My apologies to Mr. Staggs

[Mickey28]

Evidently, he is not the one responsible for all of the costs cutting and the premium up charges that are now being implemented throughout Disney. I have been a big critic of his assuming things about the man without any real facts to base that on. Yes, he was the driving force behind MM+ which many regular WDW fans dislike, but he is not the one behind the cutting of labor in the parks and the "nickel and diming" of guests that is now so prevalent. According to this Yahoo article there are a whole team of these executives that did not agree with his approach to spending. Now, I agree if a division is consistently losing money then something has to be done, but according to this article that was not the theme parks or cruise line.I am afraid this is not going to bode well for us, the consumer of Disney travel destinations.

https://www.yahoo.com/finance/news/disney-shakeup-cost-cutters-gaining-090000488.html

 

[PSUGuy]

Quote: '.....a culture shift at the entertainment giant, where cost-cutting is in vogue and value is placed on shaking up the business model.'

That says it all, cut offerings and shake up the business model which used to include unique, high quality entertainment.

Bill From PA

 

[DekrRini]

Then I guess it's now up to us, the consumers, to shake up their business model by no longer throwing our hard earned money at them hand over fist. Eventually, Disney will lose their golden sheen for providing exemplary service and lose not only their repeat guests but even the first time and only time customers.

 

[Skywise]

Magicbands were and are a good idea from room keys to photopass tracking. FP+ not so much.

As for cost cutting- it's typical MBA know-nothings who never created a business, never pushed their own ideas but got the degree because it meant more money and think they're super-de-duper smart because they know how to lower costs or increase prices.

I'm seeing more and more articles that are agreeing with my hunch - This isn't about Disney park costs or Shanghai, this is a Disney-wide code red because the company is losing ESPN which is causing them to lose control of the cable market in general, further hurting their cable subscription revenue. Not only is the cash-cow gone they're still on the hook to pay off all the lucrative, exclusive sports contracts they signed for years down the road that they probably can't recoup now.

Now a REAL business exec would see the writing on the wall and start offering these services via streaming and direct demand customers to offset the costs but no... they've panicked and don't know what to do so they're implementing rule 1 and damaging the whole company in one fell swoop from which they might not recover this time.

 

[MikeandReneePlus5]

, this is a Disney-wide code red because the company is losing ESPN which is causing them to lose control of the cable market in general, further hurting their cable subscription revenue. Not only is the cash-cow gone

Disney is losing ESPN? how so?

Also, Iger just said last month they are considering selling ESPN subscriptions directly to consumers

 

[MaryKatesMom]

I've felt for years that the long time loyal guests aren't as welcome as they had been in years past. What this short sighted business model, one that is more dependent on once in a lifetime blow all your saving approach forgets is that we all were once first time visitors and most importantly at least twice a month a friend of a friend will text me asking about a trip to Disney. I would happily meet them over lunch and spend time planning their vacation because I loved the place so much. No longer. Just trying to explain FP+ is exhausting.

And watching EPCOT, my favorite park, over the last 15 years without its entertainment and only one E ticket ride (over Easter) go downhill, so sad. Even at the one of the busiest times of the year the place was pretty empty, like a ghost of its former self. Not only was I able to find a spot at the R&C bar in the middle of the afternoon, I got a chair. It was rather pathetic,

 

[anniemae]

Then I guess it's now up to us, the consumers, to shake up their business model by no longer throwing our hard earned money at them hand over fist. Eventually, Disney will lose their golden sheen for providing exemplary service and lose not only their repeat guests but even the first time and only time customers.

I agree with you, but that will never happen. No matter what Disney does, people support them. they grumble, complain, threaten etc. but numbers speak louder than words and disney is more crowded than ever and it seems to get busier and busier each year. they can cut hours, raise prices, cut staff, cut corners etc., but people will continue to go and continue to pay. If I had a nickel for every time I read on these boards:

"I just got back from Disney, so sad it's over, but I am busy planning my trip next month!"
"I am mad at Disney for xyz, maybe after my next 5 trips that I have planned I will re-evaluate"
"I am mad at Disney for xyz, I will do Disney cruise/aulani/disneyland, next year instead"
"well I don't care what they do, Disney is MY happy place and I'm going to continue going! It's still awesome to me."

And on and on. It's not a bad thing, in fact it is wonderful for Disney. They have life long guests who will continue to go week after week, month after month, year after year etc. We still go because we still enjoy it, not sure how long that will last though. People have to decide what their breaking point is, but for many I don't think there is a breaking point and for every family that has had enough and stops going, multiple families will take their place.

 

[Jcon]

Disney is losing ESPN? how so?

