Robert's Rant: Don't Blame Disney for Abandoning a Shrinking Middle Class
The price of theme park tickets has been rising faster than inflation for decades. Many middle class families that once considered the Disney theme parks a frequent vacation destination no longer can afford to visit so often, if at all.
So Disney's to blame for pricing out the middle class, right?
Not so fast.
When a reporter from the Washington Post asked me this question last week, my first response was to ask back: What middle class?
It seems as though there's no longer a "great, big, beautiful tomorrow" waiting at the end of every day. (Photo via Wikimedia Commons.)
Time for some uncomfortable truth: In its first few decades, Disneyland was a middle-class destination because, from Disneyland's opening in 1955 through the 1970s, America was a middle-class country. In 1979, nearly 57 percent of American households earned within 50 percent on either side of the nation's median household income. By 2012, just 45 percent did. And that median income has been falling since the Great Recession started in early 2008.
Not that we were doing all that great before then, either. Median household income, adjusted for inflation, has barely increased since the 1970s, despite massive gains in worker productivity since then. What income growth we have had in the United States over the past 40 years has gone almost exclusively to wealthy households, and the wealthier you are, the more your income has gone up.
In short, American workers are increasingly more productive than ever, but for the past four decades, it's been their bosses who are reaping the reward.
And that is why Disney raises its ticket prices, introduces the Disney Vacation Club, adds after-hours hard-ticket events, and upsells dessert parties and character meals. Disney is marketing to where the money is — families that earn $100,000+ a year and are seeing their incomes rise while everyone else is watching their income stagnant or fall.
With income inequality rising in America, Disney — like every other long-time business — faced a choice: discount to chase market share among the declining middle class and growing population of poor households, or re-position as a premium brand to attract the wealthy?
Disney chose the second option, and the company is doing spectacularly well by it, making $7.5 billion in profit on $48.8 billion in revenue last year.
So don't blame Disney for its rising ticket prices, "charge now and think about the price later" MagicBands, or even replacing Epcot's Norway ride with a Frozen-themed overlay. Disney is doing what will make it more money, because what Disney is now doing appeals to those Americans who can afford to pay for what Disney is selling.
I bring Epcot into this because Disney's changing approach to that park further reflects Disney's response to a changing America. When it opened in 1982, Epcot reflected an optimistic view of future and of the world around us — an optimism consistent with a society in which incomes were rising with productivity and each generation enjoyed more prosperity than the last.
Today, that's no longer the case. As I mentioned before, for most Americans, household income stopped rising with productivity back in the 1970s. Generation X, those born between 1965 and 1984, will face retirement with less wealth than the Baby Boomers who preceded them. The situation looks even more grim for the Millennials who followed Generation X. It's tough to get excited for a future than seems to be bringing harder and harder times for most of us.
Which leads us to more uncomfortable truth: Disney stopping investing in the "old" Epcot because too few Americans believe in that optimistic vision anymore. And who can blame them? The reality of our economy and our environment today tells us that believing in the future and in the good of the world around us is about as logical as, well, believing in a fairy tale.
No... scratch that. Believing in a fairy tale allows us a few moments of escape into a world where good overcomes evil, hard work triumphs over adversity, and everyone lives happily ever after. So believing in the future today is demonstrably worse than believing in fairy tales.
And that is why we are getting Frozen in Epcot.
So if you're angry with Disney for not appealing to a large, prosperous, and optimistic middle class, well, might I suggest that the problem really is not with Disney... the problem is that there is no longer a large, prosperous, and optimistic middle class in America for Disney to appeal to any longer.
This is a problem 40 years in the making. What's the solution? This is a theme park community, and not one for political activism, so you'll have to go elsewhere to find your path toward that. But know this: Trying to shame Disney into not raising its ticket prices won't bring back America's middle class. The way to do that lies elsewhere.
Great rant, Robert!! And I agree 100%. I still want to blame Disney for chasing the money instead of the magic, but you're right that it makes perfect financial sense for them. Sad... and scary...
