Bean Counters and shortsightedness

[WAstateDVCDaddy]

It’s been a long while since I have been on the boards, have not travelled to Disney for years. First Covid and then the absolute expense of going to Disney AND the level of difficulty trying to plan a trip for a family of 6.

I flirted with the idea about a year ago, and came to the theme parks forum to get a feel, and one of the top threads was ‘if I budget 1000 usd will that be enough for the genie fast passes, we are going for five days and a family of 4. Wow.

I read that Disney parks is still making a pile of money, but more money from fewer guests. I also had friends who travelled to Disney over the 4th of July, and they told me the morning of July 3, the crowds were low and they walked on to many rides. I don’t know if crowds are still thin at Disney, but if they are I am going to say Disney is in big trouble for long term survival.

What the bean counters forget, is that they are not creating a new massive generation of nostalgic Disney goers. They are shrinking the base of people who are going to think, ‘I can’t wait to take my kid to Disney and let them experience the magic of PeterPan’. They have priced disney out of the range of any average family (in my opinion of course) and the fan base is shrinking. Over time, this attrition is going to kill Disney.

Do you think the direction Disney is going is going to be sustainable in the long run? Maybe the bean counters just figure that is the next guys problem? I don’t know. But I think what they are doing is crippling a giant I use to love so much.

I think it makes sense in the long run. It’s not just maximizing $ out of the park visitors. It’s also controlling the visitor experience, and flow of visitors.

A few years back, the common complaint was “why are the parks so crowded? It’s not worth the money!” Raising the prices reduces the visitors, but allows the people that do go to have a better time. Since the rates are variable, they also shift some traffic to off peak season, so the people who think $150 is too expensive, can plan for off peak seasons, which lets those people attend the parks, on days that Disney needs the traffic.

I don’t think they’ve done a good job of marketing it- people are seeing it as a money grab, instead of as a manageable item. No one complains about matinee vs. regular pricing at theaters, or lower tier vs nosebleed seats at concerts or games. It should’ve been handled so much better.

Where I think the bean counters have really hurt the company is in closing the Disney Stores in favor of the Target partnership. It used to be a destination, where a kid would go in, and everything was something they had to have. No other company had any experience like that except LEGO. Now, a Disney toy has to compete with all of the other brands out there, so unless the movies do well, they only have the parks to make kids want Disney more than Mattel or Hasbro or Lego. The store closure was truly a profitability decision, unlike ticket prices.

LEGO sells well at the toy store, but I’m guessing less than 20% of the time kids would choose LEGO over other toys on the average visit. But take them to a Lego store, and I’m guessing 75% find something they “have to” buy.

 

[WAstateDVCDaddy]

It's not. Attendance is dropping and with that service is dropping which is why it feels packed.

Yes - lines are still often long, with higher numbers of breakdowns, making the ride lines longer. Don’t know about other lines for food and shopping, but ride breakdowns (which have been studied) definitely have an impact.

 

[Cfabar1]

Where I think the bean counters have really hurt the company is in closing the Disney Stores in favor of the Target partnership. It used to be a destination, where a kid would go in, and everything was something they had to have. No other company had any experience like that except LEGO. Now, a Disney toy has to compete with all of the other brands out there, so unless the movies do well, they only have the parks to make kids want Disney more than Mattel or Hasbro or Lego. The store closure was truly a profitability decision, unlike ticket prices.

LEGO sells well at the toy store, but I’m guessing less than 20% of the time kids would choose LEGO over other toys on the average visit. But take them to a Lego store, and I’m guessing 75% find something they “have to” buy.

You might be right, but retail is facing significant headwinds. WB also operated stores for a time. They closed years before the Disney store. Disney stores might have been able to survive in certain super-regional malls or locations, in essence as a loss leader, but I"m skeptical that a major retail presence is sustainable today....

