Shanghai DL already trashed....

Now Disney has a relationship with the Chinese government and I guarantee you that the 34 movies that are allowed to be imported to China will now be swung towards Disney's side. Right now every distribution company fights tooth and nail to get one of those slots.

I don't see this as a good thing. http://origin.www.uscc.gov/sites/default/files/Research/Directed by Hollywood Edited by China.pdf

Supporting PRC protectionism, and screwing U.S. producers is not an admirable priority.
 
It makes sense to me. If you care about pricing out the Chinese people but not the Americans (because they are already many American's that can't afford the prices) who have been supportive all these years, it's a problem. The Americans have been supporting them for years. They don't care about these visitors that can't afford to go from here?

It doesn't make sense in a business standpoint, because in the U.S. they've proven that these price increases are not hurting their attendance, in fact attendance is rising.

They have a proven commodity on both coasts of the U.S. Trust me that years of market research went into Shanghai pricing, in order to make Disney Shanghai a good investment for them. They chose these prices because a LARGE portion of China could never afford close to the levels that we pay, and wouldn't value a Disney trip enough to put themselves in debt for it. That's not the case here.
 
It doesn't make sense in a business standpoint, because in the U.S. they've proven that these price increases are not hurting their attendance, in fact attendance is rising.

They have a proven commodity on both coasts of the U.S. Trust me that years of market research went into Shanghai pricing, in order to make Disney Shanghai a good investment for them. They chose these prices because a LARGE portion of China could never afford close to the levels that we pay, and wouldn't value a Disney trip enough to put themselves in debt for it. That's not the case here.

I still don't think you're getting it. Why would you endanger a "proven commodity" that is producing and could produce a bunch more with a little reinvestment, on the unproven hope that an "unproven commodity" in an capricious authoritarian controlled market will ever pay you back?
 
Not sure if it was mentioned here, but SDL is supposed to be the first step for Disney to make more headway into China with TV shows, merchandise, etc.
 

Well, the question is why build the park if the local economy can not support it, while at the same time disrupt operations at already producing profit centers?



It doesn't make any sense to drop a lot of money into a park that the government controls and can take away at any minute for a population that doesn't necessarily want your product at a price that's lower than what you can make elsewhere. Your statements are all arguments against building in the first place, and all the while killing the goose that is laying golden eggs in Orlando, just in order to boost Iger's Folly.
I'm not saying it was right or wrong to build a park in mainland China. Iger of course wanted to go into an untapped market for Disney which if you think about is a smart business decision. However I don't think they were completely aware of what they were getting into. Disney until recently wasn't a majority owner of any of their foreign parks. This conversation started about ticket prices and I was pointing out that the current prices for Shanghai make sense.
 
Well, the question is why build the park if the local economy can not support it...

On what basis do you conclude that the local economy cannot support it? As stated previously, most businesses know they have to nurture demand for their product before they can start testing the limits of pricing.

...while at the same time disrupt operations at already producing profit centers?

If you're referring to the budget impact elsewhere, that was clearly an unintended effect of building the park. Not something that we should be pleased about, but also not anything which played a role in the original decision making process.

It doesn't make any sense to drop a lot of money into a park that the government controls and can take away at any minute...

Is there some precedent for believing this to be a legitimate risk? I'm sure there are many hurdles in working with a foreign government...particularly China. But it SEEMS like Disney would have made sure some protections were in place before handing over about 3 billion dollars.

...for a population that doesn't necessarily want your product at a price that's lower than what you can make elsewhere.

Again, profits are a function of both revenue and expense. Ticket prices alone don't give us an understanding of either of those elements.

Besides, just because a business is operating one location which achieves a 50% profit margin does not mean it's foolish to open a second location which only nets a 20% margin.
 
This is probably not going to be a popular post, but IMO this is one of the more ridiculous threads I've read in awhile, on so many levels. (Not so much the original post as the general reaction to it.)

First, you can't draw a straight line from ticket prices to profitability. Not with the information most of us have, anyway. Both operating costs and price/profit maximization models in China are likely to be different from that of US parks.

Second, Disney is not a taxpayer-funded organization. As a consumer, you certainly have a right to consider their business practices when you decide whether or not to patronize the company. But understand that domestic ticket prices have little or nothing to do with what is or is not happening in Shanghai. They will charge whatever the domestic market will support, and whether domestic profits are used to re-invest in the business, line shareholder or executive pockets, or employed as very expensive toilet paper is really not very relevant to what people are willing to pay.

Third (and yes, I'm restating here), Disney is not a taxpayer-funded organization. It's a business. And as a business, their only reason for existence is to make money. In other words, you can rest assured that if they chose to build a park in Shanghai, it's because whoever gets to make the decisions believes that they will make money at it. Maybe not immediately, and maybe not even directly, but in one way or another, they believe it will eventually produce a net profit. Everyone is welcome to form his own opinion regarding their chances of success, but you can be sure that funnelling profits from the domestic parks into a losing venture in China is NOT part of their long-term strategy.

And last - is one kid peeing in the bushes really that big of a deal? I'm willing to accept that public urination, and maybe even defecation, is a problem in China as a whole, although I've never read up on it myself. But it's a bit of a leap from one picture of a pre-school aged child peeing in the bushes to "the Chinese are going to wreck the place by relieving themselves everywhere, indiscriminately". I have to say, if I had a small child who really had to pee, and there was no bathroom reachable, I'd let him go in the bushes. Yup, even in the city. I'd do my best to find an out-of-the way place, but if the alternative is letting him pee in his pants... yeah, the bushes seem preferable to that.
 
