Is this a reason for Disney to worry?

[rteetz]

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

And Cabana bay is expanding done in 2017.

 

[Yellowstonetim]

• 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.

I think you hit the nail on the head, particularly with these 2 points. Universal isn't stealing people or "winning", but they are getting attention and praise, and in this business, that itself is significant.

 

[Whatsthegoodword]

I thought it was FOOLISH of Disney when they let the Harry Potter behemoth get away to Universal. They should have been sure that they were the ones making those movies, and especially building those theme park rides. They let it get away because they didn't want to put up with JK Rowling's meddling (which I understand), but look at what they have allowed to happen in the process!

Now, as a tourist this is all great for me/us. We get more to do when we go back to Orlando (in a month!) and the competition has definitely built a fire under Disney. I'm sure we would have seen some of the coming improvements w/o WWOHP & DA, but no way would they have been as extensive as what's now in the pipeline.

THE ONLY thing I worry about in all of this, is Disney potentially changing it's wholesome flavor a bit to compete with the no-holds-barred rivals across town. I like my Disney World free of bathroom humor, sex & gore. Will it still be that way in 10, 20 years? I hope so...

 

[wilkeliza]

Healthy competition is good for everyone. It makes the market competitive which leads to things having to be done.

Do I think Disney is worried? No. However, I do think that seeing the Universal numbers climbs is making people at Disney figure out what they can do to improve the customer experience. Right now they don't have a lot of people dropping their Disney trips and writing saying for reason such as x,y, and z we are canceling our yearly Disney trip and instead going to Universal. They won't truly "worry" until that happens. They are seeing a lot of families do 7 day trips with only 4 at Disney. That is why they pumped a billion into MDE. If you make a schedule you are less likely to head to the neighbors.

The big thing to remember as well is Universal and Disney cater to 2 different clientele. If anything Disney and Universal could coexist and not hurt either bottom line. The big competitors for the same kind of clientele would be Sea World versus Universal. Disney isn't going for the thrill junkies. If they were they would be building more roller coasters like RnR. They want the families and hope that there is enough brand loyalty that you'll come back as a young adult and restart the whole thing once you have a family of your own. Universal on the other hand really caters to the teens - late 20s crowd. If they get some families great but most of their rides are for thrill seekers and their massive yearly special event (HHN) is really for the 18+ crowd.

 

[minnie-apple-mouse]

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

Yea, but simply picking an expansion period 2006 to 2014 (US/IOA/HP expansion) can work both ways.

Adding the next 2 years will make it a 10 year window.

Lets see another 10 year span, 2011 and what it is 10 years later in 2021 (MM+/NFL/7DMT/DTD-D Springs/AK-Avatar, ROL/DHS-TS 2, T Story Land, Star Wars Land/EPCOT-Frozen, Soarin 2/Hub/DVC/50th Anniv).

Movies like Frozen also add a lot of attendance, who knows whats coming over the next 5 years that will only add to the attendance.

 

[3DisneyFanz]

Yea, but simply picking an expansion period 2006 to 2014 (US/IOA/HP expansion) can work both ways.

Lets see another 8 year span, 2012 and what it is 8 years later in 2020 (MM+/NFL/7DMT/DTD-DS/AK-Avatar, ROL/DHS-TS, Star Wars/EPCOT-Frozen/Hub/DVC/Anniv).

MM+, NFL and 7DMT have been around long enough to see impact and they aren't pulling in anywhere near the growth Harry Potter did in the same period of time.

No one is going to WDW because of the Hub expansion and DVC has never been a draw for growing new customers. It has always been about locking in the people who are coming yearly anyway and based on the discounts provided for those rooms to non DVC members it doesn't tend to show they can support the level they are trying to build to. What it does is reduce the number of standard rooms available and push people to possibly spend a little more if they really want to stay somewhere. If they were filing rooms at full price they wouldn't sacrifice them for DVC. DS may keep more money on property in the evening but I don't think it's going to have an impact on increased theme park attendance. I could be wrong but I doubt someone is going to say "I'm heading to Orlando for Morimoto's and while I'm there I'll check out that Magic Kingdom thing that's near by."

