News Chapek FIRED, Iger New CEO

[el_super]

I'd argue that the parks have been subordinated to the commercial products/retail side of things for some time. And that segment is less lucrative than 1) the films/TV division, which itself is being subsumed by the emphasis on streaming. Again, the internal corporate advocates from within the Parks/consumer products sides of things have an emphasis on the retail merchandise side of things, and that includes the savior-in-waiting Josh D'Amaro.

But there is a perfectly good explanation for that: Consumer Products as a whole, has a vastly wider audience than the parks do.

How many (unique) people in the US go to a Disney park in a year? 30 or 40 million? about 10%? How many see a marvel movie, or subscribe to Disney+ or buy a Mickey Mouse plush at Target? The parks are still a very niche segment.

Simple. Parks (except for something like the pandemic) are reliable. Year after year. Hollywood - not so much. For every "Frozen" there's a "John Carter Of Mars"

Part of that reliability is the SLOW return on investment. They build something expecting it to make a return n DECADES versus a year or two. The parks make sense to Disney because they are a low risk/low yield investment. There's no real guarantee either, that simply redirecting money from content creation to the parks would have the same return.

They're spending something like 30+ billion on content creation next year right? That's probably about 10 Disney style theme parks. Do you really think that 10 more Disney parks would make them that much more money?

Gotta think that reliability is also the reason the parks aren’t more of a focus. If people will go regardless of what they do there’s not much incentive to make them the priority.

Let's also not forget that conventional wisdom would say that the park business is DRIVEN by the brand/IP. You need the studio pumping out new movies, new shows and new properties not just to draw the direct connection to the park experience (like offering a new Star Wars land) but also in the connection to the brand and the favorability of someone picking Disney over a competitor because of how ubiquitous it is, and how strong that connection is to the audience.

Disney *IS* the brand.

You’re going to cherry pick last year, of all years, to make that argument?

Parks typically made about 20-30%. 40% would be an anomaly. Maybe if you have time you can average it out over the last 10 years?

 

[the.dreamfinder]

But there is a perfectly good explanation for that: Consumer Products as a whole, has a vastly wider audience than the parks do.

How many (unique) people in the US go to a Disney park in a year? 30 or 40 million? about 10%? How many see a marvel movie, or subscribe to Disney+ or buy a Mickey Mouse plush at Target? The parks are still a very niche segment.

The margins are very different. A Disney vacation has much higher margins than a Frozen doll at Target. Plus, Studios takes a nice chunk of the consumer products $$$ as part of their segment revenues.

 

[Sir_Cliff]

I confess that I am not an expert in the inner workings of Disney, but it does strike me that they do pay plenty of attention to the parks and still spend a lot of money on them. Admittedly, early in the Iger years a case could be made that this wasn't true, but today the issue to me doesn't seem like they neglect the parks in favour of other divisions such as Disney+. The issue seems more whether their moves are the correct ones or whether they're spending their money wisely. What concerns me is that most of the calculations seem driven by numbers rather than thinking through the experience of visiting the parks, which may work in the short term but ultimately backfire.

In terms of all the talk about Disney+ and associated content, I do think it's clear that if Disney wants to survive as a major content producer that it needs to find a way to adapt to the streaming era and it's logical that is absorbing a lot of internal and external attention over the parks. I don't think it would be wise to go back to that post-Walt era where they essentially became a successful theme park (and now cruise ship) company with a mediocre studio attached. All the changes we've seen in the parks since the pandemic hit may not be loved or even wise, but they do show Disney is spending a lot of time thinking about how they want to run them differently going forward. Honestly, I wish they ignored them a little more!

 

[JoeCamel]

I confess that I am not an expert in the inner workings of Disney, but it does strike me that they do pay plenty of attention to the parks and still spend a lot of money on them. Admittedly, early in the Iger years a case could be made that this wasn't true, but today the issue to me doesn't seem like they neglect the parks in favour of other divisions such as Disney+. The issue seems more whether their moves are the correct ones or whether they're spending their money wisely. What concerns me is that most of the calculations seem driven by numbers rather than thinking through the experience of visiting the parks, which may work in the short term but ultimately backfire.

In terms of all the talk about Disney+ and associated content, I do think it's clear that if Disney wants to survive as a major content producer that it needs to find a way to adapt to the streaming era and it's logical that is absorbing a lot of internal and external attention over the parks. All the changes we've seen in the parks since the pandemic hit may not be loved or even wise, but they show Disney is spending a lot of time thinking about how they want to run them differently going forward. I don't think it would be wise to go back to that post-Walt era where they essentially became a successful theme park (and now cruise ship) company with a mediocre studio attached.

