Is this a reason for Disney to worry?

[old lady]

http://www.fool.com/investing/general/2015/09/26/1-more-reason-for-disney-world-to-worry.aspx

What do you think?

 

[JenLT]

No, I don't think Disney has anything to worry about. Yes, Universal has seen a big increase in attendance and that's awesome, but even Hollywood Studios still has a higher attendance rate than Universal. I love that Universal has been growing over the past five years and building a ton of new attractions. Competition between Universal and Disney World can only benefit us. However, I really don't think there is a big threat to Disney's attendance or profits here.

 

[Lee Matthews]

Quite funny when you put in into perspective that they still get lower attendance than Hollywood Studios. Ouch

 

[Yellowstonetim]

In one sense it isn't a negative for Universal, it just shows you how far above the crowd Disney sits. There are a lot of profitable theme parks further down the attendance list. Now that Universal has bumped up their attendance it means more profits and stability. Competition is a funny thing. Disney attendance hasn't been hurt at all, but they are noticing the time and dollars going to Universal. The other problem with articles like this one is that they look at attendance increase alone. If parks already have high attendance, huge increases are not possible or even desired. Disney has a problem every other theme park company wishes they had: Managing crowds from very high attendance. Disney - particularly Magic Kingdom - only has room for so many people. MK is dealing with annual crowds that are so huge it gets to be a problem. Hense My Magic and new queues. Disney must master these unique issues before they grow much more. Anyway, all will be fine and everyone wins. There are no losers in this war.

 

[atp]

Disney clearly has a lot more guests than Universal so short term I don't think there is reason to worry. But, considering how quickly Universal Studios is able to build new rides and "lands", I think that they may catch up to Disney very quickly in terms of size and quality. Disney is becoming very crowded and limiting. It may be good for Disney initially to have a lot of guests and advertise the fact that you get to ride fewer rides in general as a "plus", but the number of guests who are unhappy and feel they are not getting their money's worth will also increase since Disney is not expanding or adding anything to help with the crows.

Considering not all of Disney's guests are die hard fans or loyal (though many are), I could see them spending more time at Universal or all of their time there if it's a more pleasant experience with less crows and less time spent in lines. And of course more rides, more quality. If one compares the experiences and realizes Universal is offering them more for their money, they will favor Universal. It won't happen overnight but there's a possibility that it could happen. If Universal wanted to, they could build a third theme park in the time it will take Disney to build Avatar Land. They seem to be really fast and efficient.

Also, I think that the strategy of building and expanding to attract more people is a better one than attracting more and more people to then very slowly start building more things to accommodate the extra people. It's better for the guest and for the park's image as well. I love Disney and I like Disney's style much better (as in the look and feel of the rides and parks) but I have to admit Universal seems to be doing a much better job in the past few years, basically ever since they announced that they would build the Harry Potter area. Financially, I'm not sure what is best, but I'm of the opinion that quality is more important in this business. Assuming you are making a good profit, you don't need to be the one that makes the most money. Greed is never a good thing.

 

[Eoghann]

No.

A smaller park which invests competently will almost inevitably see a faster growth rate (by percentage) than the dominant park. People who extrapolate from that to get "in X years Universal will be larger" don't understand how math actually works. That's a really poor piece of analysis on the part of what's supposed to be an investment site.

However part of Disney's mystique is being the unchallenged biggest and best at this stuff. Any time the competition has something better, or looks cleaner, or nicer it is a challenge to them. They can't ignore it indefinitely without some negative consequences (none of which are nearly as dramatic as people make them out to be). Which is good for us, as seen by the recent announcements.

 

[3DisneyFanz]

GM and Ford never dreamed they'd have to worry about Honda. No company is above competition and resting on your laurels has been the ruin of many places. While Disney has been focussing on ride rationing and data collection Universal has been pushing guest experience. Disney gets a lot of business from being a destination for people wanting to take their kids to a place they remember from their childhood. If a new generation starts moving over to Universal that shifts. It won't be overnight but Disney clearly is recognizing this or they wouldn't be reacting with HS the way they are.

 

[DebbieB]

GM and Ford never dreamed they'd have to worry about Honda. No company is above competition and resting on your laurels has been the ruin of many places. While Disney has been focussing on ride rationing and data collection Universal has been pushing guest experience. Disney gets a lot of business from being a destination for people wanting to take their kids to a place they remember from their childhood. If a new generation starts moving over to Universal that shifts. It won't be overnight but Disney clearly is recognizing this or they wouldn't be reacting with HS the way they are.

I don't think the DHS changes are a reaction to Universal. It's a result of no longer using DHS as a working studio and it started a long time ago. They didn't need the old Residential Street so that was torn down over 10 years ago. They no longer have working animators, so that leaves the animation building pretty dead. No longer have anything going on in the backlot tour, so that was eliminated. The purchase of Lucas Films gave them the idea of Star Wars Land as an add-on to that. Pixar gave them Toy Story. The park needed to evolve due to changes within Disney itself. The success of the California Adventure renovation spurred this on also.

