The addition of Harry Potter disrupted the Orlando theme park market, consigning SeaWorld to third-tier status in the market and providing Universal with the cash flow to take full control of its Orlando resort from its former partner, Blackstone Group. Potter allowed Universal to break the bank and build it at the same time — following its initial Hogsmeade-themed Wizarding World with a faithful reproduction of Diagon Alley, complete with Gringotts Bank, further enriching Universal's bottom line. That's helped launch Universal Orlando as a credible alternative to a Walt Disney World vacation — not just a supplement to a Disney visit — a goal that Universal is pursuing with new on-site hotels, a greatly enhanced theme water park, and plans for a third gate.
Of course, market leader Disney is not just sitting around, content to watch Universal move. Walt Disney World next summer will open its most immersive themed land to date — Pandora: The World of Avatar. And Disney will follow that with its largest-ever themed land, Star Wars Land, at some point in the next few years. Disney continues to offer a stunning collection of its own IP, including all of the Pixar catalogue, Pirates of the Caribbean, existing Star Wars attractions, and Disney's many, many princesses.
Ultimately, Disney and Universal share a common goal of drawing more tourists to visit the Orlando area and to spend more money while they are there. But most families who have the ability to get to Orlando have a finite amount of money and vacation time. At some point, they make choices about their vacations. And the kitchen tables around which those families make those decisions is the front line in the Great Orlando IP War.
For years, Disney has profited from consumers around the world treating "Disney" as a generic term for family entertainment. During the Legends panel at this year's IAAPA Attractions Expo, Walt Disney Imagineering President Bob Weis quoted a Chinese official's words about Disney's brand presence in China: "Of course we know the Disney characters. We love Bugs Bunny. We love Shrek."
Of course, those are not Disney IP. But the conflation of Disney with family entertainment is widespread. When I covered the opening of The Wizarding World of Harry Potter at Universal Orlando in 2010, it became a running joke in the press room whenever a publication would post a story about the new Harry Potter land "at Disney World." The fact that some other company could be running a theme park with a wildly popular, family-friendly IP apparently was inconceivable to some reporters and editors, even ones whose freakin' job is to know this stuff!
Disney has poured vast resources into establishing itself as a lifestyle brand, pushing the conflation of "Disney" not just with all family entertainment but with the concept of "family" itself. (Show us your Disney side, everyone!) Establishing that level of brand loyalty among consumers helps stop the Great Orlando IP War before any potential opponent can fire a shot. You want to visit a family theme park on vacation? You've got to go to "Disney."
But Harry Potter allowed Universal to break through. As The Wizarding World of Harry Potter became a "must see" for millions of families around the world, many of them had to recognize for the first time that Universal Orlando actually existed and that Disney wasn't the home to every family-friendly franchise they wished to spend time with on their theme park vacation. (Marvel was not an elite, global IP franchise when Islands of Adventure opened in 1999.)
Universal's strategy in this business war must be to break the public's default association of the Disney brand with all forms of family entertainment. Universal does not need to establish its own brand name the way that Disney has its brand; Universal just has to get people to stop assuming all high-quality family movie and theme park entertainment as "Disney."
Why? Because if "Disney" is no longer a catch-all generic brand for top-quality family entertainment, it simply becomes a brand representing its own collection of unique IP — just like Universal now is.
Of course, Disney's actual IP line-up is formidable. Its IP line-up matches up with or beats just about anyone else's out there. That's why it became the generic in so many consumers' minds. But once "Disney" is just a collection of its own IPs to most consumers, and not something greater than that — the Great Orlando IP War is back on. The battle over which resort to visit then would be fought over which resort offers the most attractive collection of IP and experiences. Disney no longer would have the head start of being the default destination for family vacations because of its brand status.
That's when Universal's triple play of Harry Potter, Marvel, and Nintendo becomes compelling. Potter might be the most powerful IP in the world right now for cross-generational appeal and appeal to both genders. Nintendo is right there, too, earning billions of dollars in revenue from game enthusiasts around the world each year. Marvel traditionally skewed male, but the success of the Marvel Cinematic Universe has broadened the franchise's appeal among females, helping raise it to — or even maybe beyond — the level of Nintendo and Potter.