Great article and your viewpoint is very true in my eyes. I also think that Disney is a mirror of what happens in this world, when a founder of a company dies who replaces them? Someone who cares about profits, period. What a world we would live in if companies had to dissolve or become not for profits after their founders pass. A bizarre concept but the distribution of wealth would go to people with ideas and the will to get by on their own steam. Disney doesn't appeal to a middle class because because the middle class has shrunk, but you also have to think how many people they employ, and they are a part of that epidemic as well. Squeeze water out of a rock is the economic trend these days, and just like every other business everyone's moneys green and they'll take every cent you have. Maybe it is an old fashion notion to believe in the wonder of the future but taking it away from a place of joy seems like a cruel punishment. Especially to replace it with a bleaker franchised future they're helping to create.
Well, this doesn't certainly help my constant stress and anxiety concerned with the direction that humanity is headed.
The part about Disney not pricing out middle class families is pure crap. It shouldn't matter where the fault lies with families and income. The truth is that Walt's wish for a place that all could enjoy has been ignored by Disney execs for the bottom line. People are being priced out and Disney could choose not to do it. Walt is turning over in his grave and the Disney powers that be should be ashamed, but with no evident moral compass, thats unfortunately not the case.
Robert, it sounds like we're on the same page politically. I'm equally frustrated with the income gap that continues to grow. I can totally understand why Disney is marketing to the upper class. That said, I do wish they would find more ways to offer alternatives to fans that can't afford the higher prices. And if they decide to spend money, why not push harder to make the parks feel like high-end places. They seem to be raising prices and going for the high-end guest, but what they offer doesn't always match it. It's getting less quality along with the prices that bothers me more. If I go to a fancy restaurant, I expect to get an amazing meal. Disney must remember that even people with money still want a good experience.
Fantastic article! It's a hard truth, but a truth none the less. I'm not mad at Disney for acting like any other company would act. At the end of the day, Disney is just another business trying to maximize profits. I may not necessarily enjoy spending big bucks to take my family to a theme park, but you can't blame Disney for wanting to make more money.
You haven't squared this with your previous articles on Epcot. Either you accept the reality or resigned to it. You said the optimistic vision no longer applies. Is that due to the declining middle class or the cynicism of the upper middle class? Disney's appeal is it's brand, not its politics as portrayed in Tomorrowland.
Yep, it's true. We are doom. When the companies prefer the lesser people with more incomes instead of the more people with less money, they were right. They increase prices to reduce people in the parks, but with more money. For my family, it's been 7 years since our last (definitely our last) visit. I can't pay that prices for a family of 6 anymore. It's a shame but Universal is right behind them.
Fantastic article Robert. I would just like to add it's important to remember the main reason why American families so prospered during the 50s and beyond, because most of the major world powers were left somewhat obliterated after WW2. America, thanks to its oceans, was unscathed unlike Germany, UK, France, Russia, Japan, China etc. This created a huge econimic vacuum that allowed America to boom.
Sorry Robert I disagree and despite your disclaimer, this sure seems like a political rant about income inequality disguised as a defense of Disney's pricing policies.
I think it's the main reason Disney stopped building new rides. They knew their new demographic hadden't seen the parks and needed years to take it in.
Tom, the widening income gap is absolute fact and the rate is exponential. It's great that your family is better than the last generation, but that's just one case out of 100 million. And don't forget most middle class families in the 50s were single income homes, affording what nowadays requires 2 full time incomes.
Good try, but the reasoning is flawed. Fallen into the classic "correllation study trap". If fact one is, that Disney is rising prices faster then inflation, and fact two is, that "middle class" (census) numbers are lowering, that is in no way delivering proof "it's the rich" who visit those parks now. That's a presumption, and nothing else then that. It's the same kind of flawed statement as "climate warms up and google grows, so clearly google takes profit from the warming climate"... Sorry, To know if "the rich" now visit Disney parks (more), one need to do a full year of statistical study interviews at the front gates of the parks. I don't buy it, even if it was a good try to tell something "around rising prices". Greets !(And therefore, I aggree fully with poster Thomas tskogg, and what I try to tell here is not even 'political' inspired, it's about scientifically flawed reasoning.
