Ladies and gentlemen, your new chair of the Federal ReserveSo, the economy.
With the Dow plunging straight into the Briar Patch and investment banks worldwide failing like the Disney Institute, one might wonder what the economic crunch might mean for Disney’s plans for upgrading their theme parks. In the last few days, we’ve started to get a few hints as to the mindset in Burbank and what it might mean for expansions both announced and rumored.
Concept for Disney-themed Urban Entertainment Center from the 2006 Walt Disney Company annual reportThe first salvo of cutbacks came on Tuesday when Disney’s partner in Tokyo Disneyland, Oriental Land Company, announced that it had canceled its plans to build a series of self-contained urban amusement centers in major Japanese cities. The project was first announced in May of 2007, when Oriental Land Company proclaimed their desire to expand beyond their Tokyo base:
Oriental Land Co., which operates Tokyo Disney Resort in Urayasu, Chiba Prefecture, together with Walt Disney Co. of the U.S., plans to develop indoor entertainment facilities in major cities outside the greater Tokyo area. The facilities will feature restaurants, shops and entertainment spots intended mainly for women and families. The business plan will aim for a grand opening sometime after 2010.
The plan was outlined in Oriental Land’s midterm business outlook for the fiscal years through March 2011. Entertainment, dining and shopping at the facilities will draw on the Disney brand and provide visitors with plenty of choice. Investment is expected to reach tens of billions of yen per facility.
Developers hope to open at least one of the facilities by 2010 at the earliest. “We are targeting visitors in outlying areas who live far from Tokyo Disney Resort,” said Oriental Land Vice President Akio Nagaoka.
– Nikkei Weekly, 21 May 2007
Prior to the Japanese announcement, speculation was rife that Disney and its parks chief Jay Rasulo intended to build these Urban Entertainment Centers in a variety of locations worldwide. Wanting to expand into new markets, especially in Asia, Disney could build these centers in major cities without the investment required by a full theme park. A number of sites, notably Singapore, were mentioned. Oriental Land Company was looking at a number of sites in Japan, such as Osaka and Fukuoka, for its entertainment center.
OLC’s plans were canceled when it was determined that the potential for profit in the new project did not justify the required investment. Even with the faltering global markets, this seems somewhat surprising considering that Tokyo Disneyland has just come off a year of record attendance. After all, if the Urban Entertainment Center doesn’t make economic sense in Japan, perhaps the most Disney-crazed society on the planet, where could it succeed?
The idea of regional entertainment locations is nothing new for Disney; plans for similar, smaller regional attractions go back to Walt’s time. The concept had a resurgence under Michael Eisner, but each of these attempts also failed at some point in their development. It’s clear that Disney in general and Rasulo in particular still has a fetish for the regional entertainment concept, but the history of the idea as well as the OLC withdrawal begs the following question: If Disney can’t even manage to keep a chain of Disney stores open and operational, how will they pull of this more daunting task? If the Celebrity Sports Center, Disney Store chain, Mickey’s Kitchen, DisneyQuest and Club Disney all flopped in some way or another, how long will quixotic Disney managers continue to daydream about diluting the brand by putting Disney attractions in major cities worldwide?
DisneyQuest Chicago: FAIL.But the OLC news was confined to Japan. How will America’s economic woes affect domestic parks? In the last couple of days we’ve heard from Al Lutz and Jim Hill on the subject, and the news is mixed. According to Lutz, the projects that had been approved and are in the pipeline for California Adventure are essentially safe. Later phases of the California Adventure remodel and further Disneyland additions seem to hinge on what happens next in the economy. Both Lutz and Hill agree that projects yet to receive final approval, like Walt Disney World’s Little Mermaid dark ride, will likely see delays as Disney executives wait to see which way the financial winds blow. Nothing’s been canceled, it seems, but a wave of postponements are probable.
More intriguing is that Hill confirms some rumors, previously mentioned here, about major changes in Florida’s Magic Kingdom. A potentially massive remodel, which Hill says has possibly been delayed, would eventually result in an overhaul of the park’s Fantasyland area to bring it up to a higher standard of design and theme. Hill repeats the rumor of the Little Mermaid attraction, which he claims will be so large as to necessitate the relocation of Dumbo the Flying Elephant around a hundred yards to the east. He also confirms rumors of a Snow White themed family coaster, and states that the Beauty and the Beast attraction previously alluded to would be a new dark ride designed to replace the current Snow White’s Scary Adventures. Also mentioned is a new shop themed to the forthcoming Princess and the Frog.
Perhaps most surprisingly, Hill drops a new rumor – the possible retheming of Mickey’s Toontown Fair to resemble the look of Disney’s preschooler-targeted television series Mickey Mouse Clubhouse. This is news to me, but while I certainly have no affinity for Toontown Fair I would hope WDI would aim for something a bit more inclusive than toddler TV fodder. Hill also mentions that next year’s Space Mountain remodel will last seven months, which seems to indicate that the Florida resort’s management won out in their race to the bottom and that Space Mountain will not receive the major, head-to-toe overhaul that Imagineers had intended. Walt Disney World management, far more concerned with efficiency than show, originally consented to a lengthy overhaul similar to Disneyland’s successful remodel of recent years. But cold feet prevailed and management backed down on keeping the ride closed for such a long period of time. Here’s an idea – if you think it would so adversely affect the guest experience to have a single ride closed, doesn’t it stand to reason that you need to add some more rides?
