Disney's New Theme Park: Delayed and Over-Budget, But More Amazing Than Ever
While U.S. theme parks drove most of
The Walt Disney Co. (NYSE:
DIS ) theme park segment growth in 2014, investors have been waiting for 2015 -- the year Disney's largest theme park to date, located in mainland China, was initially set to open. Some investors hoped Disney's release of Star Wars VII would accompany the park's opening in 2015 to cap off another widely successful year.
Now, the park is over-budget (at a current $5.5 billion compared to the original $4 billion estimate), and the company announced that its grand opening will be delayed until 2016.
So, in a world where time equals money, does this mean I should worry about my investment in Disney and the success of its new park? Not a chance.
Still an incredible new park
Disney's Shanghai resort has about 8,000 people involved in its construction, which covers nearly 1000 acres (about 4 square kilometers). The park will have a typical Magic Kingdom-style theme park, but is also said to feature the largest main princess castle of any Disney resort yet.
"The artistry, complexity, the magnitude and the detail, it's all quite astonishing," said Disney CEO Bob Iger, speaking about Shanghai Disney Resort.
The resort will also include multiple hotels (one is expected to boast a
Toy Story theme, a first of its kind), as well as other retail, dining, and entertainment venues in a classic "Disneytown" area for families to enjoy during times when they are not in the theme park itself. The resort will even include a more formal Broadway-style theater and other outdoor venues to draw other shows, artists, and attractions to its site.
Still in time for a record breaking 2016
Even with a delayed opening, the park is expected to break visitation records. Disney Shanghai will likely host more visitors than Disney's biggest park to date, Magic Kingdom in Orlando, Florida. The anticipated annual number of guests to this Shanghai park is 25 million, compared to about the 20 million expected for Magic Kingdom in Florida.
And because Disney still plans to open the park by February 2016, which is just in time for the high tourism season surrounding Chinese New Year, Disney Shanghai's grand opening could garner even more publicity that will serve it well the rest of the year.
Still the first to open in Mainland China
Disney is not that only company looking to make a major opening in the Mainland Chinese market. Both Comcast (NASDAQ:
CMCSA ) and DreamWorks Animation (NASDAQ:
DWA ) are also planning to push their own brands in this vast and growing market with future theme parks.
DreamWorks Animation is involved in a joint venture with Chinese partners called Oriental Dreamworks, which includes plans for opening a theme-park-like set of studios and attractions called DreamCenter, also outside of Shanghai. There has been little public mention of this plan, however, and at the earliest, Oriental DreamWorks' DreamCenter would open later in 2017.
Comcast-owned Universal Studios has already broken ground on its own theme park near Beijing, too. This park will rival Disney Shanghai by size and investment, and the characters under Universal Studios brand such as Transformers, already have strong brand awareness in China. However, plans for this park indicate its scheduled opening is set for 2019, giving Disney Shanghai the advantage of establishing itself first without much competition.
Even after the announcement that Disney Shanghai is more expensive than expected and scheduled to open later than anticipated, investors can rest assured that the park looks more amazing than ever, will likely boast record-setting visitation numbers, and will still open years ahead of these competitors. Despite some hiccups along the way, this park is still one reason long-term Disney shareholders can be excited.
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