The bombing of Black Spire Outpost
Image: DisneyLess than a year ago, I asked a group of Disney experts about their expectations for Galaxy’s Edge. All of these people work in cottage industries related to Walt Disney World, and each one expressed confidence that the new themed land would drive a surge in attendance. Nobody would have taken the bet against that belief. Star Wars Land seemed like the biggest slam dunk in the business.
With the benefit of hindsight, we all had our evaluations wrong. Disney overplayed its hand here, which we found out quickly. On the opening day of Disneyland’s version of Batuu, everyone braced for mobs of guests. Then, reports came in that crowds were manageable. Only a few days later, livestreamers revealed that the lines were stunningly short…on a Saturday. By that point, everyone knew the deal.
During a quarterly earnings report, CEO Robert Iger and his team confirmed that Disneyland attendance had not performed as projected. While revenue increased a modest amount, attendance dropped at Disneyland in the months after Black Spire Outpost opened. The notion seemed inconceivable six months ago, but the facts were undeniable. Theme park tourists rejected Star Wars: Galaxy’s Edge, at least at Disneyland.
Who takes the fall for this, and what happens next?
Image: DisneyIn August, the Walt Disney World version of Galaxy's Edge opened. While crowds were more substantial, they once again fell below forecasts. In the weeks that followed, the woman in charge of Disney Parks West, Catherine Powell, was released from her duties. She'd held the position for only 18 months, meaning that she couldn't possibly have been responsible for all of the mistakes that Disney made along the way, ones that had begun almost 15 years ago.
Somehow, the Chairman of Parks, Experiences and Products, Bob Chapek, survived this first round of disappointments. For a time, he’s seemed like the inevitable choice to replace Iger at the top of Disney. Currently, he appears just as likely to get tossed out on his keister due to the shocking woes at Disney’s American parks.
Image: DisneyWould Chapek deserve this fate? Well, he would more than Powell, who became a fall guy woman for Disney’s pricing miscalculations. As my wife stated bitterly at the time, “Of course they hold the one woman at the top of the org chart accountable.” And that’s a Disney superfan saying that. It’s a bad look for a company that got too greedy in too short a timeframe.
We’ll know the extent of Disney’s struggles when the next quarterly earnings report gets released next week. No matter how bleak the picture is, revenue should still be up because – you guessed it – Disney increased prices so much that the per-person earnings offset the dip in attendance. This tidbit almost justifies the entire situation from Disney’s perspective.
Were the company not facing hostile headlines about Star Wars Land, the earnings report would seem glowing. Since perception matters so much in the current media landscape, Disney's not that lucky, though. The disappointing attendance combined with the sustained price increases have finally caught up to all involved.
The turning point here is more of a tipping point. Disney finally priced out too many consumers, forcing even the most passionate of fans to reevaluate the current prices. Smart leadership is called for right now. Iger and his team should get in front of this pressing problem and announce that they’re going to slow down on price increases for a while. That’s what they should do.
Comments
We honeymooned at Disney, our daughter was well into double digits for visits by the age of 20, we went on our own again after she left for school. We haven’t been back in 6 years, the constant uptick of costs in food and accommodation and entry has made a month in Europe an equal value. We still have tickets but it’s going to be a hold your breath moment when we book. It’s notable that they didn’t even have the decency to lower prices when major parts of the parks were closed for refurbishment. All of our fan loyalty has been a one-way street to supporting the Mouse. So it goes.