A Spirited Perfect Ten

[ford91exploder]

I just skimmed over this SDL/Wall St. conversation and I thought I might add some insight. Wall St sees TWDC as a theme parks and cable channel company. Wall St loves the cable and broadcast channels more than the parks because they are less capital intensive and thus have a consistently higher profit margin. As @ParentsOf4 has pointed out, P&R's record low investments in Capex as a percentage of revenue is an attempt to placate investors who don't like how much money P&R needs. This is one of the main reasons why Disney considered selling P&R so they wouldn't be in such a capital intensive industry which is very dependent on the health of the economy and oil prices.

I cannot understate how much the street loves the media networks, ESPN in particular. Despite increasing, but clearly laid out, programming costs, Wall St loves how Disney can suck $5.54 from 94 million U.S. households for ESPN every month. The Disney Channel is no slouch either with hundreds of millions of subscribers around the world. As I have stated in the past, Wall St wants Disney to have more pay-TV channels around the world, especially in growth markets like China. One of Bob's biggest failures as CEO has been his inability to launch the Disney Channel in China. A Chinese Disney Channel would have been an excellent means to get the public interested in the BRAND and offer a means to educate them on what a Disney theme park is. If you're Wall St, you want to know why a risky, capital intensive theme park was prioritized over a profitable cable channel on the mainland.

This is a long way of saying Bob has prioritized having his name on an opening day dedication plaque over building a strong presence in China, one that is not just in name only.

You are assuming that the current cable model will continue which I for one do not see, ala carte cable is coming and it probably will be Apple who brings it to us. After which ESPN will be a much less valuable property as people vote with their wallets and it loses the majority of it's subs. It will still have a LOT of subs but the majority of households don't care that much for sports. Same for Disney channels no LITTLE kids, no Disney channels.

Also that China will ALLOW TWDC to get a foothold in the Chinese TV market - so far they have said 'bu' (no in Mandarin) to the idea of Disney TV channels.

 

[the.dreamfinder]

You are assuming that the current cable model will continue which I for one do not see, ala carte cable is coming and it probably will be Apple who brings it to us. After which ESPN will be a much less valuable property as people vote with their wallets and it loses the majority of it's subs. It will still have a LOT of subs but the majority of households don't care that much for sports. Same for Disney channels no LITTLE kids, no Disney channels.

Also that China will ALLOW TWDC to get a foothold in the Chinese TV market - so far they have said 'bu' (no in Mandarin) to the idea of Disney TV channels.

Apple cable is looking like regular cable with a better interface.
However, the point I was making is that Wall St likes the media networks more than the parks because they have better margins. My point on the Chinese Disney Channel is that it's what the street would have preferred as the company's launch into the country. Bob and company have tried very hard to keep the fact they failed to get a channel and are building a much more capital intensive and riskier investment.

 

[stevehousse]

Look you could make a richly themed simulator environment, Imagine launching from the temple base on Yavin to engage the death star or TIE fighters where YOU fly the X or Y wing, This would be best with the Kuka arm's like 'Sum of all Thrills' but you get the idea. yes this would be a low capacity ride but I imagine the lines would be hours long.

or be a gunner in the falcon.

There is much Disney could do to make SW a truly immersive experience for both the fan and casual guest.

Disney actually already had a patent for a ride design like this. I'm at work so I can't really search for it now, but I'm sure others on here know what I'm talking about. It was about a year or 2 ago it was patented.

 

[ford91exploder]

Apple cable is looking like regular cable with a better interface.
However, the point I was making is that Wall St likes the media networks more than the parks because they have better margins. My point on the Chinese Disney Channel is that it's what the street would have preferred as the company's launch into the country. Bob and company have tried very hard to keep the fact they failed to get a channel and are building a much more capital intensive and riskier investment.

I think your second point is far more important in that Disney FAILED to get cable properties on the Mainland, so the park is more of a desperation play.

 

[ford91exploder]

Disney actually already had a patent for a ride design like this. I'm at work so I can't really search for it now, but I'm sure others on here know what I'm talking about. It was about a year or 2 ago it was patented.

No need at least for me, I remember the discussions about it.

 

[RivieraJenn]

My boss tried to open a branch in Brazil and he said its nightmarish.

