Should the Big Two in the theme park business expand to become the Big Three?
Disney and Universal dominate the list of the world's most-visited theme parks — all 10 of the world's top 10 parks, 14 of the top 15, and 17 of the top 25 parks are branded to either Disney or Universal. (That's all of their theme parks, by the way.) With movie studios, animation companies, and television networks in their corporate families, Disney and Universal have the intellectual property and marketing channels necessary to make their parks into what millions of consumers around the world now believe are "must see" destinations.
But Disney and Universal aren't the only big media companies with that kind of library and reach. With its recent acquisition by AT&T, Warner Bros. — as part of Warner Media — offers a line-up of studios, networks and distribution channels that looks a lot like those at Disney and Universal. The three have stood atop the Hollywood box office for the past two years, with Warner Bros. sandwiched between the others.
And this summer, Warner Bros. took another step into the theme park business, too, opening a branded theme park with development partner Miral in the United Arab Emirates. Unlike Warner Bros.' previous entries in the business, Warner Bros. World Abu Dhabi is every bit the thematic equal of many Disney and Universal theme parks, signaling that Warner Bros. is ready to play the game dominated by its two biggest rivals.
So should it? Should Warner Bros. dive back into the theme park business with full force?
Younger or more recent theme park fans might not know that Warner Bros. used to own a theme park chain. But it wasn't branded to the movie studio. Warner Bros.'s theme park chain was... Six Flags. (Yes, that is why Six Flags has the American theme park rights to the Warner-owned DC Comics and Looney Tunes characters.) But the studio chose to bail on the theme park business in the 1990s, selling the chain to Premier Parks, which then renamed its company "Six Flags."
Even after the sale, Warner Bros. has remained connected to the theme park business as a licensor. Six Flags pays the studio for the right to put Bugs Bunny in its parks and to name roller coasters after various members (and foes) of the Justice League. But even its rivals do business with Warner Bros., too, most notably Universal, which pays a, uh, decent amount of money for the rights to use Harry Potter and the Wizarding World in its theme parks worldwide.
Licensing can be a sweet deal for a movie studio. Your development partners pay the costs of designing, building, and operating a park, while you just collect royalty checks. If a partner is developing in a marginal market than might not yet be ready for a world-class theme park, the developer gets stuck with the losses while the licensor continues to make bank.
But big studios didn't conquer Hollywood by being risk averse. When a park hits, as Disney's and Universal's parks have, they can generate billions of dollars for their owners. As much as Warner Bros. is making by having its Harry Potter franchise in Universal's theme parks, Universal is making far, far more from having The Wizarding World. But is the promise of that kind of payday enough to lure Warner Bros. to put more of its own skin in the game?
Warner Bros. World Abu Dhabi is another licensing deal for the studio, despite its name on the door. While Universal now owns its park in Japan and Disney has bought its theme parks in France, their other international parks have been either licensing or partial ownership deals. As Dave Cobb explained in our podcast episode about the development of Warner Bros. World Abu Dhabi, companies are looking for markets with a growing middle class with expanding spending power in which to build new theme parks. The biggest markets that meet those requirements are in China and the Middle East, not the United States. But political and business environments pretty much dictate that U.S. studios will need local partners to develop their branded parks in those regions, as Disney, Universal, and now Warner Bros. have done.
So if Warner Bros. is ever going to own its own theme parks again, they likely would have to be in more established markets in the United States and Europe, where Warners would have the freedom to buy outright. But if those market are too mature to support the construction of new theme park resorts, where's the incentive for Warner Bros. to invest?
Warner Bros. management understands the theme park business. Kevin Tsujihara, the chairman Warner Bros Entertainment, got his start in the studio managing the company's interest in Six Flags. Warner Bros. has watched closely as its partner Universal grew attendance, revenue, and profit with the Wizarding World franchise. It has enlisted many former Universal and Disney theme park designers in hiring companies such as Thinkwell Group and Mycotoo to help develop its parks and studio tours. A lack of industry knowledge will not keep Warner Bros. from a successful reentry to theme park ownership. But that industry knowledge likely will guide Warner Bros. to call its shots with great care.
Warner Bros. has been expanding its studio tours in Burbank and Leavesden into theme park-quality attractions. While neither operates at theme park-level capacity (at least, not yet), they are both outstanding destinations for themed entertainment fans visiting Southern California or London. Both provide the opportunity for the studio to get a taste of the theme park business — that it can keep entirely to itself — without enduring the expense and risk of building an entire park from scratch.