/
I would imagine there's a pretty big difference in respect between Chinese temple, and an American theme park.

Perhaps not as much difference as you think. Many of the temples I visited in China functioned more like a theme park than a church. There is a religious component with people burning joss sticks and praying, but there are also restaurants, souvenir shops, funicular rides, paddleboats, scenic overlooks, ornamental gardens, and even "fun fair" midways with kiddie rides.
 
I'm not saying it was right or wrong to build a park in mainland China. Iger of course wanted to go into an untapped market for Disney which if you think about is a smart business decision. However I don't think they were completely aware of what they were getting into. Disney until recently wasn't a majority owner of any of their foreign parks. This conversation started about ticket prices and I was pointing out that the current prices for Shanghai make sense.

Smart business decision? A good business man doesn't go into something like this not knowing all the risks. You minimize the risks first. I have a feeling he didn't. Sure it's a gamble but you want the odds in your favor. How do you think casinos stay in business? They rig the payout in their favor.
 
Smart business decision? A good business man doesn't go into something like this not knowing all the risks. You minimize the risks first. I have a feeling he didn't. Sure it's a gamble but you want the odds in your favor. How do you think casinos stay in business? They rig the payout in their favor.
I said the smart part was investing in an untapped market. Yes the bad part would be not knowing what you're getting into.
 
On what basis do you conclude that the local economy cannot support it? As stated previously, most businesses know they have to nurture demand for their product before they can start testing the limits of pricing.
[/QUOTE]

Most businesses go to the demand, not the reverse. "Build it and they will come" is a movie line, not a coherent strategy.

Is there some precedent for believing this to be a legitimate risk? I'm sure there are many hurdles in working with a foreign government...particularly China. But it SEEMS like Disney would have made sure some protections were in place before handing over about 3 billion dollars.

Yes, Apple, http://www.barrons.com/articles/the-depth-of-apples-troubles-in-china-1462228403?tesla=y&mod=rss_barrons_this_week_magazine and a host of others

Again, profits are a function of both revenue and expense. Ticket prices alone don't give us an understanding of either of those elements.
Do any of the foreign Disney parks have a higher ROE than their domestic U.S. parks?

Besides, just because a business is operating one location which achieves a 50% profit margin does not mean it's foolish to open a second location which only nets a 20% margin.
It does if you reject the opportunity to make..and keep...more elsewhere.
 
I said the smart part was investing in an untapped market. Yes the bad part would be not knowing what you're getting into.

True, however we don't know how well they did their homework. Right now it looks like they didn't do it well enough. What I've read the over run is huge and they missed the opening by a year. There are always, most times, over runs but this big.

Someone needs to be fired. Look what happened to DVC in Hawaii. It didn't work out so well and the head of DVC got fired PDQ.
 
It doesn't make sense in a business standpoint, because in the U.S. they've proven that these price increases are not hurting their attendance, in fact attendance is rising.

They have a proven commodity on both coasts of the U.S. Trust me that years of market research went into Shanghai pricing, in order to make Disney Shanghai a good investment for them. They chose these prices because a LARGE portion of China could never afford close to the levels that we pay, and wouldn't value a Disney trip enough to put themselves in debt for it. That's not the case here.
And there is a LARGE portion of the US population that can't afford it too. You don't see them dropping prices here to help those folks though.
 
True, however we don't know how well they did their homework. Right now it looks like they didn't do it well enough. What I've read the over run is huge and they missed the opening by a year. There are always, most times, over runs but this big.

Someone needs to be fired. Look what happened to DVC in Hawaii. It didn't work out so well and the head of DVC got fired PDQ.
Well Staggs was let go and we don't know an official reason for that... This park really is an Iger project though and I don't think he would get pushed out because of it.

Anyways yes the overruns are likely around $1 Billion, and the park was supposed to open last year.
 
I know I'm going to get beat up for this but: I think Shanghai will end up being extremely profitable. Ignoring the fact that they trashed the area look at how many people showed up! And it wasn't even open yet!
 
Most businesses go to the demand, not the reverse. "Build it and they will come" is a movie line, not a coherent strategy.

And what is your basis for concluding that there is no demand for the Disney product in China?


Difference being that Apple is regarded as a competitor to the Chinese government and Chinese tech companies while Disney is in partnership with them. I'm sure there are elements of risk involved. It is naive to imply that Disney has not taken any of this into consideration.

Do any of the foreign Disney parks have a higher ROE than their domestic U.S. parks?

Don't know and frankly it's irrelevant.

It does if you reject the opportunity to make..and keep...more elsewhere.

$3 billion invested in an untapped market will yield FAR greater returns than the same $3 billion invested in a more saturated market like the US, regardless of profit margins.
 
I know I'm going to get beat up for this but: I think Shanghai will end up being extremely profitable. Ignoring the fact that they trashed the area look at how many people showed up! And it wasn't even open yet!

:crutches:Get beat up eh? :laughing: Well I hope you are right about it being successful! I assume most want it to succeed because frankly if it does not well we are already seeing the cuts due the errors there. Lets hope it succeeds so the madness at wdw can stop!
 





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