Exactly. Tax law and other business regulations are incredibly complicated in Brazil, and many large, internationally savvy companies simply don't see any benefit in attempting to navigate such a beastly system. And, as has been pointed out a number of times, the Brazilians who want Disney already travel to WDW and spend boat loads of money. No need to take it to them.

 

[the.dreamfinder]

Exactly. Tax law and other business regulations are incredibly complicated in Brazil, and many large, internationally savvy companies simply don't see any benefit in attempting to navigate such a beastly system. And, as has been pointed out a number of times, the Brazilians who want Disney already travel to WDW and spend boat loads of money. No need to take it to them.

They also like to buy lots of electronics tariff free.

 

[lazyboy97o]

I guess I'm not being clear on my vision of this project. Why would there need to be just decoration or light immersion. The 2 choices aren't replica of a movie set (like Potterland) or light immersion. There are numerous examples of rides/lands in various Disney parks that are not based on exact replicas of physical locations from movies that are both immersive and elaborately themed. If you enter a Star Wars Land which is loosely based on Tatooine or specifically Mos Eisley you can have a main "street" of buildings with a Cantina and other various shops. It won't look exactly like the Mos Eisley viewed in the 30 second clip from the movie but could have some similar architecture. Now add in droids, jawas and other creatures from the movies plus well known space ships from the movies and you have been deeply immersed in the world of Star Wars.

I'm a heck of a lot more worried about the quality of the E-ticket and/or other rides than I am about Disney skimping on theming.

This is the concept I don't get. Why can't they be richly themed? We only saw Mos Eisly or the inside of the Falcon for small periods of time in the films. In my mind the imagineers are a lot less restricted in creating intricate details. The theming isn't contained to the boundaries of how something was described in a book or shown on screen. The details on a ride like TOT are fantastic...The lobby, the outside of the building, the show scenes. They didn't have hours of film footage or pages of a novel to go on. They built around a basic story based off of an old TV show.

I can't disagree with your photo-op point. Half of WDW has turned into a photo-op. Some times I feel like we spend as much time taking pictures of ourselves enjoying the parks as we spend actually enjoying them. I blame digital cameras. My trips to WDW pre-digital cameras I took 4 or 5 rolls of film and ended up with 100 usable pictures. Now it's in the thousands most trips.

What you keep describing is decoration and placelessness. Shoving in fake details to fill space is decorating. Not having a strong associated visual identity is placelessness.

Look you could make a richly themed simulator environment, Imagine launching from the temple base on Yavin to engage the death star or TIE fighters where YOU fly the X or Y wing, This would be best with the Kuka arm's like 'Sum of all Thrills' but you get the idea. yes this would be a low capacity ride but I imagine the lines would be hours long.

or be a gunner in the falcon.

There is much Disney could do to make SW a truly immersive experience for both the fan and casual guest.

You described a ride, not an environment.

 

[culturenthrills]

There's plenty of great places. Some inside ones; the Jedi Academy, the rebel base on Hoth, the Millenium Falcon, the Death Star, a Star Destroyer, Mos Eisley Cantina , a Sandcrawler, and if you want to bring in Episode I-III, I can easily give you a handful more. And a planet in itself, when it comes to Star Wars, is also a great place because they're so identifiable. The planets are the settings, and they can be themed with great props and effects to really take you there.

Personally, for an original trilogy setting, I think Tatooine would do great. Setting up the environment, e.g. Luke's home, Obi-Wan's hut, meeting Java's, seeing a Sandcrawler, and then having Mos Eisley. Remember that Mos Eisley is the spaceport, not the cantina (http://starwars.wikia.com/wiki/Mos_Eisley), where you could find the cantina, the docking station for the Millenium Falcon, etc.

This would be an awesome place to visit and very Star Wars-ish:

Tatooine and Mos Eisley area would be a TDO dream. No trees, landscaping or benches that they have to remove years later. The biggest problem they are gonna have with a lot of Star Wars environments Is no shaded areas which will be brutal in the Florida sun. Unless the build areas that are indoors or covered. This is one of the things that UNI learned from Hogsmeade was the lack of shade which is why DA is half covered.

 

[GoofGoof]

What you keep describing is decoration and placelessness. Shoving in fake details to fill space is decorating. Not having a strong associated visual identity is placelessness.

