The hidden cost of a new theme park

Image: DisneyThen, there are the other factors involving opportunity cost. Whichever theme Disney would have chosen for the fifth park would have come at the expense of the others. To have a Beastly Kingdom, we'd cede the Villains park and vice versa. Analysis paralysis happens to high-profile Disney executives, too.

Opportunity cost also comes in a second form. Let’s say that Disney had spent $5 billion on a new Walt Disney World park. What would the fallout have been? The company might not have had the money for a splashy purchase like, say, Star Wars…or Pixar…or Marvel.

Image: DisneyTry to imagine Disney without any of those properties. It’s impossible, right? Those revenue streams are critical to Disney’s bottom line. Rather than investing in a large-scale project, current CEO Robert Iger and his team have plussed several parks, using that money to save Disney California Adventure and purchase Disneyland Paris outright.

As a Walt Disney World fan, you covet that fifth themed land. If you were Iger, you'd think of the situation from a big-picture perspective. I struggle to argue with his track record as the head of Disney. To the contrary, I think he's in the discussion for best CEO in the world. Plus, if Disney theme parks existed in a vacuum, the updates to existing parks would satisfy most consumers. But it doesn’t…

Younger Sibling Syndrome

Image: UniversalUniversal Studios Florida opened in 1990, but we can fast forward to the year when it became relevant. I’m not exaggerating when I say that The Wizarding World of Harry Potter changed everything when it opened at Islands of Adventure in 2010. Park attendance more than doubled from 2009 to 2018.

I'm not ready to say that Universal is actual competition for Disney. That's a complicated discussion in that they're both top-three companies in an industry that's a de facto oligopoly. But the least trafficked theme park at Walt Disney World outperforms the best one at Universal Orlando Resort. In fact, both Universal gates added together don’t match the annual attendance at Magic Kingdom.

A reasonable statement is that Universal’s feuding with Disney, but Disney doesn’t reciprocate. Universal just isn’t enough of a threat for that. Anyone on the Universal side of that statement would bristle, just like a younger sibling is always most competitive with their older sibling. Universal wants to surpass Disney in any way that they can, and they’ve found a clever one…

The forward progress of Universal

Image: UniversalI’m keeping this discussion focused on Orlando because that’s where most of the skirmishes between the two companies occur. From day one, Universal was a bit chippy in the way that they built a theme park in Disney’s backyard. Yes, they’d done the same thing in Hollywood all the way back in 1964, but that situation was never combative like in Central Florida.

Universal has continued biting the ankles of Disney whenever possible in Orlando. Only a year after Animal Kingdom arrived, Islands of Adventure opened. Since then, Universal has also added Volcano Bay, which they call their third park. You and I know better, but the strategy here is brilliant.

By emphasizing that Volcano Bay is the third gate, Universal can (correctly) claim that they've built two significant expansions since Disney's last gate opened. Epic Universe would become the third, which sounds so much worse for some reason.

The math gets funny here, but Universal’s argument places Disney on the defensive. The moment that Epic Universe opens, the younger sibling will argue that it’s opened four parks since 1990 as opposed to Disney’s one. It’s disingenuous in one way. When Universal counts Volcano Bay, Disney should get credit for Blizzard Beach, which opened in 1995. But that’s a quibble.