Frozen, Star Wars and Toy Story will draw people in and Star Wars has a wider appeal then HP but it's going to depend on what Disney does. If they keep with their recent history of amazing concepts being budgeted into about half of what they promise it's going to push people away. They can't drop the ball on these things the way they have others and expect people to just keep giving them passes when their competition consistently exceeds expectations. There is already a lot of backlash about the Frozen inclusion in EPCOT among the people who oppose it and the people who support it but worry about it just being a coat of paint on Maelstrom. Who knows on Avatar. I didn't care for the movie but I'm looking forward to seeing the area once completed. I think people who are going anyway will spend more time in AK but I'm not sure it's going to draw people in who wouldn't normally visit Disney.

Disney has the ability and resources to really knock this out of the park and if they do it's going to be great for everyone. I just hope leadership gets out of the way of the imagineers and let's them compete their vision for the first time in a long time.

 

[minnie-apple-mouse]

MM+, NFL and 7DMT have been around long enough to see impact and they aren't pulling in anywhere near the growth Harry Potter did in the same period of time.

Not my point-its the "10 year" window comparison.

I'm just pointing out what was/will be added in a 10 (or even 8) year window like the author selected.

All of the list will impact some guest decisions to visit WDW.

I look at is an an overall immersion, and a constantly crammed Hub is indeed a turn off to many. Many individual items of course will not make somebody go to WDW.

 

[jtowntoflorida]

The only reason why Disney would care about Universal's growth is if their stock price is affected by their own park's lack of growth. The analysts look at Universal and say, "If they're putting up these growth numbers, why aren't you?" It isn't about absolute attendance, it's about growth. think that it's important to put everything in context. The fact is that Parks & Resorts are far, far more important to Disney than to Comcast/Universal from a financial point of view.

In the last quarter, Disney had $4.1 billion in operating income, and Parks & Resorts accounted for just over 22% ($922 million) of that income. Parks & Resorts is the second biggest Disney segment. Media Networks dwarfs Parks & Resorts, accounting for almost 60% (almost $2.4 billion) of Disney's income. For Disney, Media Networks primarily means ESPN. ESPN is in trouble right now, so the market is looking more to the Parks & Resorts segment to support the stock price. The fact is thanks to ESPN's issues, Parks & Resorts suddenly became far, far more important to Disney than it's been in at least 10 years, and probably closer to 15, because ESPN is beginning to tarnish.

Then we look at Comcast/NBC Universal. Last quarter their Operating Income was $8.313 billion. Over DOUBLE what Disney puts up. And why? Because in addition to the other things that Disney does, Comcast is also a cable provider. They are primarily a cable provider. Their cable operations account for almost 60% (nearly $5 billion) of their income. Unlike Disney, their second biggest segment isn't their Theme Parks segment, but rather their Cable Networks & Broadcast Television segments, which account for another 26% of their income. Theme Parks aren't even third...Filmed Entertainment is. Finally, their smallest segment is Theme Parks, accounting for merely 7% of their income. This is roughly equivalent (percentage wise) to what Consumer Products is to Disney from a financial point of view. But even though it's the smallest piece of the pie, Theme Parks are still providing over $600 million in income each quarter.

Theme Parks is a tiny segment in the Comcast world, yet Comcast's growth results in that segment are amazing. Disney is supposed to be the theme park expert, and this segment accounts for a huge chunk of their bottom line, and yet the income growth isn't there. I don't think that Disney is worried about Universal being a competitor in Orlando necessarily (yet) but I do think that right now Universal's results are embarrassing to Disney because from a financial point of view, Universal seems to be doing parks better than the theme park king of the world.

But for consumers this should be great news. If Universal is doing something that makes Disney look bad, and if investors are starting to pay attention, then Disney will, too.

 

[Lee Matthews]

While Disney are building all these expansions and lands is great, for me Disney need to go back to the wold class service they were known for. Thats what makes the real difference for me.

pete has talked about this countless times on the podcast about dirty toilets ect and this is where Disney can invest a bit of money and make a real difference

 

[minnie-apple-mouse]

In the last quarter, Disney had $4.1 billion in operating income, and Parks & Resorts accounted for just over 22% ($922 million) of that income.

Then we look at Comcast/NBC Universal. Last quarter their Operating Income was $8.313 billion.

Finally, their smallest segment is Theme Parks, accounting for merely 7% of their income. This is roughly equivalent (percentage wise) to what Consumer Products is to Disney from a financial point of view. But even though it's the smallest piece of the pie, Theme Parks are still providing over $600 million in income each quarter.

While still a big gap, that seems much closer than I would have guessed.

WDW theme parks and resorts $922 Million/qtr.

US theme parks $600 million/qtr.