But Warner Bros. might soon need more if it is to protect the income now coming from franchise licensing. The Thinkwell-designed park in Abu Dhabi has shown Warner Bros. how much better it can do by its DC and Looney Tunes franchises than once-cash-strapped Six Flags has. That licensing deal expires within the next decade, according to SEC documents. And with Universal needing room in its parks for its own franchises, including those from recently acquired DreamWorks Animation, owning parks might soon provide the most viable path to getting Warner Bros.' franchises in front of theme park fans in the United States and Europe.
That doesn't mean that Warner Bros. would have to build its own parks. It could buy existing ones. Buying an established park offers the advantage of taking out a competitor, as well as providing a head start with infrastructure. But it's only a head start. Buying someone else's park still would entail significant capital investment costs to change theming and bring the park up to higher quality standards. Buying Six Flags or Cedar Fair would give Warner Bros. a lot of reach, but does it need a huge collection of unthemed roller coasters scattered around the country? SeaWorld offers some very attractive sites, especially for its flagship park in Orlando, but what would the studio do with all the animals? Releasing animals born in captivity into the wild is a death sentence, and Warner Bros. won't want any part of that PR mess. So who takes them? New marine mammal parks in China? That would seem the only realistic option.
Given what Warner Bros. has on its hands in the Middle East, I would be shocked if the company didn't move ahead in the next few years with studio-branded licensed parks in China, using the Abu Dhabi template as a guide. And I do believe that Warner Bros. is now taking a long look at opportunities for deeper involvement in the industry in Europe and the United States. The studio tours in Hollywood and London will continue to grow. But it might take a fire-sale price on SeaWorld Orlando or Six Flags parks major markets such as LA or Chicago to entice Warner Bros. to buy its own parks.
If you were running Warner Bros., what would you do about theme parks?
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Warner Bros has no investment to "double down" on down under as the Warner Bros Movie World theme park on the Queensland Gold Coast is entirely owned and operated by Village Roadshow. Likewise, Warner Bros IP is licensed already throughout the world, with Universal getting the Harry Potter crown jewel and the DC Comics, Loony Tunes, Hanna Barbera and Cartoon Network intellectual properties licensed to Village Roadshow, Sox Flags,and others. Those existing licenses span North America, Europe, the Middle East, Australia and parts of Asia. So exactly what legally can Warner Bros develop without their many partners?
AT&T already has the naming rights for ballparks, arenas and stadiums near a six flags park so imho, it would almost seem like a good fit for Warner Bros to buy six flags for the co-promotion opportunities
But of course they would need to end their marketing agreement with Disney as their official wireless provider first
No need to be a douche guy. I forgot Village Roadshow owned and operated Movie World.
Yeah Disneyland was a big success out of the gate (in 1955) but it took 20 years for Universal Florida to be a success and Paramount gave up with their parks after 15 years. Seems more financially sound to take the licensing deals and not invest billions of their own money.
Paramount didn't give up their theme parks, rather it was a byproduct of breaking up parent Viacom into two separate units: Paramount Studios and CBS. For whatever reason, the theme parks wound up with CBS not paramount so CBS sold them. If they had been allocated to Paramount instead, maybe Cedar Fair wouldn't own then today.
There is a big problem with Loony Toons and Hanna Barbera characters. Kids today are just not that familiar with them. When I grew up in the 70s and 80s, I had more exposure to those characters which together dominated Saturday mornings. Today, my teenagers have had very little exposure to Loony Toons and Hanna Barbera during their childhoods. They could name maybe three Loony Toon characters (Bugs, Tweety and Taz) and have no idea who the others are. The only Hanna Barbera property they are familiar with is Scooby Doo. Loony Toons and Hanna Barbera just have not kept their characters in the media the same way Disney has.
The whole National Amusements/Viacom/CBS/Paramount thing continues to make my head hurt. What a mess. That should have been another NBCUniversal or ABC/Disney combo to challenge Warner Bros./HBO/Turner and make this a four-way battle, with theme park fans the winners. Alas.
Warners Bros has another potentially huge property other than Harry Potter, it is called "Lord of the Rings". That would be a huge draw for theme park fans if it ever came to be.