 

[rteetz]

Quite funny when you put in into perspective that they still get lower attendance than Hollywood Studios. Ouch

I wonder if that will change in the next year or twos attendance before Star Wars and toy story open.

 

[Eoghann]

I wonder if that will change in the next year or twos attendance before Star Wars and toy story open.

I don't think so because I don't think many people actually pay the $100 rate to get into DHS.

Admittedly I don't have numbers to back this up so it's just a hunch, but I think that the vast majority of DHS visitors are on a multi-day plan where it's substantially cheaper and of those a large portion are using the Park-Hopper option so they don't have to spend the whole day there anyway.

If you factor that in I suspect that even with only the four substantial rides and a big night time show the park will remain surprisingly busy (particularly with Season of the Force coming and probably another round of Frozen in the summer).

 

[rteetz]

I don't think so because I don't think many people actually pay the $100 rate to get into DHS.

Admittedly I don't have numbers to back this up so it's just a hunch, but I think that the vast majority of DHS visitors are on a multi-day plan where it's substantially cheaper and of those a large portion are using the Park-Hopper option so they don't have to spend the whole day there anyway.

If you factor that in I suspect that even with only the four substantial rides and a big night time show the park will remain surprisingly busy (particularly with Season of the Force coming and probably another round of Frozen in the summer).

I would have to guess that is true. The majority of people are probably park hopping.

I don't think they will do frozen summer fun again this year. I'm sure they will try to continue the Star Wars offerings tho to get the hype up for the December premiere.

 

[3DisneyFanz]

I don't think the DHS changes are a reaction to Universal. It's a result of no longer using DHS as a working studio and it started a long time ago. They didn't need the old Residential Street so that was torn down over 10 years ago. They no longer have working animators, so that leaves the animation building pretty dead. No longer have anything going on in the backlot tour, so that was eliminated. The purchase of Lucas Films gave them the idea of Star Wars Land as an add-on to that. Pixar gave them Toy Story. The park needed to evolve due to changes within Disney itself. The success of the California Adventure renovation spurred this on also.

DCA was renovated because it wasn't drawing people in and guests were complaining. If the contention is that Disney has nothing to worry about because HS in its current state outdraws Universal now then why change anything?

 

[DebbieB]

DCA was renovated because it wasn't drawing people in and guests were complaining. If the contention is that Disney has nothing to worry about because HS in its current state outdraws Universal now then why change anything?

They have a park with dead areas (Streets of America, backlot). They see an opportunity to increase attendance and tying it to Star Wars is a 2 way street. The movie helps the park, the park helps the movie. I just don't think the #1 reason is a reaction to Universal's competition.

They are also adding it to Disneyland, again tying to the movies.

 

[saskdw]

Most people still view UO as a one or two day stop in. Whereas WDW a is considered a vacation destination with people booking full weeks or even two weeks. They spend tons of money onsite on food, souvenirs, and other onsite activities. At this point UO is just way to small to be a real threat. It's hard to compete with 46 sq miles and 25 plus resorts.

 

[Eoghann]

I think the reality behind the DHS revamp is a combination of things.

• It's the lowest drawing WDW park
• The design is bad (actually it's terrible)
• WDW is drawing more and more people and Disney needs somewhere for people to go
• Universal is drawing a lot of praise for Harry Potter, Disney would like some of that.

These are all things that Disney will want to address. But using terms like "worry" implies that there's an imminent threat to WDW rather than the same risk of attrition that all tourist destinations face. Even if they did nothing they wouldn't fall to second place in the next decade.

 

[Accident]

I would say it helps everything down in orlando and nothing to be scared of. it's free advertising to remind everyone that orlando exists and they havent' visited the area in a while. I like the competition, we(the consumer) wins!

 

[luisov]

You have to consider that Disney remains the number one family friendly destination in the US, probably even in the world. Many people are not into coasters and simulators, which Universal is filled with. No matter how much Universal is growing, they still appeal to a different audience than Disney does. It could affect a park like Hollywood Studios since some people may decide to spend an extra day at Universal rather than DHS for example, but then again, Disney's numbers are still growing and they will remain steady or even increase with the addition of Frozen, Avatar, Toy Story and then Star Wars.

 

[DDLand]

Come on guys, those Comcast trucks are so cool! I give it a couple months before Disney begins begging for mercy.

 

[3DisneyFanz]

I would say it helps everything down in orlando and nothing to be scared of. it's free advertising to remind everyone that orlando exists and they havent' visited the area in a while. I like the competition, we(the consumer) wins!

That last line is the key component. It's been a while since Disney really made a consumer driven decision and regardless of why you think that's happening it's a win for the guest (unless it results in a major price increase).

 

[luisov]

Come on guys, those Comcast trucks are so cool! I give it a couple months before Disney begins begging for mercy.

Who knows? I may have to book my next vacation at the Cabana Bay after seeing that Comcast truck