Also, Iger just said last month they are considering selling ESPN subscriptions directly to consumers

They must have meant losing money. Most at Disney, would love to lose ESPN. It costs them a fortune. Maybe the new direct subscriptions will save it.

 

[ArwenMarie]

Sometimes companies make mistakes. Prices are one thing but the cuts are where they could cross the line and there goes perceived value.

 

[Skywise]

Disney is losing ESPN? how so?
Also, Iger just said last month they are considering selling ESPN subscriptions directly to consumers

They're losing it both as THE sports channel brand which is weakening and as for the leverage Disney used that brand to negotiate better lock-in deals and monetary income with cable providers and the losses of that cable market are accelerating and there's no end in sight because the of the entire change in how people view (or even don't view) content anymore. Everyone wants ala-carte channels on cable (don't buy the packages) but even moreso (and with the advent of streaming) people don't want to be locked into one CHANNEL for content providing.

http://www.foxsports.com/college-fo...million-subscribers-the-past-two-years-112515

Now, Iger spins it the best he can here -
http://www.investors.com/news/disney-easily-beats-views-but-espn-continues-to-bleed-subscribers/
"“we concluded that our sub loss was largely due to the fact that ESPN was not part of skinny bundles that had launched,” - That's a nice way of saying that Comcast et al wanted OUT of the bundles you forced on them when ESPN was a prized property. Now that it isn't, Comcast could finally put the screws to you and get it de-bundled. Guess what? Nobody bought the higher package to GET ESPN.
So Iger made deals elsewhere "We've made better deals with Dish" - but Dish has nowhere near the potential audience size that cable companies do and Dish still has the same problem all the pay-tv providers have... Everyone's cutting the cable and going streaming (and Dish can't do streaming at all because it's not an internet provider!)

And then there's this:
“Affiliate revenue growth was due to contractual rate increases, partially offset by a decline in subscribers and unfavorable foreign currency translation impacts,” Disney said in a statement.

Decline in subscribers? But Bob... you said the subscriber numbers were wrong!
Even more curious - Why point out that revenue growth in the affiliates was due to contractual rate increases? Because Disney is signaling investors to not continue to expect this kind of rate growth. It was a fluke this time.

But Bob hasn't given up on ESPN -
He said Disney is exploring “new platform providers,” hinting at more over-the-top, or streaming, options for ESPN.

Ahh, but in the words of the Wicked Witch of the West "These things must be done delicately..." - If Iger goes full-on streaming, which is a good idea, the cable companies will drop his channel like a hot potato! In any event he's contractually tied to the hip to cable companies for the near future anyway by existing deals. It's why you can't get HBO Live on anything other than Apple TV and HBO Go requires you to sign in with your cable provider account even though the streaming service is there and in place. HBO can't contractually doing it without harming cable providers. I bet Iger's "better deals with Dish" contractually allows him to stream to his heart's content which makes sense because Dish can't do streaming at all so there's not as much conflict of interest - NOT so with DirectTV which is owned by AT&T which is... an internet provider...)

ESPN isn't going to go away (I don't think) but it represented a good chunk of Disney's income and marketing power and with it under attack like this the whole company is weakened as a result. My guess is they're cutting budgets on the parks to divert cash to ESPN to shore it up/make better deals and try to hold the line but it's a very short-sighted move and also shows that Iger doesn't understand the theme park business and treats it as just another group of "cable viewers" because theme park attendees don't just "change the channel back..."

 

[rlduvall]

They must have meant losing money. Most at Disney, would love to lose ESPN. It costs them a fortune. Maybe the new direct subscriptions will save it.

Exactly. There have been massive layoffs and host contracts cancelled at ESPN lately. In fact, I have been reading that a lot of the cable companies are in big trouble because so many people are "cutting the cord" and just using streaming services to watch their favorite shows. This, and other leadership issues and changes, is what is causing ESPN to lose so much for Disney.

[edited: as you can see Skywise explained it so much better than me]

 

[JoeA]

As for cost cutting- it's typical MBA know-nothings who never created a business, never pushed their own ideas but got the degree because it meant more money and think they're super-de-duper smart because they know how to lower costs or increase prices..

I worked for a company a few years ago that had more Harvard MBA's than you could shake a stick at and very few had any real business sense outside the classroom.

They were all pretty fresh from school but had all the answers.

 

[DekrRini]

I'm not suggesting it will happen any time soon, but right now Disney is known for its excellence in customer service. A benchmark if you will. If they continue on this path, eventually they will lose this distinction. Word of mouth advertising can be very detrimental to a business. As more and more long term customers reach their tipping point, the word will spread that while Disneyworld is still a great vacation destination it might be worth checking into other destinations to see if the cost of Disneyworld is still worth it. Also, it's no longer the only game in town. Some disgruntaled customers will opt for Universal instead. So for a lot of customers it will still be worth the price, for others it won't. Because their reputation for excellence in customer service is so ingrained into our culture, it will probably take a long time for the casual visitor to decide a very expensive trip to Disneyworld isn't worth the cost.