Universal should buy Warner Brothers in response to Disney+Fox and elevate Bugs Bunny into a true Mickey Mouse alternative. This would also get their claws further into their Harey Potter cash cow.
Blog post author says...
“Disney and Universal have the intellectual property and marketing channels necessary to make their parks into what millions of consumers around the world now believe are "must see" destinations.”
Disney currently licenses AVATAR, but will soon own it.
Universal licenses Marvel (Disney owned), Simpson’s (soon Disney owned), Men In Black (Marvel owns the comic book rights and SONY feature film rights), Harry Potter (Warner Bros. controls all feature film rights with J.K. Rawlings, the owner), Transformers (Paramount), Dr. Seuss (licensed from Dr. Seuss Enterprises) and Toon Lagoon (King Features Syndicate).
BOTTOM LINE: Universal doesn’t own, rather licenses it’s TOP rides.
I would applaud it but the high end theme park market (Disney and Universal) is a very difficult beast that needs constant investments.
Going for the EU market wouldn't be very smart. Disneyland Paris will never be profitable and Universal pulled out of the EU market. Thing is we have a ton of vacation days and a ton of very diverse countries countries to enjoy withing just a few hours drive. Our vacation Euro's need to be spread out over 7 or 8 weeks at least so Europeans never will pay thousands of euro's for a theme park vacation.
I think it's a tough market, and another player jumping head first would be a foolish move. The US theme park market is very mature, and short of purchasing all or some of the Six Flags parks, there wouldn't be room for another player.
Also, it comes down to IP. WB simply doesn't have enough compelling IP currently within their control If they could either purchase SF or reacquire its DC license, that would be a start, but would be a long way from putting together a legitimate theme park to compete with the likes of Disney and Universal. The biggest WB property is under control of Universal (Harry Potter), and I doubt there would be any way for them to wrestle that away (just look what Universal has done to Disney in terms of Marvel). The only other IP that could potentially be leveraged would be LOTR (Peter Jackson's visualizations of Tolkein's world were produced under the New Line label, a subsidiary of Time Warner), and I think the complexities of that property have been well detailed with a theme park application. The thought of a new theme park anchored by DC Comics (perhaps even 2 different lands, one with Justice League and another with other DC properties) and LOTR with HB, Flintstones, or Jetsons characters anchoring the kids' offerings seems quite appealing. However, putting something like that together would take a minor miracle and tons of cash. Brand new theme parks are a huge cash drain until they start to mature and require less investment 5-10 years in. Considering how much it will cost just to get the IP to build a new park (or to acquire SF), this just seems like a fantasy in the US (or even Europe). It might work in a less mature market like China, Southeast Asia, or the Middle East, where IP is cheaper to acquire and construction costs are far less, but it doesn't seem like something that will create an all-in plunge from what now is a bit player within the market.
FWIW, IP Universal currently owns, ranked by franchise box office:
Jurassic Park/World
Fast & Furious
Shrek
Despicable Me
Jason Bourne
Madagascar
Men in Black
Kung Fu Panda
Halloween
Back to the Future
Jaws
How to Train Your Dragon
There's a lot of content there, even if Universal never licensed another property again.
May I remind you that WB already licences a theme park in Madrid, Spain. It is very far from being a Universal/Disney level park, but its arguably a park with more hits than misses. It used to be an european version of a Six Flags, but more focused on theming and IPs. Nowadys it has around 1.5-2 million visitors per year, which is not a bad number for Europe, but still far from the 10 million mark of Disneyland Paris. Should be a good way to start in Europe.
Back in the day it also licensed a park in Germany, now called Movie Park Germany. Both european parks are currently owned by Parques Reunidos. Maybe WB could make a combo offer?
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I have been to Warner Bros Movie World in the Gold Coast Australia a couple times and I would love for Warner Bros to double down their investment into the park. At the moment they have some pretty great coasters with decent enough theming (Superman and Arkham Asylum in particular make good use of their respective themes in the queue) but I of course would love to see more theming to bring the park closer to Universal. There are also some incongruities, I’d like changed- for instance they have a repilca of Rick’s Cafe from Casablanca, which is awesome, but it is a subpar pizza buffet inside. I would love better menus that match the theming, and also just a sprucing up on the rides- adding some animatronics or improved screens on rides like the Wild West River Adventure. The Justice League shooter is a step in the right direction, would love to see more stuff like that. So bottom line I would love for Warner Bros to invest in this established park to make it more than just a coaster park.