In any case, that’s where we stand. Waiting for Burbank to make up their minds before we can see if any true expansion is coming soon to Orlando. If I may be so bold, let me make a suggestion to my pals in the Team Disney building:
Build it. Build it all. Sure the economy is in shambles now, but it will recover. It always recovers. Wall Street is the largest collective of drama queens in the history of history and they known only two emotions – greed and fear. They’re losing their minds right now but will soon realize that the world isn’t coming to an end and things will stabilize. Liquidity will return, hopefully we’ll get some decent regulations restored, and after an enormous reset we’ll have an economy not quite as based on fluff and nonsense. The mortgage market, like the dot-com bubble before, was just another instance of greed creating an entire economy based on candy floss and fairy tales. So, a lot of people got hosed and hopefully we’ll see some changes in the next year that will prevent such shenanigans in the future. In the meantime, people aren’t going to stop going on vacation forever and they definitely won’t stop seeing movies (after all, Mickey rose to fame in the Depression), so if things soften up, don’t despair.
The McCain Youth Economic Outreach was a dismal failureWhen the economy sagged in the 1970’s, Disney management lost confidence. Without Walt and Roy to kick them in the pants, things stagnated under Card Walker’s gas crisis-induced paralysis. Plans for the three “lost resorts” were canceled, and we lost Thunder Mesa and other attractions. Eventually things kicked back into gear with EPCOT Center, but the reticence to build in the mid-1970’s left Disney poorly positioned to capitalize on later public demand.
The Asian Resort – shoulda, woulda, couldaIf guests are more willing to stay at home than to come to Florida, give them a reason to come. They certainly aren’t going to stretch their dollars to come all the way for a new parade or marketing campaign. They’ll come for new rides. Start building now, and when this credit crunch is over you’ll be ready to open brand new attractions in time to welcome the newly-reinvigorated global economy. Even if the dollar devalues spectacularly you can lure plenty of Britons over. On the other hand, if you wait for the economy to be fully healed before you start anything new, you’ll have years of stagnation under your belt and people will drift away. We’re nearing 20 years since the last Magic Kingdom E-ticket – get to work.
And you’ll achieve that sense of conquest
As your affluence expands
In the hands of the directors
Who invest as propriety demands
All from tuppence…
As an Innovation Consultant, I am feverishly trying to convince my clients to accelerate attempts to convert ideas into products/services in this down market so they can beat everyone to the punch when the economy turns around.
Sadly, I have always assumed organizations like Disney would need no such advice due to their rich history of risk-taking and innovation. Apparently efficiency and cost containment now trump breakthough entertainment innovations and unique experiences.
As for me…its a Disney stock purchasing opportunity!
Interesting! Thanks for chiming in – I agree with you about hoping Disney would be more prone to creative risk-taking and innovation. Even the regional concepts I mentioned (especially DisneyQuest) could have had the potential to be really groundbreaking if they had the conviction to follow through back in the day. Not every idea is going to be massively profitable overnight.
The thing about the theme park expansions is that even if they broke ground this year, many of the new features wouldn’t be ready until 2011-12. That’s a long time for the economy to right itself. But if they wait several years to see the economy steady before they start building, then we’re looking at 2013 to 2015 before these things come online and that’s a long time to go without major new attractions.
Of course, they could just be adopting a wait and see attitude to see how the election shakes out and decide then – we don’t really know. It’s all hearsay at this point so hopefully if the world doesn’t end by November 4th then Team Disney will realize that life goes on and greenlight these much-needed upgrades.
The Disney Store chain is still alive and kicking – they bring a bit of the Disney magic to my hometown…
You’re right, and perhaps I should have been a little more clear with my writing. The Stores still exist, they’re just far more scarce than they once were (sadly, all of my local outlets are no more). More importantly, it just seems like the company hasn’t known what to do with the stores in a long time. They sold them off, then bought them back, and always seem to be on the verge of closing them. Of course, I’m glad they’re still around and back under Disney control!
The impression I last had of the stores, although it might be outdated at this point, is that they pretty much just sold the same average licensed apparel one could find anywhere else. It seems like they’re not as “exclusive” as they once were, whatever that means. Going to a Disney store was more like going to the Gap than having a real Disney experience. More importantly, it was almost exclusively targeted towards kids without the artwork, posters, books, music and collectibles that might appeal more to adults. And clothes in adult sizes 🙂
But I’ll admit, my experiences might be outdated now that ownership has shifted again. And they do live on to fight another day! Thanks for pointing that out.
I read about the update or makeover in Fantasyland months ago. Well before Jim Hill or Lutz wrote about, Blue Sky Disney reported about the new rides coming to WDW. I was especially excited about the Seven Dwarfs roller coaster, but it appears that the economy will prevent us from seeing it for a while.