Robert are you auditioning for MSNBC or something? Will you be on before or after Rachel Maddow or just taking over for "Rev" Al Sharpton?
Great editorial! I have certainly felt the reality of your case in my lifetime. When I was growing up in the 1970's we were a struggling, but solidly middle class, family. We always had enough money for summer vacations and often went to Florida to spend a few days at Walt Disney World and another few days at the beach. When I reached college age, I would go to Universal Studios on vacation myself sometimes. Right out of college I worked as a journalist and freelance writer while working a day job in retail. Sadly, retail became more and more my job and the writing more and more a hobby. Finally, I had to leave the writing business behind because I needed to make enough money to survive and just didn't have time for it anymore. Fast forward to 2009 when I lost my job during the Great Recession and after nearly two years of desperate attempts to regain my footing, I suffered a nervous breakdown and began to believe I would never make a livable income again in my lifetime. I went back to what I was good at and trained to do as a freelance writer and journalist, even turning in a couple of pieces for Theme Park Insider while I tried to expand my monthly publishing goals, but reality set in. I can't afford to go to theme parks anymore. I can't spend hundreds of dollars to make a few bucks for an article. I'm fine, and even serve as Senior Editor of a growing and very promising website that I love, but I don't really believe in a "big, beautiful tomorrow" anymore.
I wish it was the old days in 1995 when a Disneyland (one park) ticket was $23
Robert hits the nail on the head. The disappearing middle class is a fact supported by government data. And I don't need to do a yearlong statistical analysis at Gucci's cash register to know who shops there ($100,000+ yearly incomes). Disney's not at Gucci's level of luxury yet, but it's getting there. And with the parks in the US still being packed, Disney can keep raising the prices to become the luxury brand of theme parks.
This article is the reason why I keep a close watch on this site - intelligent, thoughtful, challenging and entirely relevant to the whole theme park industry. Very well written Robert.
Pricing is not about what it costs or what people think it should cost, it's about what the market is willing to pay. With ever increasing record attendance, the market has decided it's willing to pay right now.
Disney's arrogance today reminds me of General Motors in the 1960's: "What's good for GM is what's good for America." It's easy to make money when you have a monopoly. If Disney isn't the worst example of greed today, then what is?
Hi David. (I know you pointed out to me :-) )
This article seems to be more about politics and income inequality than theme parks. That said, Disney as well as Universal has raised their prices much more than the rate of inflation. Disney targets the rich, because, they have the most money to spend. But lots of middle income families still go to Disney. And it's because it's an amazing place unlike anywhere else. But it has gotten harder to afford it. The middle class is no longer growing and confidence has gone down due to realities such as the recession and terrorism. Transportation has gotten harder and more expensive too and I think that's a bigger issue than Disney's prices. Disney has the same number of locations in this country as it did it 1971 despite a much larger population. Sure they operate more parks but you have to get there first and that's a bigger hassle and more expensive than ever before. The reason Disney doesn't open a third resort is so they can raise prices as demand is still strong. But hopefully someday the mouse realizes this strategy will only work for so long. Evenctually they will become too expensive if they keep raising prices at the rate their going. A third resort would be better than filling up the two they have even if it means prices don't keep climbing. That won't happen anytime soon. But As we've seen before, the people in charge change over time, which changes how the buisness is run.
Nah. Thats basically a use of middle class that uses middle class as an euphemism for working class, which i guess is typical for everyday US language use (where calling oneself working class appears to be a bad thing). A more sensible sociological use of middle class are somwhere around the 10%-25% percent below the upper 1%-5%. Those are not priced out. A theme park, even a resort one sure doenst work targeting the upper class only. I would think that the middle class society, where 50% or more of the population are middle class was always a fiction, at all times and all nations. Yes the good old times really were a lot better with regards to equality, but not quite that much.