For what it's worth, I'm not one of those long term customers who has reached my tipping point. For me, it's still worth the cost, but I will say they are inching closer to my tipping point.

 

[MikeandReneePlus5]

They're losing it both as THE sports channel brand which is weakening and as for the leverage Disney used that brand to negotiate better lock-in deals and monetary income with cable providers and the losses of that cable market are accelerating and there's no end in sight because the of the entire change in how people view (or even don't view) content anymore. Everyone wants ala-carte channels on cable (don't buy the packages) but even moreso (and with the advent of streaming) people don't want to be locked into one CHANNEL for content providing.

http://www.foxsports.com/college-fo...million-subscribers-the-past-two-years-112515

Now, Iger spins it the best he can here -
http://www.investors.com/news/disney-easily-beats-views-but-espn-continues-to-bleed-subscribers/
"“we concluded that our sub loss was largely due to the fact that ESPN was not part of skinny bundles that had launched,” - That's a nice way of saying that Comcast et al wanted OUT of the bundles you forced on them when ESPN was a prized property. Now that it isn't, Comcast could finally put the screws to you and get it de-bundled. Guess what? Nobody bought the higher package to GET ESPN.
So Iger made deals elsewhere "We've made better deals with Dish" - but Dish has nowhere near the potential audience size that cable companies do and Dish still has the same problem all the pay-tv providers have... Everyone's cutting the cable and going streaming (and Dish can't do streaming at all because it's not an internet provider!)

And then there's this:
“Affiliate revenue growth was due to contractual rate increases, partially offset by a decline in subscribers and unfavorable foreign currency translation impacts,” Disney said in a statement.

Decline in subscribers? But Bob... you said the subscriber numbers were wrong!
Even more curious - Why point out that revenue growth in the affiliates was due to contractual rate increases? Because Disney is signaling investors to not continue to expect this kind of rate growth. It was a fluke this time.

But Bob hasn't given up on ESPN -
He said Disney is exploring “new platform providers,” hinting at more over-the-top, or streaming, options for ESPN.

Ahh, but in the words of the Wicked Witch of the West "These things must be done delicately..." - If Iger goes full-on streaming, which is a good idea, the cable companies will drop his channel like a hot potato! In any event he's contractually tied to the hip to cable companies for the near future anyway by existing deals. It's why you can't get HBO Live on anything other than Apple TV and HBO Go requires you to sign in with your cable provider account even though the streaming service is there and in place. HBO can't contractually doing it without harming cable providers. I bet Iger's "better deals with Dish" contractually allows him to stream to his heart's content which makes sense because Dish can't do streaming at all so there's not as much conflict of interest - NOT so with DirectTV which is owned by AT&T which is... an internet provider...)

ESPN isn't going to go away (I don't think) but it represented a good chunk of Disney's income and marketing power and with it under attack like this the whole company is weakened as a result. My guess is they're cutting budgets on the parks to divert cash to ESPN to shore it up/make better deals and try to hold the line but it's a very short-sighted move and also shows that Iger doesn't understand the theme park business and treats it as just another group of "cable viewers" because theme park attendees don't just "change the channel back..."

I like all this and agree.

But I thought Disney flat out said Shanghai was a disappointment so they were cutting costs here to help make that up. So they probably aren't diverting cash from theme parks to shore up ESPN but who knows you may be right. The whole thing is disconcerting, I think someone else said it and I agree, price increases are one thing but cutting costs/service is quite another.

Personally I am sick of ESPN and I haven't watched Sportscenter in probably 10 years (and I love sports and watch a lot of it).

 

[dreiwhit]

In fact, I have been reading that a lot of the cable companies are in big trouble because so many people are "cutting the cord" and just using streaming services to watch their favorite shows.

I haven't seen the numbers for all of last year, but the number of people that cut the cord in the first six months of last year was staggering. I think it was around 600,000 subscribers, and from what i've read the number is accelerating. I understand completely why, as we're paying $90 a month for satellite and a DVR for the half dozen channels we watch. Cable TV/Satellite just isn't the value as it was years ago. If there was a way to stream the channels we like, we'd cut the cord too.

Cable / Satellite companies need to follow the old axiom and "innovate or die." But, they don't know how to do anything other than raise prices and offer streaming as an additional add on for a fee.

To bring this back to Disney, if I was in charge at Disney Corporate, I would be looking for a way to sell ESPN, even at a loss. IMHO, unless they can go streaming without being tied into a cable subscriber (not for a long time, IMHO), the best days are behind them.