 

[disneyseniors]

The only reason why Disney would care about Universal's growth is if their stock price is affected by their own park's lack of growth. The analysts look at Universal and say, "If they're putting up these growth numbers, why aren't you?" It isn't about absolute attendance, it's about growth. think that it's important to put everything in context. The fact is that Parks & Resorts are far, far more important to Disney than to Comcast/Universal from a financial point of view.

In the last quarter, Disney had $4.1 billion in operating income, and Parks & Resorts accounted for just over 22% ($922 million) of that income. Parks & Resorts is the second biggest Disney segment. Media Networks dwarfs Parks & Resorts, accounting for almost 60% (almost $2.4 billion) of Disney's income. For Disney, Media Networks primarily means ESPN. ESPN is in trouble right now, so the market is looking more to the Parks & Resorts segment to support the stock price. The fact is thanks to ESPN's issues, Parks & Resorts suddenly became far, far more important to Disney than it's been in at least 10 years, and probably closer to 15, because ESPN is beginning to tarnish.

Then we look at Comcast/NBC Universal. Last quarter their Operating Income was $8.313 billion. Over DOUBLE what Disney puts up. And why? Because in addition to the other things that Disney does, Comcast is also a cable provider. They are primarily a cable provider. Their cable operations account for almost 60% (nearly $5 billion) of their income. Unlike Disney, their second biggest segment isn't their Theme Parks segment, but rather their Cable Networks & Broadcast Television segments, which account for another 26% of their income. Theme Parks aren't even third...Filmed Entertainment is. Finally, their smallest segment is Theme Parks, accounting for merely 7% of their income. This is roughly equivalent (percentage wise) to what Consumer Products is to Disney from a financial point of view. But even though it's the smallest piece of the pie, Theme Parks are still providing over $600 million in income each quarter.

Theme Parks is a tiny segment in the Comcast world, yet Comcast's growth results in that segment are amazing. Disney is supposed to be the theme park expert, and this segment accounts for a huge chunk of their bottom line, and yet the income growth isn't there. I don't think that Disney is worried about Universal being a competitor in Orlando necessarily (yet) but I do think that right now Universal's results are embarrassing to Disney because from a financial point of view, Universal seems to be doing parks better than the theme park king of the world.

But for consumers this should be great news. If Universal is doing something that makes Disney look bad, and if investors are starting to pay attention, then Disney will, too.

I agree. My daughter was urged to drop her Disney stock. Her broker is excellent and is well trusted. So, she dropped her Disney stock. We will see what happens. I think THIS is what will sway the corporate Disney co. to do something!

 

[disneydennis]

I am just surprised at the number of comments this post is getting, figuring the history of the original poster.

 

[minnie-apple-mouse]

I agree. My daughter was urged to drop her Disney stock. Her broker is excellent and is well trusted. So, she dropped her Disney stock. We will see what happens. I think THIS is what will sway the corporate Disney co. to do something!

Wow-she must have had an awful lot of Disney stock.

 

[jtowntoflorida]

While still a big gap, that seems much closer than I would have guessed.

WDW theme parks and resorts $922 Million/qtr.

US theme parks $600 million/qtr.

I've been puzzling over this comment for awhile, since you seem to be highlighting that Disney's results include the resorts in with its theme parks. The two companies have their own names for each of their segments, and obviously Universal wouldn't include resorts in their since they don't own any the resort hotels, even in Orlando (Loews does). I'm wondering what the special significance is of that to you, because it's not readily apparent to me.

 

[jtowntoflorida]

Wow-she must have had an awful lot of Disney stock.

I think the poster meant in the aggregate.

Disney's stock was trading at $121/share in early August. Today the price is around $98. It's lost 20% of its value in under two months. That's a huge cause for concern.

 

[marivigi]

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.

I agree with this point of view 100%

 

[AJA]

If Disney wasn't just a little bit concerned they would not be spending 3 billion dollars.

 

[DDLand]

In the last quarter, Disney had $4.1 billion in operating income, and Parks & Resorts accounted for just over 22% ($922 million) of that income. Parks & Resorts is the second biggest Disney segment. Media Networks dwarfs Parks & Resorts, accounting for almost 60% (almost $2.4 billion) of Disney's income. For Disney, Media Networks primarily means ESPN. ESPN is in trouble right now, so the market is looking more to the Parks & Resorts segment to support the stock price. The fact is thanks to ESPN's issues, Parks & Resorts suddenly became far, far more important to Disney than it's been in at least 10 years, and probably closer to 15, because ESPN is beginning to tarnish.

