Published: May 29, 2014 at 2:51 PMThis is a great, great, great article! I just got my MBA and we were assigned many case studies that required us to use various frameworks (Porter's 5 Forces was always my go to) to analyze industry rivalry. I would have loved having Disney and the rest of the theme park industry as one of my cases. Robert, your article sets it up perfectly for this type of discussion. I could go on and on about why Disney is the clear market leader from economies of scale to barriers to entry, but you really hit the nail on the head with their core competency of providing their customers with a unique experience (along with brand equity and customer loyalty). In my opinion, Disney's unique experience lies within their ability to provide guests with an enveloping sense of a 'magical' environment in which guests can completely lose themselves in. Up until Universal's IOA and the addition of The Wizarding World of Harry Potter, Disney had the only parks with that level of attention to detail (logistics, architecture, staff, sight, sound, smell, etc). With that being said, I do think that Disney has left some market share on the table. I believe that the extreme crowds of late has left Disney Parks slightly haggard. I have been reading more and more comments about customer service not being what it used to, rides are down more frequently or getting dated, and attractions aren't as innovative as they should be. This leaves the door open for Universal to swoop in and steal customers especially if they create more environments like The Wizarding World of Harry Potter which (in my eyes) matches that core competency of a unique fully immersive experience. I very much look forward to your post discussing Universal's ultimate goal to one-up Disney.
Published: May 29, 2014 at 7:32 PMWell yes you can substitute...my family in our first year in Orlando had Annual Passes for Disney. For the 3 years since we switched to Universal & SeaWorld with Aquatica passes.
We have since upgraded to Universal Premier Passes and only do the Disney's Spring Florida Resident for 3 days for $129 each.
Overall the option to have no blackout dates with better perks for a comparable venue made it compelling.
Published: May 30, 2014 at 7:25 AMJust read this article and had to mentioln that they are doing it at Paris as well. In one of Fridays daily papers in the UK ther is a story regarding the huge price difference between what french families pay and what uk families pay when they book through the respective versions of the disney site. Apparently the difference can be up to £500 pounds more that uk families get ripped off, sorry, charged for the same holiday. That being said, I personally havn't been to paris for a long time and now would not go back after reading this and also due to the less than good report from my sister who visited with her kids last easter, shabby, badly run/organised with rides that kept breaking down were the main points she made. The article is in The Sun, a british tabloid paper on 30/5/2014
Published: May 30, 2014 at 11:05 AMI think Disney World is walking on very thin ice, more then they realize. Team Disney Orlando has done a poor job keeping the parks new and vibrant. Everyone knows the Magic Kingdom will always be top dog, however I predict once Diagon Alley opens, followed by King Kong, follwed by the rumored Jarassic Park expansion, people will drop a day or two from DIsney. Disney World just seems to not be able to get projects off the gound and complete in a timly fashion. With nothing new added to the parks, (Fanasty Land--pretty, but lacking anything amazing) DIsney will lose attendance at the Studios, Animal Kingdom, and possibly EPCOT. The annual pass rates for Disney are expensive and they are getting to be just not enough bang for your buck (unless your a fan boy that thinks Disney can do no wrong.) Universal offers their annual pass members a good price point, giving them 15 to 20% on food and merchandise at EVERY location. The premium pass gets you free valet parking and a Halloween Horror nights ticket...Sorry DIsney, but my money is going elsewhere...
Published: May 31, 2014 at 12:21 PMTourists, who visit Disney mostly for character meet and greets, are definitely locked into visiting Disney parks. But what about locals and tourists who visit Disney because they want to experience great rides in a themed environment? Knott's Berry Farm and Universal Studios could be great substitutes for this type of customer.
I can't understand why Knott's Berry Farm or Universal has not created their own versions of Space Mountain and Toy Story Midway Mania. People often wait hours to ride these attractions. There is a huge unsatisfied demand for these products. It appears that Disney would rather raise prices and lose some of these customers, instead of investing money to increase ride capacity.
Published: June 3, 2014 at 7:53 AMVery good article. The Theme Park industry is clearly ripe for a number of economics or MBA term papers, theses, or books.
Disney has demonstrated "pricing power" - they can raise their prices without a significant adverse impact on demand. Looking at Walt Disney World, it is interesting to observe how prices are discounted for multiday passes. A one day pass to the Magic Kingdom is $99, two days at Disney parks is $188, and three days is $274 (still over $90 per day). However, day 4 is $20 per day, day 5 and beyond are $10 per day. Basically, Disney feels it has pricing power until Day 3, then it has to discount steeply in order to generate additional park visits. At that point, many guests are presumably ready to check out the competition, find a non-theme park activity, or go home.