What else is left for Disney? Well, what might be the most popular IP franchise in the world, overall — Star Wars. While Star Wars might offer stronger cross-generational appeal than Potter, it (at least up until now) hasn't had as strong an appeal among females as Potter has. (Perhaps Daisy Ridley's Rey can fix this. I'd bet "yes" on that, actually.) Beyond Star Wars, though, each of Disney's IP franchises is somewhat limited in demographic appeal. All those princesses skew heavily toward girls. Pirates skews to boys. Pixar skews young, mostly due to its relatively recent emergence. Parents love watching Pixar films along with their kids, but people over 40 don't show the same level of cosplaying, merchandise-buying fandom toward Pixar than they do toward Potter, Star Wars, Marvel, and Nintendo. (Or that younger consumers do toward Pixar.)
And as far as franchises go, Avatar was a cool movie to watch. Beyond that, no one cares. (At least, not yet.)
Together, Disney's IP has strong cross-demographic appeal. But, speaking as a parent, I would much rather visit a destination that my children will want to enjoy together than one where they each would have something to enjoy that the other child might not. My son might love Pirates and Star Wars, and my daughter might love Disney princesses, but if they both love Harry Potter and Mario, Universal is where we are going, not Disney.
That's the importance of cross-demographic appeal. And that's why even the deepest collection of IP with limited demographic appeal won't beat an acceptable collection of IP with strong cross-demo appeal.
Now let's not forget that Disney has a huge lead over Universal Orlando in the central Florida theme park market, attracting an average of 13.5 million visitors to each of its four Walt Disney World theme parks last year, compared with an average of 9.2 million visitors to each of the two Universal Orlando parks in 2015. Disney welcomed early 138 million people to its theme parks worldwide last year, according to the TEA/AECOM Theme Index report, compared to nearly 45 million visiting the Universal parks. But Universal is killing Disney on growth, with an 11.8% increase in visitors last year, beating Disney's 2.7% growth and the industry's 7.2%.
Yes, Disney is beating Universal on overall visits and income and, having talked with countless industry insiders, I know that it wants to continue beating Universal. Disney will fight to protect its status as a lifestyle brand that people generically associate with family entertainment. And if it can't sustain that, it will fight by offering a compelling collection of IP to its current and potential fans.
But, to borrow an analogy from sports, it's not enough to win with a collection of role players. A championship team needs all-stars. Universal will have three in Orlando: Potter, Nintendo, and Marvel. Disney has one: Star Wars, with a second, Pixar, growing with time into that status. The irony, of course, is that Disney is the licensor of Marvel to the Universal theme parks, thanks to a deal in perpetuity that Universal's former owner signed with Marvel more than a decade before Disney bought it. That deal prevents Disney from ever featuring the Avengers family and other Marvel characters used at IOA in the Walt Disney World theme parks.
Disney can feature non-IOA Marvel characters at WDW, and Disney will try its best to do what it can to feature those Marvel characters in its parks. So perhaps that makes Marvel a half-point to both sides, making the score 2.5 all-stars for Universal Orlando and 1.5 (on its way to 2.5) at Disney World. But Marvel split across the two competitors reduces its value to both, as it limits both sides' ability to market themselves as the home of the brand. While that's to Disney's benefit in neutralizing Universal's advantage in holding the rights to Marvel's top property, the Avengers, it doesn't help Disney fully leverage the power of theme park placement in building the Marvel brand overall.
How much would it be worth to Disney to have Marvel for itself in Orlando? And how much would Universal need to make itself whole in surrendering Marvel to Disney? Given the value of winning the Great Orlando IP War, I can't imagine how large a check that would have to be. A billion dollars? More?
Perhaps allies would need to be enlisted, as is so often the case in conflicts such as this. What if Universal could get the rights to Warner Bros. DC characters from Six Flags, to replace Marvel? A win in the Great Orlando IP War might be worth more than the value of the entire Six Flags chain. What would IP presence in the Orlando parks, which attract many millions of high-spending families every year, mean to the value of the DC franchise? Warner Bros. and Universal have seen what it's done for Potter.
Heck, everyone in the entertainment industry saw that. What other IP are out there that Disney or Universal might try to license, to give them an advantage in Orlando? On the flip side, what other IP holders are looking to entice Disney or Universal to bring their IP into the Orlando market?
What deals might be made, not just for individual IP, but for entire companies, as Disney and Universal chase the billions of dollars available not just directly in Central Florida tourism but also indirectly from brand building among Orlando-area visitors? Disney bought Marvel and Star Wars' Lucasfilm to increase its cross-demo appeal. Universal has been buying, too, having acquired DreamWorks Animation. Could it make a play for Warner Bros.? Could Disney?
The Great Orlando IP War is on. And the stakes are not just who makes the most money on theme park tickets and hotel rooms in Central Florida. This is about brand building. And because of that, ultimately, this is a battle for supremacy across the entire entertainment industry.Tweet
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