I think this part is 100% correct, Walt Disney Parks and Resorts offers a massive growth opportunity in both revenue, potential brand growth, and profit growth. Even as broadcasting seems to be getting riskier and riskier, theme parks seem to be the stable strong growth driver (tell that to an analyst 10 years ago and they'd look at you like you were crazy). Star Wars Land and Toy Story Land have been pushed up in order to accelerate growth, and that's consistent with this logic. They're well positioned to restore significant profit growth at DLP in the coming years as the resorts continue to move through their renovations and the theme parks come out stronger too. Right now DLP has been a drag, but moving forward it should be a positive contributor. Additionally Shanghai should really boost revenue in a big way once it launches, but real profits should be a few years done the road. I'm a little worried about HKDL, but with their aggressive investment program underway I'm cautiously optimistic.

Then we look at Comcast/NBC Universal. Last quarter their Operating Income was $8.313 billion. Over DOUBLE what Disney puts up. And why? Because in addition to the other things that Disney does, Comcast is also a cable provider. They are primarily a cable provider. Their cable operations account for almost 60% (nearly $5 billion) of their income. Unlike Disney, their second biggest segment isn't their Theme Parks segment, but rather their Cable Networks & Broadcast Television segments, which account for another 26% of their income. Theme Parks aren't even third...Filmed Entertainment is. Finally, their smallest segment is Theme Parks, accounting for merely 7% of their income. This is roughly equivalent (percentage wise) to what Consumer Products is to Disney from a financial point of view. But even though it's the smallest piece of the pie, Theme Parks are still providing over $600 million in income each quarter.

I could be misreading the Comcast 2nd quarter report, (the most recent release) but I believe that there's inaccuracies in some of the numbers above. Using the same metric between Walt Disney Company's most recent report (3rd quarter), it appears that the difference isn't as large as you suggested. According to the Comcast release, "Consolidated Operating Income increased 7.9% to $4.1 billion." Compared to Walt Disney Company's $4.1 Billion. They're actually almost identical if I'm reading it right (I will warn that I have misread a thing or two in the past ). Perhaps I'm misreading what your point was, and in which case I apologize. Additionally I would point out that while it is true that Walt Disney Parks and Resorts did indeed post operating income of $922 million, Universal in the most recent quarter reported operating income for their theme parks of $354 million. Walt Disney Parks and Resorts continues to dominate their peers. Walt Disney Parks and Resorts also posted Operating Income growth of $74 million. This compares to Universal's $110 million growth in their theme parks in the quarter. While it's true Universal outgrew Walt Disney Parks and Resorts, it should be noted that Segment Operating Income was negatively effected by weakness incurred by Disneyland Paris and Hong Kong Disneyland. Their domestic parks showed considerable strength.

Theme Parks is a tiny segment in the Comcast world, yet Comcast's growth results in that segment are amazing. Disney is supposed to be the theme park expert, and this segment accounts for a huge chunk of their bottom line, and yet the income growth isn't there. I don't think that Disney is worried about Universal being a competitor in Orlando necessarily (yet) but I do think that right now Universal's results are embarrassing to Disney because from a financial point of view, Universal seems to be doing parks better than the theme park king of the world.

Disney has put a lot of their eggs in one basket, (Shanghai) we'll see how that works out for them.

I've been puzzling over this comment for awhile, since you seem to be highlighting that Disney's results include the resorts in with its theme parks. The two companies have their own names for each of their segments, and obviously Universal wouldn't include resorts in their since they don't own any the resort hotels, even in Orlando (Loews does). I'm wondering what the special significance is of that to you, because it's not readily apparent to me.

Universal Studios retains 50% ownership and control of all their Resorts.

 

[minnie-apple-mouse]

I've been puzzling over this comment for awhile, since you seem to be highlighting that Disney's results include the resorts in with its theme parks. The two companies have their own names for each of their segments, and obviously Universal wouldn't include resorts in their since they don't own any the resort hotels, even in Orlando (Loews does). I'm wondering what the special significance is of that to you, because it's not readily apparent to me.

Not highlighting, just quoting the post.

Simply meaning its even closer than $922 to $600, $600 is without resorts apparently.

 

[minnie-apple-mouse]

I think the poster meant in the aggregate.

Disney's stock was trading at $121/share in early August. Today the price is around $98. It's lost 20% of its value in under two months. That's a huge cause for concern.

It was a bit tongue in cheek.