Huh? It's a theme park. It's going to be full of fake details. So then TOT is just decorated? How about Africa in DAK (Harambe Vilage)? Honestly, if that's the case I'm quite fine with just decoration.

 

[BrerJon]

They also like to buy lots of electronics tariff free.

I do worry that Disney has jumped on the mall bandwagon without realising the psychology of *why* the Brazilians flock to Florida Mall and the outlets - it's all about trying to get cheap stuff.

Disney is spending millions to build a mall for them and keep them from going off-property, but while Disney Springs will showcase designer luxury brands, I doubt they'll be at significantly cheaper prices than anywhere else, unlike the rival mall's offerings.

 

[spacemt354]

What you keep describing is decoration and placelessness. Shoving in fake details to fill space is decorating. Not having a strong associated visual identity is placelessness.

By that definition, aren't all theme park lands/attractions guilty of decoration and placelessness? I'm not sure how that's a negative on the project.

 

[RSoxNo1]

Like the saying goes...great minds think alike...

But seriously....the potential quagmire that Disney is getting into over there should be of interest to all Disney park fans.

Here's hoping it scares them into investing stateside.

 

[the.dreamfinder]

I do worry that Disney has jumped on the mall bandwagon without realising the psychology of *why* the Brazilians flock to Florida Mall and the outlets - it's all about trying to get cheap stuff.

Disney is spending millions to build a mall for them and keep them from going off-property, but while Disney Springs will showcase designer luxury brands, I doubt they'll be at significantly cheaper prices than anywhere else, unlike the rival mall's offerings.

Well... Apple products cost the same whether you're at a Best Buy or an Apple Store.

 

[Disneyhead'71]

I think your second point is far more important in that Disney FAILED to get cable properties on the Mainland, so the park is more of a desperation play.

It's not really a desperation play. The Chinese said no to cable channels. Disney said we make great theme parks. How about that?

It certainly is option B. But the goal is to get the brands foot in the door. This is a harder path, and one that will take more time to grow, but it will work. And let's not forget, the Disney Animated Features, Marvel, and Star Wars films do play in the theaters there.

Desperation would be something like trying to crack the market with cruise ships.

 

[BrerJon]

It's not really a desperation play. The Chinese said no to cable channels. Disney said we make great theme parks. How about that?

It certainly is option B. But the goal is to get the brands foot in the door. This is a harder path, and one that will take more time to grow, but it will work. And let's not forget, the Disney Animated Features, Marvel, and Star Wars films do play in the theaters there.

Desperation would be something like trying to crack the market with cruise ships.

I think most people agree that it will work eventually, it's just the scale and timeframe they're selling that is dubious. They're currently inflating the stock price and reassuring investors that SDL will see 25 million visitors in the first year.

There's almost no chance of that, and like an overhyped movie, even if it does well by the standards of Paris or Hong Kong opening years it will still become Iger's folly as far as the Wall Steet of 2017 is concerned.

 

[ford91exploder]

It's not really a desperation play. The Chinese said no to cable channels. Disney said we make great theme parks. How about that?

It certainly is option B. But the goal is to get the brands foot in the door. This is a harder path, and one that will take more time to grow, but it will work. And let's not forget, the Disney Animated Features, Marvel, and Star Wars films do play in the theaters there.

Desperation would be something like trying to crack the market with cruise ships.

Disney's movies compared to competitors don't do really well in China.

 

[ford91exploder]

I think most people agree that it will work eventually, it's just the scale and timeframe they're selling that is dubious. They're currently inflating the stock price and reassuring investors that SDL will see 25 million visitors in the first year.

There's almost no chance of that, and like an overhyped movie, even if it does well by Paris or Hong Kong opening years it will still become Iger's folly as far as the Wall Steet of 2017 is concerned.

It MAY do well, There is no guarantee in the Chinese market.

 

[the.dreamfinder]

It's not really a desperation play. The Chinese said no to cable channels. Disney said we make great theme parks. How about that?

It certainly is option B. But the goal is to get the brands foot in the door. This is a harder path, and one that will take more time to grow, but it will work. And let's not forget, the Disney Animated Features, Marvel, and Star Wars films do play in the theaters there.

