RIP WDI - Is Imagineering Dead?

[tiggerstheman1]

The only way I can see not have $100 gate prices is to have much more corporate sponsorship partners. Does it water down the Magic? Probably to some extent. Are they doing it now? Yes, but I think they would require substantially more.

Construction prices, labor prices, the economy all combine to put a squeeze on non-utilitarian development. For example, my brother is an architect - and a good one at that. When he graduated he had dreams of building really asthetically interesting places. What he learned was that there is more money in plain office buildings where the internal layout gets reshuffled that in the "artsy" places. People don't want to pay for "artsy" most of the time. They want to pay for just the minimum to get by. Therefore, corporate sponsors are going to be as likely to pony up the cash for the really creative attractions when they can look at a catalog and go "hmm, that looks pretty cool but it cost ALOT LESS -- let's do that. So what if it's not as creative, inventive, or earth shattering." (simplified example, I know).

There you go. The money has got to come from somewhere and the development and construction costs per attraction are very high. Meanwhile, the public's shortened attention span means that the $400M investment last year is going to be old news by the end of next year. Basically, we are doing it to ourselves in a way. Same thing happened in the kayak industry. We all wanted the hottest, newest design so the companies couldn't make back their investment in the mold by pricing the boats at $600. Now we pay $995-$1095 for a new whitewater boat. Who's to blame for raising the price? We are. Now imagine Disney putting in a $300-400M attraction every year. How are they going to make back their money at $43 a head?

Again, another stream of conciousness brought to you by the fine folks at: TiggersTheMan1

 

[DVC-Landbaron]

The more I think about it, the more I think he's probably right.

JEFF!!! Hey, buddy! Is everything alright? Where does it hurt? How many fingers am I holding up?

(Can we get a stretcher over here please!!!!!)

I think you'll be OK. Just need a little time on the sidelines. E-mail me your address and I'll send over a copy of "The Quotable Walt Disney". Take two pages and call me in the morning.

Scoop!!

What have you done!? Are you proud of yourself? You sound EXACTLY like the detractors that told Walt that Disneyland would make a dime. Hmmmm. I think one of the major naysayers was his own nephew. One Roy Jr. You'd think the naysayers would have learned by now.

Walt Disney:

Give the people everything you can give them. Disneyland is a work of love. We didn't go into Disneyland just with the idea of making money.

 

[YoHo]

I have a semi Rhetorical question I'd like to ask.


Scoop has suggested that, given the vast changes in the way the economy runs from the 50s-60s and possibly even the seventies, Disney CANNOT successfully fund the parks at a Walt like level, AND make money. Or more to the point, the owners of Disney won't let them try.
Part of this is, because of Pre-Eisner Failures and part of it is due to the Wells salvation. I have been hinting that without wells, the Owners, the Institutional Shareholders have not been headed off at the past, AND Eisner has been bombarded by failures and misfortunes caused in part by his own arrogance.


So then, We come to Jeffs lament, its too late for Disney.


What I want to know is, Is it too late, and if not, what is the solution.

I personally don't think there's no light at the end of the tunnel. There are plenty of companies such as (I Think AV mentioned this) MGM which are very focused. The key to Disney's success has to be a focus on quality, and I would suggest they need to start with Filmed Entertainment (live action and Animated) THere is nothing that prevents Disney from succeeding here if they have the will to try. They can coast the Theme Parks on good will long enough to get some quality product out the door. If they have to sell Cap Cities (I wish they didn't) or other divisions, then so be it. Do what you do, and do it well. The only trick will be keeping the Investors off your back. If Mike came out today and announced that they were dumping ABC, (Keep ESPN and most cable properties) maybe transfering part onwership of the Disney store etc. and focusing on their key compitency of family entertainment, We at the DIS would let up a cheer while Wall street toook them to a Dark Alley.


So, the solution to me is to find a way to avoid that alley.

 

[DVC-Landbaron]

OK!! I'm back in a more serious tone. (Sorry, yesterday's graduation got me a little frivolous, I guess.) Sorry.

I don't want to make this mundane but a ton of differences exist...leveraging, junk bonds, commodity financing, etc. all mundane to the general public but very different

Yes those are differences. But they don't enter our picture at all.

First we're talking about two separte issues. And I'm probably more guilty than anyone in confusing them. The first issue is, "The Take-Over". What would have happened back in the mid eighties if Ei$ner & crew hadn't stepped in? And more importantly, to me at least, is how that is different than what actually took place? I contend that there is no difference whatsoever. The ONLY difference (and to me it is so slight it's hardly worth mentioning) is that it happened internally as opposed to externally. No other major play and/or company and/or conglomerate would have done anything differently than Ei$ner did. Oh, the look may be different. We might have five gates or maybe only three. But the business plan would have been followed to the letter. Develop the property, raise prices, cut budgets, promote the brand and maximize profits. What's different? Now, there is a slight chance that the company would have been sold off in pieces. And yes, that would NOT have been good. But I doubt that any company would have busted up it's leading, although intangible, asset: the Disney name (brand). On the other side of that small chance coin is the (slim) possibility that a Walt like person would have been appointed and NOTHING would have changed. You have to at least recognize the slight possibility, both ways.

