Article: Eisner Encouraged on Park's Summer Bookings

[Luv2Roam]

Disney CEO says theme park bookings "encouraging"
Reuters, 06.03.03, 7:30 PM ET

By Kevin Krolicki

LOS ANGELES (Reuters) - Walt Disney Co. Chief Executive Michael Eisner said Tuesday travel to its theme parks had not been disrupted by heightened U.S. security and that advance bookings were "encouraging" as the summer travel season gets underway.

The more upbeat remarks came just over two months after Burbank, California-based Disney cut its profit target for 2003, citing the effect of the war in Iraq and terrorism fears which had depressed travel.

Disney's main parks are Walt Disney World in Florida and Disneyland in California, and it has interests in parks in Paris, Tokyo and a Hong Kong park that is being built.

In a presentation to analysts and investors in New York, monitored by Webcast, Eisner said the U.S. government's "orange" mid-level terrorism alert ahead of the May 26 Memorial Day holiday had not slowed travel, a comment echoed in recent days by other hotel operators.

"We're getting a very good feeling," Eisner said. "The orange alert came and went, and it didn't disturb people as much time as the last time we had an alert. The last time we had an alert, the phones stopped. This time that didn't happen."

In the most recent quarter, Disney's theme park division contributed about 25 percent of the company's operating profit.

Although Eisner said he could not predict when travel to the theme parks would recover, he said he believed the current slump would give way to the kind of "pent-up demand" Disney has seen in the wake of past slowdowns and global crises.

"I know it's going to happen. I just don't know when," Eisner said.

Eisner also said the blockbuster opening of the film "Finding Nemo" demonstrated the value of its deal with production partner Pixar Animation Studios Inc. . The computer-animated family movie set an opening record for an animated film, selling $70.6 million in tickets in its first three days.

It was the fifth consecutive box-office hit for Disney and Pixar, whose future partnership is the subject of talks between both sides as Pixar seeks more favorable financial terms for a renewed deal that would continue beyond the release of "Cars", due in 2006.

"We have a very good relationship with Pixar," Eisner said. "I think we have a better relationship today than we had on Friday ... I suspect we will change the kind of relationship we have with Pixar, but I am fairly confident that we will continue to be in business with Pixar. I am not sure."

As for the company's money-losing retail store chain, Eisner said Disney's preference would be to sell its ownership interest to a specialty retailer and then collect a license fee for the Disney brand.

The stores would also then sell more "high-end" merchandise that would set their offerings apart from the Disney-branded goods available at mass-market retailer Wal-Mart Stores Inc. .

Copyright 2003, Reuters News Service

 

[grinningghost]

Well, that's encouraging news. Not so sure about the Disney Store news though. Sounds like they're eager to dump the place, but even more eager to fill their pockets with someone else's hard earned money.

 

[raidermatt]

With the stores, the question is, if Disney thinks the higher-end specialty concept is workable (an idea kicked around here on numerous occasions in the past), why not do it themselves? If Disney isn't willing to invest in the idea, its going to be hard to find somebody else who is willing to invest in it, plus pay a license fee.

Oh well, maybe they'll find the OLC of retail, and we'll get the stores' answer to Tokyo Disney Seas.

On Pixar, it has also been stated around here for over a year that even a new deal between Pixar and Disney will not be as profitable for Disney as the current deal, so Disney will be worse off no matter what the outcome. Its just a question of to what degree.

With the parks, its nice to hear the phones didn't stop, but just not seeing a decrease is not good enough. The "pent-up demand" theory is nothing new, and I'm sure there is at least 'some' validity to it. The question remains how much of Disney's downturn is out of their control and how much is self-induced. Disney would have us believe its 100% outside...

 

[blackshirt]

Originally posted by Luv2Roam
Disney CEO says theme park bookings "encouraging"
Reuters, 06.03.03, 7:30 PM ET


"I know it's going to happen. I just don't know when," Eisner said.

Well, if demand doesn't increase as the economy starts to get better and excellent deals are available at WDW, then perhaps the problem might be something else. Nation wide other vacation destinations are doing much better but Disney struggles to merely maintain last years numbers. I wonder if the percieved value of the present offering has anything to do with it.

 

[crusader]

I wonder if the percieved value of the present offering has anything to do with it.

Are you referring to the recent campaign going on?

I've heard recently that Jobs is not nearly as much the ultimate decision-maker on what route to take as he appears to be in public.

OK I'll bite. Care to enlighten?

 

[blackshirt]

Originally posted by crusader
Are you referring to the recent campaign going on?

I think that Disney is offering attractive packages right now, but I think they could backfire if the resorts are filled and hours and services are not adjusted higher to accomodate the higher volume. Summertime in Florida requires large amounts of patience and fluids as well as evening hours in the parks. If these don't occur than repeat visits from these customers might not happen.
The reason that WDW is having trouble today maintaining previous years numbers ,IMO, is because they have cut numerous things and have not invested a sufficient amount to attract repeat visitors. I realize several new attractions are opening later this year, but they do nothing for June and July. I don't have access to Disney bookings, but I would be willing to bet that bookings for the summer were way done and in an act of desperation, the Princess packages were offered in order to salvage the summer.

 

[crusader]

blackshirt -

You're point is valid. The increased capacity of the parks will need to be accomodated once it reaches a certain level by lengthening hours; increasing staff; and operating more venues.