Desperation would be something like trying to crack the market with cruise ships.

I'll leave this here. The Chinese don't have the context to understand what makes Disney, let alone it's premium theme parks, special. Having a Disney Channel would have been a solid revenue generator and an important tool in getting the Chinese public interested in Disney to the point they would be willing to go on a Disney vacation.
QUOTE="the.dreamfinder, post: 6588414, member: 76847"]Or that Disney picked the wrong venture to make its grand entrance into China. A while back I linked to a number of comments Jay Rasulo made to an investors conference on Disney's international business. His major point was that the Disney Channel is the single greatest means that folks, children in particular naturally, are exposed to the BRAND. He then stumbles around the issue of not having a Disney Channel in China by saying SDL will be a sufficient replacement. Hold up!! You just said the Disney Channel is the best way to introduce international audiences, many of whom don't have a cultural connection to the company's work, but you're going to go with a theme park?

One thing to keep in mind here, as @ParentsOf4 has brought up time after time, is the street's dislike of capital investment in P&R given the high expense and depreciation. In writing an article about how little BRAND recognition Disney has in China, it may make Disney nervous that Wall Street will realize the company went with a riskier investment that may do poorly, at least initially. The street wants more higher margin cable channels in the international markets, not theme parks.

Rasulo's Comments:[/QUOTE]

Here are Rasulo's comments from the 2012 Citigroup conference on SDR's role as TWDC's beachhead to China.
http://cdn.media.ir.thewaltdisneycompany.com/2012/events/jar-citi-2012-0105-transcript.pdf
Jason Bazinet – Analyst, Citigroup

And given your history at Disney in the parks division, and I know it's still a few years out, but do you mind just taking a second and explaining a little bit of the sheer scope and size of the operation in China and what it will ultimately be relative to the US investments?

Jay Rasulo – Senior Executive Vice President and Chief Financial Officer, The Walt Disney Company

In terms of Shanghai Disneyland?

Jason Bazinet – Analyst, Citigroup

Yes.

Jay Rasulo – Senior Executive Vice President and Chief Financial Officer, The Walt Disney Company

So, not to forget the park we already have in China, in Hong Kong, Hong Kong Disneyland has been doing amazingly well over the last couple of years, has definitely contributed along with Paris to that international growth picture you've seen. But Shanghai Disneyland is a very important strategic down stroke for the company. I mentioned that part of our international strategy, and if you look around particularly at emerging markets, investments of scale are something that we have decided to do in new markets. We recently announced a free to air deal in Russia to get a joint venture to get the Disney Channel on free to air television in Russia. We are engaged in buying in the rest of UTV in India that we own 50% of, but really want to have a significant statement there.

And in China where of course media entry is much more difficult than it is in most counties of the world, we decided our strategic play was going to be to plant the flag of a major destination theme park in Shanghai. And we worked on it for a decade. As you all know, the deal came to fruition, it is underway. It is a sizable investment in a partnership between the Chinese government and Disney. It's on a very, very big piece of land in Pudong in between the airport and the older part, more developed part of Shanghai, although Pudong is becoming quite developed. And it has the potential to be probably our second biggest resort around the world.

So the scale there -- of course we won't open at that size, but we'll open with significant scale if we compare it to Hong Kong, and have every reason to believe even in the microcosm of the Hong Kong Disneyland project where we see bigger and bigger penetration from mainland China, really gives us a good perspective and a good high optimism about how successful this park can be. It will be, look quite different from our other parks around the world in terms of how it's organized, but it will be 100% Disney, make no mistake about it. It will be distinctly Chinese, but it will be 100% built around Disney equities. That's what our partners want, that's of course what we want, and we have every reason to believe that it will accelerate quickly. And as I said, it certainly has the land potential and we think the market potential to be our second biggest destination around the world. And when you think about the size of the Orlando destination, that's a pretty big statement. And even Tokyo which brushes up against 30 million attendees a year. So we're pretty optimistic about it.

 

[Disneyhead'71]

Disney's movies compared to competitors don't do really well in China.

Now. But with the synergy of the park, I believe they and the brand will gain popularity. It will be a long slough, but it will work.

There is no way in hades that the park gets 25 million "PAYING" customers through the gate the first year.