I worked for a company a few years ago that had more Harvard MBA's than you could shake a stick at and very few had any real business sense outside the classroom.

They were all pretty fresh from school but had all the answers.

That's why I wish companies would go back to the old apprenticeship program. Not only would people have degrees, but also the practical experience to go with it.

 

[Ninja Mom]

Thanks for posting this article. I think it's important for a lot of people who frequent WDW and these boards to understand why quality is failing and costs are going up astronomically. I think in the end all things (Shanghai, profits focused management, etc) are going to be responsible for the death of everything we have come to love about a Disney parks vacation.

Disney already has the reputation of being an expensive family vacation. Certainly the folks that visited during Spring Break will be happy to tell their neighbors of the long lines, equipment running at less than capacity, and expensive, low quality food offerings that are the "New Disney". Hearing those stories will be enough to convince the next set of guests NOT to take the plunge and go all in on a Disney vacation. It's only a matter of time before word gets out about the unsatisfactory and mega-expensive vacation experience that Disney Parks have become.

Those of us that are frequent park guests and participate on social media are the proverbial "canaries in the coal mine". We see what others will soon unfortunately experience for themselves. We have a place to voice our objections concerning the demise of the Disney experience and the rise of it's replacement "Profits are the priority, suckers welcome!". It's sad to see something as magical as what Walt Disney created come to an end. There are too many other things in society where the emphasis is on the wrong thing. Despite making record profits on a regular basis lately, the management at Disney has chosen to abandon it's legacy and focus on extracting the maximum amount of profit for the minimum effort.

Concerning these changes, there will always be those that defend Disney to the death, choosing to be true believers and swallowing the Kool-Aid. There are some "Influential Bloggers" on social media who will continue to collect their Disney freebies and invitations to special events as long as they continue to paint a rosy picture that the emperor has new clothes and boy don't they look GREAT! Then there are some of us who are compelled to say that they are experiencing negative changes that are not in keeping with the Disney that they have come to know and love and perhaps even in keeping with the Disney legacy.

I don't know what camp you the reader fall into but I know that sometimes change is good and positive growth results from it and other changes result in a devaluation and ultimately the destruction of all that was good. I believe that with this new emphasis on profits above guest experience Disney is headed in the wrong direction.

Your mileage may vary...

~NM

 

[Mikie]

Yuck, yuck, yuck!
It was easy to assume the CFO-turned-parks guy was responsible for cost-cutting and up charging, but unfortunately it looks like he wasn't the worst and may nòt even have taken that approach at all.

I'm a bean counter myself and am forever frustrated with DH's company and companies we own (or ownED) stock in and their shorts-sighted cuts. The amount of money wasted through drecreased employee morale (therefore productivity and innovation) training unqualified, inexperienced replacements, re-hiring for old positions when they realize they need to add them back, recalling substandard merchandise, getting stuck with uninspired cookie-cutter merchandise. . . So shortsighted and frustrating!

People do what you pay them to do - companies seem to understand this when it comes to setting bonuses for sales staff, but throw all logic out the window when they devise compensation packages for execs who are financially motivated to make decisions contrary to guest satisfaction and long-term success.

 

[tlmadden73]

I've felt for years that the long time loyal guests aren't as welcome as they had been in years past.

A LOT of companies unfortunately take this approach. Look at how you can get so many "sweet deals" as a new cable or dish subscriber, but once you are no longer one ... good luck getting a good price again.

Phone companies same thing. New customer? Here are tons of discounts!
Old customer? Heck .. Verizon was more than willing to keep me on an old outdated plan even though it was LESS for MORE money. I had to call to switch to their new plans which gave me more data for less cost. I am sure there are tons of Verizon subscribers that just pay their bill for what they used to have (probably still paying for limited minutes).

Disney definitely seems to be focusing on the 'new customer experience' a lot.

But a lot of these special experiences they do make I feel ARE for the repeat customers. You've done Disney for years .. heck maybe this time splurge for a dessert party for a NEW way to enjoy the fireworks.

 

[PSUGuy]

Disney definitely seems to be focusing on the 'new customer experience' a lot.

Agreed.

Bill From PA

 

[Mikie]

Disney definitely seems to be focusing on the 'new customer experience' a lot.

Agreed.

Bill From PA

Yes. Change can be good. . . "New and Improved" sometimes actually is. . . But the customer experience at Disney was, in my opinion, their greatest skill and what set them apart. "Shaking up the business model" is not something I was looking for - I wonder who was? Closest I ever heard was people making comparisons to Uni and saying that Disney was too slow in adding new things or that the things they did add weren't thrilling or innovative enough. . . I can't say that cost-cutting and exclusive parties had a grassroots demand.