I have to admit this is something I would expect the company to automatically prepare to do given their history and the desire to reestablish a strong customer base.

The reason that WDW is having trouble today maintaining previous years numbers ,IMO, is because they have cut numerous things and have not invested a sufficient amount to attract repeat visitors

Not entirely. The hours don't appear to be significantly deterring the repeat bookings. The attractions; the cost; the time; the magnitude; along with a host of other factors (predominantly personal) probably are working against them with every type of customer.

 

[raidermatt]

The reality is that, after Pixar's success, the best anyone could expect would be a watered-down Lucas type deal.

I agree. The problem is with the overall strategy of making deals with animation studios and just slapping the Disney name on the films. If the films are bad, Disney's name gets dragged down. If the films are good, like Pixar's, Disney gets a profitable deal for a period of time, then must either relinquish much of that profitability, or see somebody else's name associated with the best animated films in the industry.

When your name was built on being the best, and is reliant on you retaining that position, it makes sense to invest in continuing to be the best. Avoiding that investment by outsourcing your core product is a poor long-term decision.

Didn't Walt learn a lesson early on about the perils of not ensuring ownership of your creative content?

 

[crusader]

When your name was built on being the best, and is reliant on you retaining that position, it makes sense to invest in continuing to be the best. Avoiding that investment by outsourcing your core product is a poor long-term decision.

Of course - but your "name" was only built because a great many individuals relinquished the rights to their creations in order to have a job, and will forever remain anonymous to the average consumer. There are those who choose not to do this anymore. If they possess the absolute best talent the industry has to offer and you cannot get them to sign away their art, then you should carefully consider the long-term aspects of all options before simply dismissing the idea of outsourcing.

 

[ThAnswr]

>>>Although Eisner said he could not predict when travel to the theme parks would recover, he said he believed the current slump would give way to the kind of "pent-up demand" Disney has seen in the wake of past slowdowns and global crises.

"I know it's going to happen. I just don't know when," Eisner said.<<<<


He gets paid how much for this?

I guess the idea of creating demand for your product just never occurs to these people.


>>>As for the company's money-losing retail store chain, Eisner said Disney's preference would be to sell its ownership interest to a specialty retailer and then collect a license fee for the Disney brand.<<<


I'll bet!

 

[raidermatt]

Just to be clear, Disney did a good job of retaining the ownership rights of the films under the current agreement. The problem now is with ownership/control of the creative resources (Lasseter and crew), which will likely hurt Disney's efforts to retain ownership of future works, as well as the profts.

The folks at Pixar were perfectly willing to sign away their art, as evidenced by the current deal. Disney just didn't provide the environment these people desired. Whether it was compensation, creative freedom, personal differences, whatever.... Pixar as a company was willing and able to do what Disney would not, hence Lasseter and crew create their art for the Pixar corporation instead of the Disney corporation.

 

[crusader]

The folks at Pixar were perfectly willing to sign away their art, as evidenced by the current deal.

You know, I had to do a little research on this before posting because I was quickly being drawn into unchartered waters and it didn't appear anyone else was coming forward to assist.

Here's an interview given over a year and a half ago by Mr. Lasseter himself which some may not have had the privilege of reading. Nowhere in it did I get the impression Pixar was willing to sign away anything.

http://film.guardian.co.uk/lff2001/news/0,1555,604658,00.html#disney

For those who don't have the time to siphon though all of the artistic development dialogue, here's the most poignent part re: Disney -

"When we became Pixar we started working with Disney by helping them with a software project to do their computer system called CAP. So we started an association with them, the new regime, the Roy Disney, Michael Eisner, Jeffrey Katzenberg, Frank Wells regime.

I kept getting calls after every single one of the short films asking me to come back. I was having way too much fun living in San Francisco, using the best computer graphics group in the world, and it was like, 'Why would I want to go back there?' So we finally convinced them to let us do a feature film for them here at Pixar and so, about 1991, they said 'Sure'. They were open to it. But it all depends on the story. "

 

[raidermatt]

Nowhere in it did I get the impression Pixar was willing to sign away anything.

Essentially, Pixar DID sign away their ownership. Disney owns the Pixar films. Disney can produce sequels at will, they can develop rides, merchandise, shows, whatever they want.

 

[crusader]

Pixar may very well have provided their partner full licensing and distributorship along with sequel rights in exchange for financial backing on a major motion picture. That does not mean they did not do something far greater in remaining independent as a company by gaining full name recognition and accreditation for the film.

 

[raidermatt]

I'm not saying it was a bad move on Pixar's part. (Side note, my understanding is not that Pixar gave Disney licensing rights, but that Disney OWNS the rights. An important distinction.)

My point is that it appears the creative folks who work for Pixar wanted a place that provided them with the creative freedom and resources to do what they wanted to do. Disney chose not to invest in this, Lucas did. Further down the road, after Disney saw the potential, Disney was unable to convince Lasseter they offered a superior opportunity, even though they certainly were capable of doing so.

Still later, Lasseter's choice was validated by Disney's attempt to push them into the "8-song formula".

If Disney is not willing to make the investment, or to allow the creative process to remain a creative driven one as opposed to a marketing or efficiency driven one, then sure, Disney's best option is to forget trying to do it themselves and instead "pimp" their name to others who ARE willing to do it.

It can be the best choice when you are not capable of creating your core product yourself. Its a strategy that will delay the problems brought on by a dearth of self-created product, but it does not solve the problem in the long term.