remain Strong. I understand that the Imagineers have projects in Foreign markets to use their Creativity on, Maybe the point I ma trying to say is that a renewable resource like WDW's creativity asset is wasted if not used. and a Wise man onces said" Why put off tomorrow what you can do today? I think Uncle Walt would say as well. True It may not be a necessity to do anything to keep the current share But Is that right for the Future? what if the Combined market shares of WDW's Competitors suddenly Increased more than expected or worse at a geometric progression in the future because the execs did nothing now?

I think Disney is scared of Universal, and it's other competition. I think the reason why Fantasyland was even expanded was to combat the older Harry Potter area. It just takes Disney so long to build. Avatar again is in response to the newer Harry Potter even though it takes them forever to build anything, and that's 500 million supposedly. I think Disney has done stuff to fend off Universal, but they are just slow as molasses doing anything so it looks like they aren't doing anything at all.

I think the new Fantasyland expansion was NOT needed. I think Disney needs to replace & add rides / shows to Hollywood Studios, and Animal Kingdom. Now, they are adding Avatar, and the water thing, but still that would have made more sense instead of Fantasyland.

Something someone mentioned is about the waterparks. I think that they should be expanding the waterparks. Yes, their waterparks get a lot of people into them, but add more to them. You have 17 million people at the Magic Kingdom, but how many at the waterpark? It's a hot climate in Florida, so why shouldn't they push their waterparks on people, and expand them.

Disney knows exactly what they are doing. They don't build slow, they build as fast as they need to. Fantasy Land opened on December 6th. Thats right when kids are going on winter break looking for a vacation. Diagon Alley opened on July 8th. Thats halfway through summer break, they missed out on all the June vacationers.

Look at how fast the garages at Downtown Disney are going up. They realize that the money will come from shops / dining not from a new attraction. $$$

Theres no money in watermarks but there is a lot of overhead. You don't get as much return from people going to Typhoon Lagoon opposed to Magic Kingdom. Thats why they won't expand them.

You can always tell when WDW is hurting because they start discounting hotel rooms and giving away free dining plans. Companies only give discounts when they have to, and WDW has definitely lost business to Universal in Orlando and is continuing its discounting. That trend is going to continue, particularly as kids grow up and want more mature rides and attractions.

Where you are probably going to see a greater impact is in California. Universal Studios Hollywood has always been a pathetic non-contender, and will be until Harry Potter opens there. Since both Universal and Disneyland are "local" parks, and less than an hour apart, The Disneyland Resort could see a bigger loss in business because of Harry Potter than WDW.

And as soon as Universal finishes construction of the first part of Harry Potter in California, they're going to start on the next part, which will have already been open for several years in Orlando and have the Harry Potter fans west of the Rockies drooling for it to come to their side of the country.

That should shake some of the TDA executives up, and we may finally see Star Wars Land and some other big things get underway at the Disneyland Resort. That big empty area at the back of Frontierland is just waiting (and if Robert Downey, Jr. had played the Wizard, Tony Baxter would still be working at Disneyland and construction would be well underway on Oz). Competition is good: it forces moribund companies to react in a way that's beneficial for customers.

I liked the new magic bands. Thought I would hate it, but it was a good experience. However, Magic Bands are never going to motivate me to go to a theme park. Whereas if they had spent that 2 BILLION dollars on E-tickets spread out across the four parks, I would be going back to WDW a lot more often in the future. As it is, I'll keep going back to the Tokyo Disney Resort and the Disneyland Resort in Anaheim: they are the best Disney resorts in the world.

I dunno. I'm torn. As a Front Desk Cast Member at a Disney Resort, it seems increasingly that Guests are taking at least a day out of their time with us to go "across the street" to Universal. This has got to be concerning to Disney, one would expect. Yet... they don't SEEM concerned. That said, one aspect where we continue to dominate EVERYONE else is in Guest Service. Just this evening, I stopped by Universal Studios to make an inquiry regarding an upcoming event going on in their parks (I'm an Annual Passholder) and the "service" I received was abysmal. The crewmembers were uninformed, disinterested, and dismissive. If our people acted like that to our guests, heads would roll. But that's not a concern because our people NEVER act like that. Until Universal's employee standards rise above Six Flags level, they'll never be true competition for Walt Disney World, IMO. Guests see, and appreciate, the difference.

I think Universal has been rising competition for Disney in the past few years since Harry Potter. The Central Florida parks has raised their ticket prices tremendously for years as well. It costs $99 for one day at the Magic Kingdom and it will continue to increase. If Disney is paying off it's $2 Billion Magic Band system with $12 Turkey Legs, then why can't Disney be investing more money into it's parks since it's charging over $100 to enter, specifically Disney World's. Magic Kingdom opened up New Fantasy Land between 2012 & 2014 with technically 2 new rides, Little Mermaid and 7 Dwarfs Mine Train, the former of which uses the same technology as Haunted Mansion and Finding Nemo at Epcot. Look at Epcot with what it has opened up in the past decade: Soarin' (2005) and a refurbished Test Track (2012). Over at Hollywood Studios latest investments include Toy Story (2008) and a refurbished Star Tours (2011). Let's cross our fingers for a Star Wars land in the future. Finally, we have Animal Kingdom. It's newest attraction and really the only reason many people visit there is Expedition Everest, which opened 8 years ago. When Avatar opens, it will have been over 10 years since a new attraction opened at AK. Oh and their 2 water parks. Nothing at all with the exception of Crush n Gusher in 2005. Shameful considering Disney has tons of money to change that.
Now about that rising competition I was talking about, Universal Orlando. At Universal Orlando Resort in the past 5 years at 2 of their parks they have opened: Rip Ride Rockit (2009) Harry Potter 1 (2010) Despicable Me (2012) Transformers (2013)and Harry Potter 2 (2014). These are all new, non refurbished, attractions Universal has opened. While Disney opens Avatar in response to Diagon Alley in 2017 apparently, Universal will have already opened, possibly, King Kong in 2016. I am a fan of both parks. I live in the region that people call the theme park capital of the world. But I think that all of the theme parks here need to stop raising prices every 6 months basically, or step up their game and invest in major, innovative rides in their parks. That's my take on it.

bottom line is this, Disney has been awful at adding new attractions. all 4 parks have little to no added attractions for the last 10 years. each park has had about one new attraction added each the last 10 years. i dont count ride refurbishments like what they did with Test Track. you would think they would be kicking ass on getting Avatar land opened but no, its moving as slow as molasses. there is no sense of urgency when their should be. the new fantasyland premiered a ride that already existed somewhere else. what kind of an expansion is that?! a pathetic one if you ask me. just because the que is the most incredible que ever, does not make it a good idea. the parks are becoming stale. and to me THAT IS VERY DANGEROUS!!!

First, people will spend a day at universal but the vacation is to visit WDW. Second, Disney will still innovate and build in Florida because that brings in the return guests.

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