My problem is the amount of reinvestment. The parks belch money for just opening their gates and it pours in throughout the day so to understaff (pre-covid) and delay/defer capital projects while allowing show quality to decline is nothing short of robbing that division to prop up dividends/bonuses/growth of other sectors. They spent a boatload of money so they wouldn't have to invest in the core product of the parks and we know what a waste that turned out to be. The future vision is very short sighted indeed.

 

[ImperfectPixie]

My problem is the amount of reinvestment. The parks belch money for just opening their gates and it pours in throughout the day so to understaff (pre-covid) and delay/defer capital projects while allowing show quality to decline is nothing short of robbing that division to prop up dividends/bonuses/growth of other sectors. They spent a boatload of money so they wouldn't have to invest in the core product of the parks and we know what a waste that turned out to be. The future vision is very short sighted indeed.

I'm frankly stunned that the BoD isn't having a coronary over the $3 billion wasted.

 

[TikibirdLand]

I'm frankly stunned that the BoD isn't having a coronary over the $3 billion wasted.

Hey, a Billion here, a Billion there... Pretty soon, you're talking about some real money!

Seriously, did it REALLY need to cost $1B on each coast to produce what we have in GE? Did they get their money's worth on MMRR (dunno how much that cost)? I'm flabbergasted by the lavish spending on these projects while the rest of the parks can't get what they have maintained properly. They've tore out true treasures while doing these projects. The only one I've seen that really succeeds is the EPCoT entrance (don't go past there though!).

 

[JoeCamel]

I'm frankly stunned that the BoD isn't having a coronary over the $3 billion wasted.

That figure keep growing like a zit but maybe half that

 

[ImperfectPixie]

That figure keep growing like a zit but maybe half that

When you include MM+, FP+, and Genie, it's actually $4 billion. I knock $1 billion off for the infrastructure upgrades that were desperately needed.

 

[lazyboy97o]

Just a reminder that for the money Disney has spent on trying to avoid adding capacity they could have added at least 30 Non-Descript Coasters Themed Like India or Whatever to Walt Disney World.

 

[ImperfectPixie]

Just a reminder that for the money Disney has spent on trying to avoid adding capacity they could have added at least 30 Non-Descript Coasters Themed Like India or Whatever to Walt Disney World.

RIGHT?!? It's mind-boggling the choices they've made.

 

[HauntedPirate]

Again, as has been said numerous times - It’s not the amount being spent, it’s how and where it’s being spent.

I personally think the goal is near-total control over and absolute insight into the consumers’ days spent in the parks. They are making things so complicated and convoluted, plus the numerous schemes now in place, that nothing else makes much sense.

 

[Lilofan]

Again, as has been said numerous times - It’s not the amount being spent, it’s how and where it’s being spent.

I personally think the goal is near-total control over and absolute insight into the consumers’ days spent in the parks. They are making things so complicated and convoluted, plus the numerous schemes now in place, that nothing else makes much sense.

One reason that Disney track consumers spending ( ie Magic Bands ) is to get the company a better return on their investment of products and services. The shocking result is when the family gets home and gets their credit card bill at the end of the month.

 

[SpoiledBlueMilk]

Hey, a Billion here, a Billion there... Pretty soon, you're talking about some real money!

Seriously, did it REALLY need to cost $1B on each coast to produce what we have in GE? Did they get their money's worth on MMRR (dunno how much that cost)? I'm flabbergasted by the lavish spending on these projects while the rest of the parks can't get what they have maintained properly. They've tore out true treasures while doing these projects. The only one I've seen that really succeeds is the EPCoT entrance (don't go past there though!).

All that rock work costs serious $$$. Galaxy's Edge is the physical embodiment of how Disney has handled Star Wars since they acquired it - half a$*ed.

I still stand behind the idea that Chapek is a numbers guy who thinks more in terms of widgets sold and costs cut than he does from a higher strategic position. All CEOs need training wheels, but I don't think Bob is cut out for it. His initial track record is terrible and his decisions are concerning. The way he uprooted Iger's "creatives first" approach to fill the C-Suite with allies with little experience in their new roles. The whole Scarlett Johanssen flare-up. The failure to right the ship at Lucasfilm. The list goes on.

