The idea sounded crazy to many theme park fans when it was announced last week - a tiny, four-and-half acre, separately-ticketed theme park in far-exurban Central Florida, themed to Peppa Pig. How could this possibly work?
Merlin Entertainments' plan for its Peppa Pig theme park defies much of the current conventional wisdom about theme park development. First, it's a new gate in the United States - which many industry insiders thought to be too overdeveloped with existing attractions to support new gates, especially now as we (hopefully) approach the end of a devastating pandemic.
Second, the footprint for this park is minuscule - smaller than some themed lands. Will enough families be willing to pay a separate admission for what looks like a collection of lightly decorated kiddie rides and a meet and greet?
Finally, there's the IP. The animated Peppa Pig show might be wildly popular among preschoolers, as well as some older kids and young adults who are drawn to the franchise either out of nostalgia or the many Peppa memes online. But IP-driven theme parks typically rely upon a collection of franchises to draw fans, rather than promoting a single IP. While no one disputes that Peppa could help any park as the theme for a well-designed land, can she anchor an entire theme park?
And yet... Florida's Peppa Pig might provide an elusive example of a project where multiple wrongs actually end up making something right. As such, by defying conventional wisdom about theme park development, Peppa Pig might end up shaping a new approach toward developing theme parks in decades to come.
Let's start with where many young viewers discovered Peppa - cable TV. Over the past decade, millions of consumers have been "cutting the cord" by abandoning cable subscriptions in favor of various online streaming services, including Netflix, Hulu, and more recently, Disney+. Now, other studios - including Warner Bros. with HBO Max, ViacomCBS with Paramount+, and NBCUniversal with Peacock - are launching their own services in an attempt to create a direct-to-consumer [DTC] relationship that cuts out the middlemen of cable providers and, perhaps, even movie theaters.
The effect is to debundle the studios' IP from the single package that most consumers had bought to access it at home - cable TV - into a variety of individual services. The downside is that consumers might end up having to spend more than they did before with cable to see everything. But if "everything I actually want" is substantially less than "everything available" on cable, debundling allows consumers to enjoy a more relevant collection of in-home entertainment at a lower overall monthly cost. Especially when studios introduce their streaming services as low, low rates to entice consumers to sign up with them directly, allowing studios to grow revenue by cutting out middlemen including cable and PPV providers as well as competing, first-generation streaming services such as Netflix and Amazon Prime Video.
Peppa Pig brings the concept of debundling to American theme park industry. And it does so by targeting the a segment of the population for whom the comprehensive, bundled model of theme park development doesn't work particularly well - families with preschool children.
Theme parks, especially Disney's, target such families relentlessly. "My first visit!" is portrayed as a rite of passage for children - one that good parents are supposed to provide, then follow up by making subsequent visits a family tradition.
But those first few visits with preschool children can be far from the magical experience that park marketing sells them to be. Preschool children often lack the interest and endurance to make it through a 12-to-16-hour day at a major theme park. How many kids have you seen break down at Disney because they were just too tired to go on any longer? My kids are grown now, but I remember many days at many parks where my then-preschool went wild in the kiddie land - only to then call it day and demand to go back home, to Grandma's, or to the hotel.
At the Peppa Pig park, they can. And parents won't feel like they're leaving value on the table by skipping out on dozens of acres of other attractions that their kids are too tired or disinterested to visit. The small size becomes part of the park's value, rather than a detriment to it. You're only paying for what you will actually do.
Therefore, Merlin does not need to price Peppa Pig at a small fraction of a "regular" theme park's admission price to deliver superior value for such parents. All Merlin has to do is price Peppa a little bit less than a regular theme park ticket, and that becomes a better deal than paying full price for a bigger park the family probably won't enjoy in full. Paying, say, $60 a ticket for Peppa Pig to enjoy two or three hours there is a better deal than paying $70-80 bucks a day for a park that you're just going to spend two to three good hours in before the kids conk out.
But the promise of two to three hours of great themed entertainment probably is not enough to entice a family to book a vacation getaway. A small, standalone Peppa Pig theme park might work in an affluent suburb of some big city, where it would function essentially as a well-themed FEC. To leverage greater profits, however, a small, single-IP park such as Peppa Pig's should be sited at a resort destination that features compatible themed attractions.