And the second topic is whether or not Walt's business philosophy would fly in today's market? You can't see it. I can.

Eisner inherited a company whose business side had been all messed up.

Absolutely not!! Underutilized assets both in their film library and property lead to the take over possibilities.

But nothing can recreate Disney circa 1950 and allow the company to operate in today's economy.

Again, just saying the obvious. I believe you are wrong. Just like the naysayers in Walt's day were wrong.

Please, please, please show us how it can be done! Without causing Disney to be taken over, class actioned with shareholder derivative suits, or run out of money to create any magic.

And this is why you are wrong. You keep talking about absolutes. Black and white. All or nothing. And that's not the formula. It is a matter of degree. It is all a shade of gray. On where you draw the line. Even in the fifties, overspending to the point of not meeting payroll was cause for bankruptcy. No different than today. Even in the naive fifties a company had to turn a profit somewhere along the line. No different today. What is different is the man in charge. And his take on what is enough and what is too much. No one ever said that 100% of the profits had to turned over to Imagineering to be 'wasted' away. ABSOLUTELY NOT!! What we are saying is that a higher percentage be turned over to them. Walt still saw a lot of gray where Ei$ner sees only black. But neither would be cause for 'class action suits' or 'running out of money' or even the threat of 'being taken over'. That's ridiculous. Think in terms of degrees. Not absolutes.

Without agreeing to pay $100 a day, the numbers just do not add up.

OH YES THEY DO!!! If you take away propping up all the failed (or failing) Ei$ner ventures, there's more than enough to satisfy the Walt Disney Philosophy's giant appetite. And even possibly make a bigger profit than they are currently making!!

While talking about the "bottom line" does not seem "magical" as someone earlier posted, without the bottom line, there would be no WDW at all

And without Walt's blatant disregard for the bottom line (thank God for Roy sometimes) there would be no WDW at all!!!!

It is with this thought in mind:

I'm beginning to believe that Discovery Cove is the only analogous model based upon lack of response. If that is the case, then maybe a discussion should turn towards how "magic" could be implemented under the Discovery Cove set-up.

WHOA!! You've got no response because it is NOT even close to analogous. It's analogous to a high priced spa for the rich & famous. The upper deck of an ultra luxury cruise liner. The (failed) Disney Institute. Or even the first tourist in space!! It is simply offering a rather unique experience for those willing and able to pony up the bucks. NOTHING could be further from the business model of Disney, theme parks and animation in particular.

I know I'm hard headed about this, but I really feel this is the heart of all the talks we have here. Read the bottom of this post. Within my 'signature you will find two quotes. That is the underlying principals, foundation and/or business philosophy that was, and should be, employed when discussing Disney animation and theme parks.

 

[airlarry!]

The LB just hit the nail on the head and answered the question we've been pondering instead of working for two days.

Yes, it can be done -- because it has and was and is.

The Parks and Movies have been propping up Eisner's other investments for the past few years. If the Company would be spun off (a la AT&T) into Disney Brothers LLC, a company which owned only the resort stuff (WDW, DLP, DL, Disney Cruise, DVC, etc) and the Film & Disney Channel, would these not make money? Of course. They already are.

 

[larworth]

No argument that OLC operates in a different climate, but I think we overstate the perception that they don't also manage to the bottom line. What did they do when attendance started to decline. Why they worried about the hit they were taking on profits and decided to build a new attraction (Pooh) to again wow and amaze customers.

They do operate on much lower margins, as typical for Asian companies. I agree that Disney would not be allowed to operate at this lower level of profitability. I agree that the cost/value equation for a Disney park has to be magic adjusted to reflect this. However, the magic differential that appears to exist between a TDS and DCA seems well beyond this adjustment. There is more than just different financial markets at work here.


Airlarry you can be in my carpool.

WDI is exactly like R&D for other companies. It is irrelevant whether the improvement is part of a bundled buying decision or a discrete product purchase. R&D is the process of creating the next generation of product and services. Exactly what WDI does.

I too don’t see the relevance of finding this mythical company that excels paying no attention to costs but only to satisfying customers. That is not what we are asking Disney to do. I also don’t care to compare practices all the way back to the 50s/60s. I believe we had a fully funded WDI at a much more recent point in history to argue whether it is a good business model.

Anyway, every time someone brings up an example we’re told it doesn’t apply because it is in a different industry. So let’s limit our examples to only other theme park divisions. Who has the most successful theme park operation today. For sake of this argument can we say Disney does. What past business practices propelled them to this lofty position. Let’s see, they were the biggest investors in their industry in customer service, and R&D (WDI) to create high quality experiences for their guests.

