Bob Iger: "We Don't Believe We Have A Pricing Issue At Our Domestic Parks"

[eliza61nyc]

The question is whether we are grasping at a nostalgia of better days that never were or whether things have truly gone down hill.
Both things are entirely possible.

Maytag used to have washers that would last 20+ years. They were high quality.

Then Whirlpool bought them and just slapped the Maytag name on Whirpool washers and quality plummeted as Whirpool level washers only last 5 years.

****

Vaccum cleaners. The greedy Vacuum Corps made billions off the vaccuum cleaner bags while providing crappy service.
Then a man called Dyson(who was fed up with the greedy Corps) came along and with a superior services crushed the greedy Vaccuum Corps.

another agree, I always allow for the real reality that for long time visitors things have gone downhill. but you're last sentence points to a difference, right now Disney is still king, that is pretty evident from the visitors to the parks. Is it sustainable? who knows but I'll go out on a limb, for the next 5 years??? yeah they are sitting pretty as long as the entire economy does not crash. also again the age thing. more and more of those who remember are dropping off.

but along with the washing machine analogy and Disney, John q public bears some responsibility. Americans (and I'll just use us for example) stopped demanding quality. We wanted fast, cheap, renewable junk. I remember when Walmart first opened up, didn't they use to pride themselves on only purchasing quality American goods?? I have a friend who is a small business women and I went with her to her interview with walmart when she tried to get her product on it's shelf. the entire interview went basically "can you manufacture it a lot cheaper, are you willing to move production out of the country".

I'm not sure if dyson has 'crushed" the vacuum industry, there is a price point that some consumers just won't go over, lol I'm one. I'm never ever going to pay 500 bucks for a vacuum and they do have some cheaper entry level offerings but that cute little dyson animal that is suposed to be great if you have pets? 499.00. never gonna happen, which is pretty interesting since I will shell out 2K for a pocketbook. go figure. though I don't think Dyson is worried about the lower end consumer, they are not trying to get the guy who wants a vacuum for 89 bucks.

anyhoo back to the consumer, now you know my mantra, I stopped saying it because folks here get mad. If you find a product/service has deteriorated and the company is no longer operating under principles you feel strongly about... the logical answer is to stop supporting that product. Right now that has not happened so I'm sort of confused about what we think is going to change?

But to the point of Iger giving his explanation on the parks pricing? doesn't surprise me and not sure how important he feels the parks are to the overall health of the company. I don't think wall street cares where the profit comes from, as long as it comes.

 

[eliza61nyc]

And yet all the bags you buy for your vaccumm will end up costing you more than the $499 Dyson.

probably, lol that goes more to the psychology of purchasing.

 

[Mainahman]

i dont complain about the parking fees for example, as if i go to downtown nashville, i pay more for a few hours than i would for an entire day of parking my car at POP. Its a luxury to have your car at this point, were only 11 hours away, and prefer to drive, we get there quicker sadly,. can bring anything we want with us, and bring back anything. Ill gladly pay a few bucks, the same way i would if i was going to a concert downtown, or a preds game. Big cities do the same.

 

[Sirwalterraleigh]

Listening to the earnings call live at the moment, Disney said domestic park attendance was down 3% versus last year and analysts were questioning why.

Interestingly, Iger flat out said there is no pricing issue based on a lot of market research and data within the company. Instead, Disney gave reasons such as people waiting for crowds at Galaxy's Edge to subside and annual passholders staying away from DL.

I find this fascinating as consumers are so resilient. The pricing is based on the "value of the franchises" and investments in new attractions and experiences, according to Iger.

I have been openly resilient to price increase, but recently posted a thread complaining about the product itself suffering while prices have continued to increase, here: https://forums.wdwmagic.com/threads/ok-ill-admit-it-disney-prices-are-out-of-control.956080/

Seems crowds have spoken a tiny bit and I'm not completely buying it's because of Galaxy's Edge.

I mean...what’s he going to say? He watches his investment portfolio 23.5 hours a day at this point in the game...

But is it wrong to bring up the classic truth when somebody in power denies??
Bank it in the inverse

 

[Sirwalterraleigh]

I’m a shareholder too. No doubt, Iger has been a pimp for the stock.

He’s been terrible for the fans of Disney World in particular.

I think a lot of us are...

Would it shock people here to know i’m “Heavy”?

