The Contrarian: 3 Reasons Why Universal's Strategy for Beating Disney May be the Wrong OneBy Marc N. Kleinhenz, Sunday, August 10, 2014 12:02
Universal is taking on Disney on the worldwide stage – but does it really need the rest of the world in order to win?
Editor's note: this is the latest of a series of features in which one of our writers takes a deliberately controversial stance on a theme park-related topic to try and stir up some debate.
Marc's views do not necessarily represent those of Theme Park Tourist!
On the one hand, this development is no surprise; forward progress on the project was initially halted with the outbreak of the Great Recession six years ago, and all remaining momentum has long since dried up (the exact same fate which befell Universal Studios Dubailand, thanks, ironically enough, to the exact same scenario).
On the other hand, however, this is still a heavy blow. Ever since Comcast purchased NBCUniversal in 2010, it’s been on the singular mission of unceremoniously dumping the Disney Company from its position as the ruler of the themed industry – a process which, by its very nature, would seem to include overshadowing Disney’s ever-growing international presence (when Shanghai Disneyland opens late next year, it’ll be the company’s 14th park, giving it more than double Universal’s possessions). If Universal’s properties keep dropping like flies, it’s not going to have any ammo with which to use against its rival.
Or will it? Colonial holdings seem like a decidedly antiquated way to either run governments or conduct business, and in the always-connected, always-on post-modern world, there ought to be newer, nimbler alternatives to the march-on-the-world strategy.
While it’s true that a greater number of destinations will attract a greater total audience – just a quick look at Disney’s 132 million visitors last year versus Universal’s paltry 36 million should instantly silence any debate otherwise – it’s not necessarily true that this is the most sublime way of going after the almighty dollar, which is, obviously, these giant corporations’ ultimate end goal.
Indeed, here are the top three reasons why maintaining a massive, costly international presence may prove to be irrelevant to these two titans’ looming confrontation.
1. They’re nowhere near as popular as the American parks
Yes, getting a theme (or, for that matter, an amusement or water) park in their backyard is a significant step up for locals who would otherwise have to hop on a plane and land in a different country to enjoy them, but it turns out that, for nearly everyone else on the planet, it’s of no great concern whatsoever.
With the exception of the Japanese, whose rabid thirst for Disney’s and Universal’s parks may be a by-product of their American-loving culture, no other society is as nearly obsessed with Mickey Mouse or Harry Potter as are Americans; the only overseas theme park to break the top 10 last year was Disneyland Paris, and it only had nearly half the amount of traffic as did Orlando’s Magic Kingdom.
(Editor's note: Don't forget the UK and Germany, here, Marc...those big numbers in Florida and at Disneyland Paris are propped up by millions of Brits and Germans.)
Even Universal Studios Singapore, the newest jewel in Universal’s colonial crown and the first location to unleash Transformers: The Ride 3D on the world, only received a meager 3.6 million visitors, whereas Universal Studios Hollywood racked 6.1 million and Islands of Adventure received a (comparatively) whopping 8.1 million. There’s just no contest.
Why is this? There are, of course, a multitude of reasons, ranging from the huge population of the US (314 million) to a middle class still developing in a number of other countries (such as China) to a certain level of cultural dissonance or, even, incompatibility (like what befell Disneyland Paris for its first several years, if not longer).
And there’s also the little matter of real estate, which the United States might have more than enough of to devote to such trifles as amusement parks, but which comes at a significantly higher premium in nearly every other country.
2. Universal already has a mini-attendance spike on its hands
Thanks to the 2010 opening of the first Wizarding World of Harry Potter at Islands of Adventure, that park’s attendance rate skyrocketed, nearly reaching California Adventure’s and putting it just two million behind both Hollywood Studios and Animal Kingdom.
Now, with Diagon Alley having opened at Universal Studios Florida – and with the Hogwarts Express driving sales of park-to-park tickets – Universal is already seeing another, comparable surge; according to some sources, more people went for a train ride on the Express the last weekend of July than went to Animal Kingdom.
While it’s extremely doubtful that Universal Orlando will be able to close the attendance gap with Walt Disney World this year – or, just possibly, ever – catching up to even Epcot’s 11.2 million is certainly not out of reach, and for reasons we'll see in just a moment, that would provide an almost exponential boost to Universal's profit margin. With money like that pouring in, who needs a fifth – or sixth – location?
And Diagon Alley, of course, has just been the start: Universal Studios Japan’s Wizarding World of Harry Potter has also opened this past month, and Hollywood’s version will follow in the summer of 2016. This should provide a similar profit explosion for the company another two times over, maximizing its portfolio to almost the ultimate possible degree instead of simply – and blindly – building away across the globe (a lesson which Disney similarly had to learn with its Paris and Hong Kong parks).
And, indeed, since having a smaller-but-more-effective footprint is the way that nearly every other human activity is heading, from business operations to military incursions, it's not hard to see the themed industry head this way, as well.