The heart of the business model is what does a company do that customers are willing to pay for. I don’t see how the institutional investor is involved in this equation. I see no evidence that people are not still willing to pay for great customer service and unique high quality experiences. Maybe someone can provide the reasons that make this business model obsolete.


I see that thedscoop finally agrees that this business model is really the best at creating value.

So yes, airlarry disney can operate successfully as you suggested, but not as an independant company. The market would not allow it. Disney would become to small to ward off the sharks and too valuable for the sharks to ignore.

Ahh, too valuable to ignore. Because they would have the best business model for creating market value. Value creation potential they would just love to get their hands on. Funny how most investors salivate over profitable growing businesses.

 

[DVC-Landbaron]

So yes, airlarry disney can operate successfully as you suggested, but not as an independent company.

I didn't say 'independent company'. But a self sustaining division inside a bigger company would be perfect. And furthering the cause of a 'whiter shade of pale', this Division doesn't have to pour 100% of its profits back into itself 100% of the time. NO!! It's the real world. We can wait a season or two. Heck, I've waited a good long time for something spectacular to happen to EPCOT and World Showcase in particular. And its only recently that I've started to complain about it. Absolutely. The rest of the company in a slump? Fine dip into the well. Need a real quick fix for a quarter? Well…. OK, go ahead and take some. But next year it's ALL MINE!!!

BUT, we really have to draw the line at a DCA kind of thing. Either don't do it (give the money to other divisions or what have you), or "DO IT RIGHT"!! But don't give us watered down versions. Don't ALWAYS value engineer it to death. Or we will wind up with nothing but Imaginations and DCAs!! Is that the current business plan you want? No? Well, that's the one that's in place.

And it has nothing to do with the business aspect of corporate America 2001. It has to do with how much is too much and how much is too little. And part of that goes to the heart of the original thread, which no one has addressed for several pages now. Simply, is Imagineering as Walt saw it a good thing? Or is Imagineering as E$ner sees it (and has directed it to be) better? I think we all lost in this harebrained move. Just one more reason (on top of many others) why - THIS GUY HAS GOT TO GO!!!!

One final thought:

However, it seems I'm repeating myself and that usually is a good time to stop talking or typing. So, see you all at the next thread.....

NO FAIR!!

But I do understand. I feel the same way sometimes. It's been fun!!!

See ya!!

 

[YoHo]

What about Pixar, What about MGM, What about..... Another Voice will remember all the names better. Hollywood is filled with small production companies that aren't gobbled up. Why is there an assumption that Disney would be? I agree that right now there would be a major problem in moving to that buisness model without annoying investors and thus risking a buyout, but as far as a Viable buisness option, it is one. Heck Disney wouldn't even have to be all that small, they just need to be focused on their core compitency.

 

[DVC-Landbaron]

Heck Disney wouldn't even have to be all that small, they just need to be focused on their core compitency.

Yeah!! Wouldn't that be nice for a change!!!

 

[airlarry!]

No, YoHo, he is right that Disney Brothers LLC would be too valuable to stay independent. And I for one would hate to see the day DB LLC gets swallowed up by Vivendi or GE or Microsoft or Yahoo! or whoever.

But now we come to DVC or maybe Jeff's point.....it..(being swallowed up by the larger company where DB, LLC has to give up its profits and R&D in the budget to prop up other parts of this conglomeration)...has already happened.

Well.

Yes, I guess the thing we dread the most has already happened. But there is one distinction. The company is still called Disney. It is still Disney shareholders who own it--those fanatics just like you and me.

It has gone from a rule-breaker like Pixar to a Rule-Maker wannabe like Coke or Microsoft. But RuleMakers only stay that way if they continue to be the leader.

And that's why after years of denying it, and actually praising Eisner for saving the company from Shark Doom, I think I finally agree that the time has come for a shake-up.

There was only one Walt. He was the only one who could lead the company for sixty years with creative innovation and risktaking. From here on out, we will need a Knight to come in every so often and inject the company with Creative Vision and Risk-taking investment. Uncle Mike is like the train that climbed the mountain as far as he could, but is running low on steam. We need another locomotive.

Therefore, I think the answer to Scoop's original question is Yes, there can be a company who invests heavily in R&D (Magic), sacrificing profit for quality because in the longterm quality yields profitability through higher margins (charge more, more visits, more repeat visits, less need for ads). Disney is in a unique segment of the business market that will allow for it.

We don't need E*ticket every year. We just need the belief that this administration can deliver Magic from A ticket to E ticket. Mr. Chairman, whomever you will be, invest in Imagineering and Animation and the money will come.

 

[JeffJewell]

So, see you all at the next thread.....

...I hope you're still reading.

About succeeding with a business plan of over-the-top quality and guest experience in the vacation/entertainment industry... it struck me that the last ten to fifteen years of Las Vegas resorts might be the example you've been asking for.

Just a thought.

Jeff