And yet i could care less about this quarter and want them to set pricing and investment strategies that won’t pay off till long down the road?

It should not.

The disconnect in modern investment is the disregard for “middle road security” in companies. TWDC was built on that premise. It’s not boom and bust. It’s been a more or less straight line for decades as many other waves rose above it and crashed below.

Iger has “made me money”...but I want him gone.

First - 15 years is too long. Have to refresh the tree

Second - when you’re leaning on parks so heavily that you have to show quarterly increases on the increase in price? And not growth/attendance bumps?...
...where are you headed. That is “rudderless”.

The myth of “luxury”

 

[Janir]

Iger is 100000% correct. There isn’t a pricing issue but rather a capacity issue. As a Disney shareholder I’d rather see attendance slightly turn down but profitability turn up due to the revenue per guest increasing drastically. We all complain about the parks being “always crowded” and this new pricing strategy will address this problem.

I agree, it's not a pricing issue so much as a capacity (and quality) issue.
Maybe they over did it at DLR with the AP blackouts for SWGE, and differnt passes, maybe not. But it will take them some time to sort out their info at the corporate level. They piled too many things at once and now they have obscured relationships between what changes they made and what they are seeing. Plenty of companies have this problem when the executive leadership (Senior VPs) is made up of more marketing types and fewer engineering background types but that's at best a generalization on my part.

 

[Sirwalterraleigh]

Iger is 100000% correct. There isn’t a pricing issue but rather a capacity issue. As a Disney shareholder I’d rather see attendance slightly turn down but profitability turn up due to the revenue per guest increasing drastically. We all complain about the parks being “always crowded” and this new pricing strategy will address this problem.

The problem is those parks are not nearly “full” and never have been and Disney in NO WAY wants to reduce capacity.

Their strategic goal is to increase attendance as if always has been.
Don’t believe suits when common sense will do.

 

[Smiley/OCD]

and although Iger is akin to the anti-christ here, this article sums up why elsewhere folks are happy campers.

https://www.cnbc.com/2019/08/06/bob-iger-forever-changed-disney-with-4-key-acquisitions.html

In the year that Iger was named CEO, Disney made $2.5 billion in net income. Last year, the company’s net income was $12.6 billion, a 404% increase. Similarly, Disney stock has risen exponentially. Shares of Disney are up 450% from $25 per share in 2005 to nearly $140 in August 2019.

YES!!! I read that CNBC article yesterday also...we (you & I), just have to remember that most on here are biased towards the parks. Say what you will about the resorts, but probably 300 out of the top 500 CEO's would LOVE to have the success Iger has.

 

[BoarderPhreak]

Less attendance + higher prices = continued revenue.

Pricing strategy. If you can't sell more than X widgets, increase the price until sales fall.

 

[jloucks]

The problem is those parks are not nearly “full” and never have been and Disney in NO WAY wants to reduce capacity.

Their strategic goal is to increase attendance as if always has been.
Don’t believe suits when common sense will do.

That's a scary thought considering my experience with crowd levels. But, yea, they could go for Tokyo Subway level crowds. *shudder*

 

[eliza61nyc]

The problem is those parks are not nearly “full” and never have been and Disney in NO WAY wants to reduce capacity.

Their strategic goal is to increase attendance as if always has been.
Don’t believe suits when common sense will do.

this is what worries me more than pricing. I have seen grandparents who will drop mortgage type money on little sunshine if he or she is happy, a full/crowded park will lead to meltdowns among the minon set. that is going to hurt long term imo way more than cost.

 

[Sirwalterraleigh]

That's a scary thought considering my experience with crowd levels. But, yea, they could go for Tokyo Subway level crowds. *shudder*

It’s simple numbers...3 of the 4 parks were built “big” and they rarely get anywhere close to their capacity.

But they also were built with “expansion pads”

And that’s why they are “crowded”...they’re still “pads”

 

[Sirwalterraleigh]

Less attendance + higher prices = continued revenue.

Pricing strategy. If you can't sell more than X widgets, increase the price until sales fall.

And when the sales fall...what do you do then?

Ahhh..now the mouse has a problem

 

[flynnibus]

Now first, I don't think John q public is all that deep into Disney they way we are. I often wonder, do the majority of guest really give a flip that the hotels don't have a cohesive "theme"? I don't think they do. How many guest do you really think are upset that Frozen is in Norweigh and they took out maelstrom? I'm a big fan but I'm definitely in the minors compared to some folks here. No way do I nit pick the authenticity of a lunch counter. so I think for a number of guest they still see the magic.