That said, I do think that Disney began to make the scope of the company too small. That's the fundamental problem. Everything has to be a "major hit" and it is built on mega-franchises. They used to take risks and experiment and find new ways to create ways to engage with customers. They knew that being present in the lives of customers was key to building relationships with them. I think not developing the DVC in Colorado and NYC were huge mistakes in that regard for example, as was allowing Marriott to have the timeshare at Euro Disney. They would have sold out eventually, and would have been another way to show Disney's presence throughout the world.

 

[HokieRaven5]

Where I think the bean counters have really hurt the company is in closing the Disney Stores in favor of the Target partnership. It used to be a destination, where a kid would go in, and everything was something they had to have. No other company had any experience like that except LEGO. Now, a Disney toy has to compete with all of the other brands out there, so unless the movies do well, they only have the parks to make kids want Disney more than Mattel or Hasbro or Lego. The store closure was truly a profitability decision, unlike ticket prices.

LEGO sells well at the toy store, but I’m guessing less than 20% of the time kids would choose LEGO over other toys on the average visit. But take them to a Lego store, and I’m guessing 75% find something they “have to” buy.

Just to point it out the margins for Consumer Products went from the mid 30% with the stores to now operating above 50% following the removal of stores. Also about 20% higher in revenue.

 

[WAstateDVCDaddy]

Yeah - I’m sure financially the Target tie up makes more sense than the standalone stores. But when taken from a brand building perspective, I believe the stores really paid for themselves. There was no reason the Disney Stores couldn’t have remained open also.

I know that while the store in our mall was open, every trip to the mall with our DD6 had to include a stop at the Disney Store. And almost every trip resulted in several “I have to have this!” Items, and usually (almost always) some purchase of a Disney IP product.

Now, we do swing through the Disney section of our Target, and we see their toys mixed in the toy section as well. But I can’t think of the last time we bought a Disney toy on one of those trips. Plenty LOL Girls, Barbie, and Mini-Brands items though. When Encanto was released was the last time her focus was only on Disney IIRC.

We still buy stuff when we go to the parks - September we will bring an empty duffel bag with us to Orlando so we can haul back the loot. But park visits are fewer and farther between these days. And our DD is much more a “Barbie Girl” now than a Disney girl.

 

[New Mouse]

Yes - lines are still often long, with higher numbers of breakdowns, making the ride lines longer. Don’t know about other lines for food and shopping, but ride breakdowns (which have been studied) definitely have an impact.

Less chefs and cashiers also have an impact. Less places to go also have an impact. Higher food prices causing less people to stop and eat have an impact.

 

[robinb]

If Disney prices people out why is it still packed?

I don't think it is packed. I've heard various reports about how dead it's been this summer.

 

[Minnie1222]

We were there three weeks ago. It was less crowded than our Easter trip during Tron opening, but definitely not dead. I even posted a picture of the crowd during one of the allegedly vacant days.

 

[loves to dive]

Just as an aside, why does everyone always have to rag on the "bean counters"? I'm a bookkeeper, yes, I count the beans. The company I've worked for for over 30 years is in the process of shutting down, privately owned and the boss is in his 80s, it's time. It's just the boss and the bean counter. We were a small business, at our height a little more than 100 employees in 2 states. I would tell someone they had to stay in these hotels because we were a government subcontractor and would be reimbursed for them. Why can't the company foot the difference? Do you want to get paid? Do you possibly want a raise next year? Do you like the profit sharing plan? A profit can't be shared if there is none. The beans have to be counted. If we don't count them, there could be too many and then we are throwing away the excess, thus losing the money we spent on those beans. Of worse yet, if we don't count them there might not be enough and you aren't going to get your coffee or soup or whatever we make with those beans. It's a balancing act and always done in the background and always be people who rarely have any skin in the game. Trust me, because we were a government sub, that meant my department was a cost center. We made no money (outwardly) for the company. Thus we got the smallest share of any profit sharing, the smallest, if any, raises because the profit center employees felt it unfair they had to share with us. Yet we were the people behind the scenes talking to the head's of departments and making the hard decisions. I even had managers telling me their people were upset because I told them you can't buy purple pens instead of red because they are more expensive. I don't care if your editors think purple are prettier, you want to throw your part of the profit sharing toward them? No, hmmm, then who is going to pay the difference. It's a silly example but on a small scale the same as do we replace a ride or continue to service it for another year or two to get the most out of it (that is assuming that servicing it is putting no one in danger).