I know we are mostly focused on Parks, but let's face it - Disney's future lies in tech and streaming. However, D+ isn't meeting the Street's expectations. Hawkeye pulled in fewer viewers than Wanda or Loki. The shine is off the Marvel apple and you can blame the pandemic all you want, but Eternals pulled a $300 million global gross earlier this month. That used to be a domestic weekend opening. Despite Disney spinning Shang Chi as a massive success for 2021, it still sits at the end of the list for Marvel movies in terms of box office. The bright spot is Spider Man and that's a Sony production. Disney needs something new that will keep subscribers interested right as super hero fatigue might be setting in. I just don't think Chapek is the guy to do that.

Then we have China. Iger bent over backwards to woo the Chinese government for Shanghai. Now we have Disney - a self professed "woke" corporation needing to balance its creative decision to push diversity with the Chinese government's refusal to go along with it. The result? Eternals and Shang Chi won't be seen by the largest audience out there. Now we learn that Disney censored the Simpsons to cut negative references to Mao or Tiananmen Square. With China becoming increasingly bellicose with its trade policies and Taiwan, what decisions will Chapek need to make to maintain Disney's reputation and keep its position in the Asian market?

Challenging times call for bold leadership. Unfortunately, Disney's answer is Bob Chapek.

 

[lazyboy97o]

Again, as has been said numerous times - It’s not the amount being spent, it’s how and where it’s being spent.

I personally think the goal is near-total control over and absolute insight into the consumers’ days spent in the parks. They are making things so complicated and convoluted, plus the numerous schemes now in place, that nothing else makes much sense.

Data mining was a big component of NextGen that didn’t actually pan out as much as desired.

 

[ImperfectPixie]

One reason that Disney track consumers spending ( ie Magic Bands ) is to get the company a better return on their investment of products and services. The shocking result is when the family gets home and gets their credit card bill at the end of the month.

But yet they continue to make decisions that inhibit a person's desire to spend money on merchandise and dining...

 

[el_super]

The issue seems more whether their moves are the correct ones or whether they're spending their money wisely. What concerns me is that most of the calculations seem driven by numbers rather than thinking through the experience of visiting the parks, which may work in the short term but ultimately backfire.

I do agree that they have been paying attention to the parks, and are still heavily investing in them, but I have to shudder at the whole idea of "but the long term..."

People have been saying this, literally for decades. There is famously a letter that circulated in the 1940s, claiming that the Disney Studio was done, Walt had lost his touch and sold out to investors. The studio was ruined forever by corporate greed.

80 years ago.

The problem for the people here, thinking that Chapek is a bad leader because he's too focused on the numbers is a simple one: being a numbers guy usually works. It's the textbook definition of how to run a business. I think most people here do recognize this, but where the disconnect is occurring is when they see actions they don't agree with in the parks, and no corresponding drop in the numbers. Chapek removes a ride and people keep going. Chapek raises the prices and removes the free services and people keep going. And the only thing left to point to is this emotional appeal to the future.

"Yeah things are great now... but someday .... someday they will be sorry."

If Chapek strictly plays it by the numbers, and the parks keep raking in attendance and cash, he will be seen as a great example of how to run a park. If the attendance waffles, and the cash stops flowing, he will have to adjust and then he will be judged on how he adjusts. Having the "Chapek is bad for the parks" discussion now is way too premature.

I'm frankly stunned that the BoD isn't having a coronary over the $3 billion wasted.

On NextGen? It wasn't wasted. Every post crying for Fastpass to come back, or for MagicBands to be rolled out at Disneyland proves that.

 

[el_super]

Data mining was a big component of NextGen that didn’t actually pan out as much as desired.

That's true, but if the goal of the data mining was to make sure the parks were packed to capacity, they achieved that goal anyway.

 

[the.dreamfinder]

That figure keep growing like a zit but maybe half that

It went over $2 billion.

 

[the.dreamfinder]

That's true, but if the goal of the data mining was to make sure the parks were packed to capacity, they achieved that goal anyway.

It was for hyper targeted marketing, but COPPA protects the most valuable users, I mean guests, known to normal folks as children under 13 from such data mining.

At one point, they wanted to use the data to bring back sponsorships where brands/companies would get access to said collected data.

 

[el_super]

It was for hyper targeted marketing, but COPPA protects the most valuable users, I mean guests, known to normal folks as children under 13 from such data mining.

At one point, they wanted to use the data to bring back sponsorships where brands/companies would get access to said collected data.

That probably would have been a nice way to pick up a couple 10 million dollars checks, but it was never going to pay for the whole endeavor.