You're misunderstanding these discussions.

The guest isn't supposed to recognize those things.... just like the guest isn't supposed to see the infrastructure behind the attraction... or necessarily the lighting rigs illuminating the sets, etc. It's never about 'if the guest is aware of this...'

Those topics are critiqued because they are the building blocks and elements of design that are used to create lasting, successful, integrated attractions. It's about the principles used by the people that established the format that these guests found so satisfying. The critique is about what design choices and their eventual consequence on guest satisfaction.. especially when you look at things beyond a single attraction experience.

What the 'guest will be aware of' - is their eventual satisfaction visiting the park and attractions. What's the sum in the long run... not what they are immediately able to pin down as 'off'.

 

[Disorbust]

I really don't buy any of their "analytics" on prices. That can be manipulated to what they want to hear.

 

[Disorbust]

The question should be as someone already pointed out "where are they headed?" Off the top of my NON business head my concerns are:

The rumblings of the next economic downturn....
Uni building a new park, adding thousands of decent affordable rooms...
The trends of a lower birth rate....

 

[Chef Mickey]

That's a scary thought considering my experience with crowd levels. But, yea, they could go for Tokyo Subway level crowds. *shudder*

At least the people in Tokyo have some respect and manners.

 

[Chef Mickey]

The question should be as someone already pointed out "where are they headed?" Off the top of my NON business head my concerns are:

The rumblings of the next economic downturn....
Uni building a new park, adding thousands of decent affordable rooms...
The trends of a lower birth rate....

I would be concerned about none of those.

1) Birth rate is not an issue, at all. The US population grows from immigrants if nothing else. The world population is growing and Disney is a world brand, particularly the Orlando parks.

2) Economic downturns don't hurt Disney in the long run and not even terribly in the short run. The 2008 crisis was barely a blip in attendance and while there was some impact to profits, the parks were still profitable and came back stronger than ever.

3) Universal is not Disney and never will be. Disney's content trumps everything.

Disney's biggest concern is keeping the standard of quality high while managing crowds.

 

[eliza61nyc]

You're misunderstanding these discussions.

The guest isn't supposed to recognize those things.... just like the guest isn't supposed to see the infrastructure behind the attraction... or necessarily the lighting rigs illuminating the sets, etc. It's never about 'if the guest is aware of this...'

Those topics are critiqued because they are the building blocks and elements of design that are used to create lasting, successful, integrated attractions. It's about the principles used by the people that established the format that these guests found so satisfying. The critique is about what design choices and their eventual consequence on guest satisfaction.. especially when you look at things beyond a single attraction experience.

What the 'guest will be aware of' - is their eventual satisfaction visiting the park and attractions. What's the sum in the long run... not what they are immediately able to pin down as 'off'.

Agreed but from what I can see the guest IS satisfied with the product which seems to upset the crowds here and we seem to use those things as a barometer to whether or not Disney will last or not

 

[flynnibus]

2) Economic downturns don't hurt Disney in the long run and not even terribly in the short run. The 2008 crisis was barely a blip in attendance and while there was some impact to profits, the parks were still profitable and came back stronger than ever.

Helped largely by the happy conincidence that DCA v2 was already in motion... that alone boosted domestic attendance significantly. Disney absorbed the impact by dramatically cutting costs and offering promotions. Disney had enough cushion in the business to absorb much of the blow - not that they were not hurt by it. They were certainly impacted, they just were able to compensate.

Disney's diversification also helped... in that they had already invested in the Dream and Fantasy before the market impact. When you take things like DCA, DCL, etc.. you can see how their long range plan positioned them well for the post-recession. Some of that was more happy circumstance, but you have to give Disney credit for pressing on vs retreating at the time. They took the recession opportunity to invest rather than hunker down.

Of course... all that was after years of living thin. And I think that's what bothers fans... they don't see a constant stream like the promise of the DIsney Decade... instead they get new... thinning.. thinning... my god why is this crap still here... then boom.. big investment.. and the cycle continues.

Disney had established the creedo of perfection all the time. Disney under Iger has been 'stretch things out as long as you can before spending again'.