Disney is a publicly held company, their first responsibility (whether it's liked or not) is to their stockholders. If they don't make any money, those stockholders are going to vote from someone who can. It can be argued if they don't please the customer then they aren't going to make the money to please the stockholder but no one knows what goes on behind the scenes in the little rooms the bean counters are sitting in. Walt may not have totally known what it meant by going public but I'm sure Roy did (after all he was a bean counter).

Rant over.

 

[ChipnDale79]

Disney is a publicly held company, their first responsibility (whether it's liked or not) is to their stockholders. If they don't make any money, those stockholders are going to vote from someone who can. It can be argued if they don't please the customer then they aren't going to make the money to please the stockholder but no one knows what goes on behind the scenes in the little rooms the bean counters are sitting in. Walt may not have totally known what it meant by going public but I'm sure Roy did (after all he was a bean counter).

we're all aware they are a public company, i dont think anyone here is a making an argument that disney should take a loss in order to please the customer. I think some people are saying, "how much profit is enough to make them happy while upsetting the customer base?"

They have to walk a fine line of how much money they can make, but not running off those same people that are giving them money.

I can promise you though, that their actions over the past 10 years, has caused my family to readjust our disney budget, and how much we give them and how often. Its not as much as it used to be.

I'm not making a comment here against disney, or complaining, that's not the goal. I think for years Wall Street has demanded they have a short sighted view of their company, meaning, "healthy quarterly reports", meanwhile potentially hurting the overall long term returns.

I'm not talking theme park attendance or any of that, but could the decline in stock price over the past year or so be that the "short term" has caught up with them?

Time will tell.

People are emotital about "bean counters", because they do their job, and sometimes they take the fun out of things, i'm not saying its right, its just what it is.

 

[RivShore]

Just as an aside, why does everyone always have to rag on the "bean counters"?

People also refuse to realize that in large companies, the finance and accounting groups have absolutely no operational control. They just report and forecast the numbers, it's up to the operational mangers to come up with and implement ways to improve them.

It can be argued if they don't please the customer then they aren't going to make the money to please the stockholder

I would make that argument - I think that for a company to have long term success, it must have satisfied customers and a satisfied workforce, once you have those two things, the shareholders will be happy too. If you don't have all three, over the long term, the company will disappear.
You can probably get away with keeping only Wall St happy, while ticking off everyone else for a few years, juicing profits, getting your big bonuses, then riding off to retirement, leaving an ill prepared successor in charge (who shares your first name)...well, you know the rest of the story

 

[MillauFr]

I don't think it is packed. I've heard various reports about how dead it's been this summer.

I was at Disneyland two weeks ago and it was jammed. They don't dare start selling annual passes again because that would make the problem far worse.

 

[robinb]

I was at Disneyland two weeks ago and it was jammed. They don't dare start selling annual passes again because that would make the problem far worse.

I think Disneyland is always more crowded than WDW. I Hope you had a great time even through the crowds. Disneyland is my favorite park.

 

[Brian Noble]

It's Disney+/DTC coupled with a film industry in transition.

A special version of the DTC problem is "whither ESPN?" Sports rights fees have been growing astronomically, and there has been more competition for them because live sports is pretty much the last thing on the planet that people feel compelled to watch in real time--meaning, to watch in a way that they cannot skip commercials. ESPN is something like $8-$9 per subscriber in cable/satellite bundles, whether or not the subscriber ever watches it.

Naturally, many people don't. Bob 1.0/3.0 was recently quoted on spinning ESPN out as an over-the-top/direct service. But most analysts think that doesn't even tread break even with bundled unless they charge $30ish/month for it, and it is not clear how many people care enough about <sport-whatever> to pay that.