Great article Robert! I think you hit the nail on the head about the increased demand for fantasy when people feel stress. Even though people in the middle class can go to Disney sometimes, they probably need to budget for it and probably for a longer amount of time. If you spend a lot of time worrying about money, when you go on vacation you want it to be a vacation from the real world, and the further your vacation is from it, and the more distracting, the better. Super hero, fantasy, and now dinosaur movies are really popular. So people want more of that in the theme parks too. I don't think it is political at all to mention that many families feel monetary strains. Kids that go to college start out their life in huge debt if their families are not wealthy enough to pay for their education outright, which might be acceptable if they could find a really high paying job, but that isn't available for a lot of people. If you don't go to college you will have a very low paying job. Unlike buying a house (which was the first way that people in generations past went into debt) where you are able to earn a steady, fairly reliable return on your investment if you keep the house for about 30 years, an education is different. You also need to secure a well paying job, but if you don't get one there isn't any way to get money back out of that very expensive investment. Also, unfortunately many people very recently just saw their major/only asset (their house) loose money, and even though after 30 years it will be up again, that stresses people out. Without even considering an income gap, this is what most parents or grandparents with children ages 0-30 are concerned about. People may not really want to hear a "the future will be great" song and dance when they're worried about that. They may believe that even if that comes, their kids will not be able to be part of it. I was trying to come up with a reason why people didn't get so excited about the Tomorrowland movie, but I think this is a big part of it.
............. The specific business model, Randy, needs to offer value for money, whatever the targeted spenditure segment is !
Robert, I'm glad you posted this article. but I have to disagree with a lot of it. I agree the American middle class is disappearing. There is lots of documentation on this.
I think ten years ago they tried much harder to be the amazing brand they claim to be as far as theme parks go. Yes, it is expensive, and, yes, the middle class is shrinking, but the crowds are still vast and the lines are long. If Disney truly marketed the parks for the ultra-rich, then the prices would be higher with less lines. Right now it is simple supply and demand. The demand is high due to the enormous crowd levels; therefore, they raise prices. What is different now is that they seem to be only maximizing profits and not making the experience better for the consumer. In 2000 you got the best customer service in the world and the attractions were great. Now you get enhanced pre-ride areas and armbands and a dead yeti. If they really wanted to appeal to the wealthiest, they would have the express pass system like they do at Universal. They will continue to raise prices as long as they people continue to arrive in droves. I think the points are valid, but I do not think Disney is appealing only to the rich. They have places for them to stay, but they are catering to the masses as long as they come.
I agree with the above poster that this has nothing to do with becoming an upscale brand and catering to higher income families. Disney will take a lower income family that just decided to clean out little Billy's college fund as long as they buy a full price ticket. And THAT is what it is all about. They are facing an unwavering demand, they are a public company and therefore they are simply charging what they can get. I guarantee they could care less about any statistic other than what is the price point that will maximize their profit while not losing any market share. If it ever gets to a point where their price causes demand to drop and they see an effect on the bottom line, or if Universal decides to start a price war (again, affecting their bottom line), then and only then will you see a pricing strategy.
I think the writing was on the wall. If the park is crowded, raise the price. What else?
With this level of popularity, what would happen if Disney lowered their prices? Capacity crowds at all the parks, all year long. Unbearable parks instead of fun places to visit. The crowding is already bad enough as it is.
Disney is a massive corporation employing nearly 200,000 people. Indirectly, they are likely responsible for the employment of hundreds of thousands more for the production of their goods in every sector; television programming, movie production, the creation of merchandise, construction, utilities, and so on. And as such, they have (like every other publicly owned company) chased reducing their operating costs to increase their profit margins without any regard to the increase of revenues, often to justify immense executive salaries and bonuses. Disney absolutely shoulders blame for the fall of middle class and, in turn the strategy they've been chasing of replacing those guests with upper middle class/rich tourists from outside the US.
Hmm. Well I disagree a little but don't want to get into it. Good article non-the-less as always Robert....
Supply and demand... I agree. Simple as that.
It was a treat to sit down and read the Washington Post and see you quoted - hope it brings you a little extra sizzle.
To me Disney, Universal and even Sea World all want you to do the Multi-days at their parks.