It's hard to get a cable TV customer to cut the cord when the only alternative is a single targeted option such as Disney+. But if a consumer can buy any combination of Disney+, ESPN+, Hulu, HBO Max, Peacock, and Paramount+ for less than the price of a cable TV subscription and still get almost all the content they wanted to watch for less money each month - cable companies see their customers get out the scissors. Building Peppa Pig next to Legoland Florida provides preschool families with that kind of combination alternative to the massive Walt Disney World Resort. The two highly-themed, kid-targeted Legoland hotels offer families an enjoyable place to spend the rest of the day after visiting Peppa Pig. And having Legoland Florida and its water park right there allows Peppa-loving families that want a longer vacation the opportunity to enjoy more attractions that are sharply focused on younger children.
Why not just add Peppa Pig as a land to Legoland Florida, then? Again, it's all about the potential with debundling. Peppa Pig is not a Lego character. Adding that franchise to Legoland would dilute that park's theme. But I suspect that Merlin would not have a problem doing that if it provided the company the greatest return on a Peppa Pig licensing investment.
The fact that Merlin is pursuing a separate gate suggest that the company's mathematical model supported a debundled approach. For an attraction targeted at families whose children likely are only going to be able to handle a visit of a few hours, it the company can earn more selling that experience independently with a ticket slightly under the price of a competing park than it can by adding the experience as a land to another, fully-stocked, full-priced park.
And the company could earn even more by bundling Peppa Pig and Legoland as on a multi-day ticket that discounts both parks... and then still more by bundling that multi-day, discounted ticket with a vacation package that includes a stay at a Legoland hotel.
So why don't all theme parks start debundling their lands and pricing them as separate tickets? It's been rumored that Universal Orlando was considering that pricing model for its now-shelved Epic Universe theme park. (And by the way, I am hearing rumblings that Universal is talking with local contractors about reviving that project sometime within the next year or so. It's not yet a sure thing, but Universal is seeing enough promise of a tourism recovery that it is not officially killing the project, despite the departure of nearly all of the park's creative leadership.)
Continuing with this logic, why wouldn't parks keep going and return to a pay-to-play model for their attractions, along the lines of Disney's old A through E tickets?
This is where it's worth point out how the theme park business differs from cable television. Ride manufacturers and IP owners can't deliver theme park attractions directly to the consumer as easily as studios can deliver digital entertainment directly to consumers worldwide over the Internet. Theme park attractions are fixed-site physical investments, not infinitely duplicatable digital assets.
Obviously, Disney and NBCUniversal have their own parks for their own IP. And Mack Rides has Europa Park to showcase its work. But Mack Rides sells its rides to other parks worldwide to expand its reach. Disney licenses Marvel and NBCUniversal licenses DreamWorks Animation to theme parks in the Middle East, where neither company has plans to build their own parks anytime soon. Other manufactures and IP owners need to sell and license wherever they can to reach consumers. There simply isn't the opportunity to develop the same DTC business models in the theme park industry that exists in digital media.
But could individual parks debundle their line-ups anyway, to maximize revenue? In certain circumstances, yes. Parks whose consumers primarily spend only a limited time there (such as families with little kids), probably can make more money selling multiple $80 tickets to smaller attractions than $100 tickets to a larger park that few visitors would do in a day anyway. Companies with wildly disparate IP collections also probably would do better by segmenting than offering a catch-all experience that, again, few visitors would experience in full.
Up until now, companies have expanded parks beyond what a typical visitor could experience in one day in order to sell more multi-day tickets to those parks. But with Disney's old "Magic Your Way" pricing plan training consumers to expect deep discounts for adding days to a park ticket, might now companies find more revenue by pivoting to develop smaller, one-day-only parks that could be sold in bundles where the discount for adding additional visits is less because you're getting a different park on each day?
And might consumers be willing to accept those smaller discounts because they can get a vacation experience that's more tailored to their family's specific likes and needs?
Peppa Pig might help the industry get some answers to these questions. That's why the opening of a tiny, niche park in a relatively sparsely populated community might actually become one of the most important stories in the global theme park industry next year.
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