Can you really substitute one theme park for another?
Published: May 29, 2014 at 10:16 AM
The Disneyland Resort recently raised its ticket prices, leading to the typical online outrage, as well as at least one hilarious viral photo. The Orange County Register put the new $699 price of a Premium Annual Pass at Disneyland into perspective:
"For a bit less, others can choose to instead buy the highest-priced annual passes at Knott’s ($186), Universal ($199) and Six Flag[s], ($129.99), and still kick in for SeaWorld’s standard pass ($145)."
That illustrates just how much more going to Disneyland can cost than going to Southern California's other theme parks. Economists often talk about "substitution" and its effect upon pricing. When a specific product starts to become too expensive for customers, they start looking for comparable, lower-priced substitutes. The classic example is the price of beef rising to the point where people start eating chicken for more dinners, instead.
But for year after year, Disneyland's raised its ticket prices... and its attendance continues to grow. Meanwhile, attendance at Southern California's other parks far lags the Disneyland parks. If there's a price point at which theme park fans simply will substitute other local parks for the Disneyland experience, clearly Disney hasn't reached that point with its past increases.
Maybe this is why — maybe the difference between the Disneyland parks and other theme parks isn't as minor as the difference between beef and chicken.
Truth is, almost all theme parks offer unique experiences. As vacation and entertainment destinations, they compete not just with other theme parks, but also with going to movies, national parks, cruises, Broadway shows, IndyCar races, and dozens of other out-of-home entertainment alternatives. But part of the value that theme parks deliver is an experience unlike those alternatives. The more unique the experience, the greater the potential value.
That's part of the reason why you see similar pricing among regional parks, many of which offer a somewhat similar lineup of flat rides and roller coasters. If you're looking for a thrill ride experience, you'd think twice about going to a Cedar Fair park that charged twice as much as a Six Flags park with a similar ride line-up, for example.
But theme park fans still see the differences in ride-line between various parks, and understand the unique experiences that they offer. Someone in northern Indiana who doesn't know theme parks might look at Raging Bull at Six Flags Great America and Millennium Force at Cedar Point, and say, "eh, what's the diff? They're just big roller coasters." But the people who actually end up buying tickets to parks are more likely to go online and engage in long, passionate debates over every real and imagined difference between those coasters. They see the uniqueness in each. And they're willing to pay to experience that.
So, to fans, Six Flags Magic Mountain and Disneyland are as different from one another as spending the day hiking in Joshua Tree or going to the California Speedway for a race. They're all excellent ways to spend a day having fun in Southern California. If your heart is set on going to Disneyland, you're going to go to Disneyland, and maybe adjust your entertainment spending elsewhere to afford that Disneyland trip. If you're simply looking to have fun out of the house for a day, or to go a family vacation, however, you'll price the Disneyland option versus all of those other options — theme parks and not — and go with the one that delivers the most value for your budget.
If Disneyland, or any other theme park, ever raises its prices to the point where people simply can't afford visiting anymore, those customers are going to "leak" all over the entertainment marketplace, and not simply flow to the nearest thing calling itself a "theme park." If a theme park wants to take market share directly from Disney, it's going to do that not simply by undercutting Disney on price, but by creating a visitor experience that's more like what people have come to expect from the Disney theme parks.
That's the formula that Universal is following in Orlando, and beginning to implement in Southern California, with richly themed environments such as The Wizarding World of Harry Potter and Springfield. That's why Knott's Berry Farm has been revamping its Calico Mine Train and Timber Mountain Log Ride, classic dark rides that inspired Disney's Imagineers, to bring those ride up to current Disney quality. These competitors are working to create something similar enough to Disney that people might actually consider their chicken to Disney's beef, if you will. (I'd suggest that Universal's ultimate goal is one-up Disney, with steak over plain ol' beef, but that's another post for another day.)
There's no simple formula for predicting a theme park's attendance. It's not as plain as saying, "price increases decrease attendance, and price cuts raise it." (Money is almost never that simple, in anything, in fact.) Theme parks offer unique experiences, each with their own unique value to individual visitors. And that's one of the reasons why we love them so much.