Excellent article, Robert! Timely, thoughtful and provocative. I don't want to get into a political diatribe; suffice it to say that as a writer for TPI I feel that I should visit a Disney park but frankly cannot afford to do so. Disney doesn't even offer a discount for seniors. This is in sharp contrast to a couple of the parks near me. At Hersheypark the regular price is $61.95 but only $38.95 for seniors; at Dorney Park, where I went yesterday, I paid $35 and change at the gate. OK, so neither of these offers the magic of Disney but the sad fact is that Disney is beyond the budget of many and the fact that those who can afford it are willing to pay the price does indeed conform to the law of supply and demand.
I don't understand how people can say that Disney is pricing everyone out of their vacations. Based on their attendance, they are pricing no one out of their vacations. With attendance increases every year, what guests are telling the park is that they don't care how much it costs. The moment attendance flat-lines, you will stop seeing the cost increases.
Well said Jeff.
Excellent article, Robert! In one succinct and well written piece, I find myself wholeheartedly agreeing and disagreeing with you.
Hmmmm I have a universal pass. I paid 259 for a year and it includes parking. The lowest pass with parking is like 400 bucks. I never go to Disney unless I get a comp ticket....they are ridiculously priced. I mean cant you make a pass where I pick the two parks I go to and it's less...... I mean I know they offer more parks and that is there justification but $125 for one park..... INSANE.
I suspect a lot of people heard about or read the Washington Post article, and agreed with it on some level, but it wasn't until I Robert's article that I thought about *why* Disney is looking to the very wealthy as a major source of revenue. Very insightful, and pretty depressing at the same time.
Here's my second point: I just saw the movie Tomorrowland for the first time over the weekend, which is dying a slow death and is projected to lose tens of millions of dollars for Disney on their motion picture side. Like the original vision of EPCOT, Tomorrowland is about hope for the future, as well as the individual's ability to make some sort of positive change in a world of pessimism.
Very interesting, well written and thought out article. Like it or hate it, this is reality. I do know life is all about choices. I have never visited a Disney park, ever. I would like to someday but I can say with confidence it has NOTHING to do with pricing. I simply make other choices as to how to utilize my vacation time and have found other ways to enjoy life without the Mouse. I live within 15 minutes of a Six Flags park. Ok, I know its not Disney, but I have chosen to get my theme park fix there instead. In fact, my favorite vacations are road trips, visiting areas of the country I have not yet seen, and I am thankful for the fact I have entered all 50 states at some point. As an added bonus, we sometimes visit other SF parks along the way.
What I think is being lost in all of this is that, in the end, Disney is a business in a free market economy. They are not the keepers of dreams for everyone. They are entitled to do whatever they want to do as guided by their own stockholders and executives. If, and when, they overstep their bounds people will vote with their wallets and stop going or go less often, or stay elsewhere. The Disney Vacation Club provides excellent value and while it is a cash cow for them, it is, as a member myself, a great way to manage costs. Now that my kids have families of their own, I almost never go to the parks, but I do spend very excellent vacations at Vero Beach, Hilton Head, and Aulani, where I was fortunate to stay for two weeks, in a very large one bedroom suite two years ago for what amounted to my annual dues, far less than it cost us to spend ONE additional week on Maui. Get a grip folks, it's a business, and they should and will run it in a responsible fashion with an eye to making the revenue AND the business better...and for the record, I am a public school teacher and a registered Democrat and have very liberal leanings...
I think people get too paranoid about the future ahead. Yes, bad things have happened recently, but were we any better in the good ol' days? Nowadays, if I were to ask out a black girl, no one would care. But if I asked out a black girl 50+ years ago, I'd probably get beaten (or worse) and no one would ever wanna associate themselves with me again. And didn't this country spend most of the 20th century watching the skies for Russian missiles? Look, there's always gonna be some sort of problem, some hurdle we're gonna have to get over. But you're not gonna get over them if you just spend your time whining about how much reality sucks. With that, I'm not gonna deny that Disney is another big name corporation trying to make money, but they're not abandoning the middle class. Not because they care about the middle class, but because if they did, people would see them as monsters and stop buyinng their products and services. I also know that DVC and a lot of the other luxuries the resort provides are clearly targeted towards the rich. However, I've never used a single one of them and I have the time of my life at Disney! I don't need any special reservations or fancy hotel rooms to enjoy the magic of Disney, nor does anyone else.
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