Anecdotally: I've been a bit fan of both college football and the English Premiere League. But, I'm drawing the line at paying for Peacock in addition to everything else to get a handful of games that I care about. Would I pay $30 just for ESPN? That's a good question. If it were only ESPN, maybe. But the games I care about are spread across ESPN/ABC, Fox/Fox Sports, NBC/Peacock, etc. etc. etc. If I have to make individual decisions about each of those at the $10-$20-$30/month range, it starts to occur to me that maybe I don't need to watch all of these games that just give me heartburn anyway, and that books are nice as are walks in the woods.

 

[RivShore]

Would I pay $30 just for ESPN? That's a good question. If it were only ESPN, maybe. But the games I care about are spread across ESPN/ABC, Fox/Fox Sports, NBC/Peacock, etc. etc. etc. If I have to make individual decisions about each of those at the $10-$20-$30/month range, it starts to occur to me that maybe I don't need to watch all of these games that just give me heartburn anyway, and that books are nice as are walks in the woods.

There was talk a while back from Disney of making ESPN+ a hub for not just games they broadcast, but all available games. You could click on a game pay a fee and watch it on whatever network it might be on. That could work for a lot of people.

 

[Aluminum Falcon]

I'm not talking theme park attendance or any of that, but could the decline in stock price over the past year or so be that the "short term" has caught up with them?

I don't think so, the parks side is still the golden goose in terms of performance, i am interested to see how they perform moving forward compared to their contemporaries, because i think domestic travel is coming down across the board. I think the primary problem for Disney is that streaming wasn't all that it was cracked up to be, and that the population is moving away from movies on a whole, and shifting more towards television.

I think we are watching the slow decay of movies, and Disney is going to feel it more than most. They need to focus on original content for Disney+ IMO and make it quality (the mandalorian).

I don't think short term planning is hurting them, just not knowing how to navigate this quickly changing media marketplace

 

[Aluminum Falcon]

Parks have ups and downs in visitation, saying that Disney parks are "not full" is not very insightful. Saying that Disney parks aren't performing like lets say for example Universal, and can back up assertions then we're talking, otherwise it's just pontificating

 

[ChipnDale79]

I don't think so, the parks side is still the golden goose in terms of performance, i am interested to see how they perform moving forward compared to their contemporaries, because i think domestic travel is coming down across the board. I think the primary problem for Disney is that streaming wasn't all that it was cracked up to be, and that the population is moving away from movies on a whole, and shifting more towards television.

I think we are watching the slow decay of movies, and Disney is going to feel it more than most. They need to focus on original content for Disney+ IMO and make it quality (the mandalorian).

I don't think short term planning is hurting them, just not knowing how to navigate this quickly changing media marketplace

when i said short term, i wasnt just talking the parks, i was talking the entire company.

 

[StageTek]

Just as an aside, why does everyone always have to rag on the "bean counters"? I'm a bookkeeper, yes, I count the beans.
<snip>
Rant over.

An understandable rant.

The reason people use the term is because it's a term that is understood by most people. I'm sure you know that it doesn't mean all bookkeepers and accountants are bad people or that they aren't needed in every business. But I get why it affects you as a bookkeeper.

Your purple pen example is excellent - not silly at all. That "penny pinching" is a sound business practice. And it affects those who love purple pens. When a small business make a dozen or so decisions like that it could extent the life of the company. Sound business.

And in the entertainment and hospitality business "bean counters" make sound decisions that affect how people see the final product. Dropping 10 bus drivers a day saves a lot of money over a year. The Disney World guests feel it when they wait longer for a bus back to their resort. It's a sound business decision - and it affects the guests. Closing a show saves a lot of money and can be a sound business decision. Changing what was once "free" to something that is an up-charge might be a sound business decision and it affects the guest experience.

As Disney Parks and Resorts cuts out perks it affects the overall guest experience and many of us react to that. Calling the decision makers "bean counters" is just brevity. Your rant did not fall on deaf ears with me. I get it.

 

[Tigger's ally]

Add net new attractions? As opposed to just replacing things while attendance grows.

You mean like Tron, Remy, GoG, FoP, Rise and Slinky?