el_super
Well-Known Member
If people stop showing up they will course correct. If people like homogenization, they will continue down that path. They know what the market wants.
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If people stop showing up they will course correct. If people like homogenization, they will continue down that path. They know what the market wants.
Missing20K
Well-Known Member
I might argue this viewpoint (one that caters to the broader audience in search of profit) is dependent upon whether one believes theme parks and their experiences fall under the category of "art" or are simply a consumer good.
Sirwalterraleigh
Premium Member
It’s very difficult if even possible to “market correct” a phliosophical mistake.
el_super
Well-Known Member
Missing20K
Well-Known Member
An amusing craftsman and dishonest tradesman if you ask me. And I'm from Pittsburgh.
Straying too far off topic so I'll leave it. Feel free to PM to discuss art criticism further though.
mikejs78
Premium Member
That's not how this works. You're completely wrong about this. First, it's been confirmed by insiders here that the current cuts are directly a result of the situation in China.
Regarding if Disney is obligated to reduce costs regardless of China, that's also false. A company is not obligated to cut costs - they are obligated to maximize shareholder value. And sometimes that means increasing costs.
Disney has decided to cut costs domestically so as to offset the China situation a little. That's not even up for debate. They've done so by reducing staffing levels, which has the effect of making a poorer guest experience. They've decided to do that for the time being because of the losses from China. They may have not decided to make that trade-off in absence of the Corona virus situation, and they would not have in any way been obligated to do so.
Finally, having seen things like this happen before first hand in a large coroporation, you'd be surprised at how quickly this type of thing can come together. I've seen it done in a period of 2-3 weeks.
el_super
Well-Known Member
So the cuts that occured before the parks in China closed were what exactly? The mistake here is attributing cuts to the closure of the Chinese parks. They're not, because thats not how this works.
Absolutely, but when folks start claiming that Blizzard Beach is going to be closed because of budget cuts, the only way that makes sense is if running Blizzard Beach was costing them more than was coming in. And if that was true, why would it be open (costing them money) if the chinese parks were open?
It isn't up for debate, but only because it isn't true.
Those instances you speak of, where this happened before... was that also caused by Corona Virus?
Maybe cuts just happen, and trying to attribute them to the crisis of the day is silly. And if there is such a big concern about cutting, why are long term projects like Epcot and and the new DCL ships continuing?
flynnibus
Premium Member
The company the size of Disney? The company I work for micromanages sales forecasts to the FREAKIN HOUR at times of the year. OpEx spending can be clamped down within hours. Approvals to release new spending are happening non-stop and everything can be slowed or paused. This is a Fortune 100 company with over 70k employees and 50 billion a year in revenues. OpEx spending is like a faucet... you can slow it down with just the click of an email. There is inertia of course due to things in motion, but the decision logic is simple.. and it's effective.
How effective the changes are depends a lot on your type of business and where your costs come from. If you have high fixed overhead due to fixed labor and assets... you're not going to move the needle much. But if you are a scaler business that has lots of discretionary spending or flexible labor or operations.. you can make big change. Freeze all contract labor in the offices, freeze travel, eliminate overtime, pause any new non-critical capital spending, scrutinize discretionary spending. All common tricks even in simple white collar work to manage expenses when revenues are projecting shortfalls.
What? Have you ever even worked in a big corporation? That statement is ludicrous from even a white collar corporate world... Never mind the obvious examples how Disney manages costs in their parks. Staffing, operating hours, deferred upkeep, limited operations, limiting things like contractors, limiting entertainment, etc.
"tightening the belt" is something every big company knows how to do.. and Disney Parks has shown countless times they are well versed in the tools as well.
And Disney is always looking to outsource work instead of employing cast members. Job gets done, if you get hurt, Disney won't be paying workers comp.
Epcot82Guy
Well-Known Member
But therein lies a bit of the problem. When you are talking about merchandising and even films/screen-based entertainment, your ability to pivot is relatively quick. I can create new toys quickly. I can release or retweak content somewhat quickly. Theme parks are themselves static things that are enduring. Of course, they are not museums. But, banking on long-term nostalgia and enjoyment is the only way. Look at roller coasters at Six Flags where you have little nostalgia. The most popular coaster can be very mediocre within a matter of years. And, the expenses to build out physical things like that are very different than stocking shelves or redecorating window storefronts. Quick, temporary adds to a park can often feel just that - quick and temporary. Add onto that Disney's crazy building and approval timelines, and you have a big impediment to a fast, unexpected change.
I'm not saying Disney is doing that in all regards. But, that management style seems more and more prevalent in Parks and Resorts management in recent years. And, it is far from certain whether that will bode well if there is a big shift in fandom at some point.
flynnibus
Premium Member
A gross simplification that completely misses the point. When your revenues are falling short... you rush to cut expenses because it's what you control. You usually can't just run out and scare up new revenue. So to protect your margins, you slash expenses. You forget when you look at something like Blizzard Beach and Disney... it represents a huge cost no matter if people show up or not... and most of your attendees are already PRE PAID. So yes you lose revenue from that park, but you have pretty much a captive audience that simply will be pushed to somewhere else for the day.. and will spend there. The short term schedule changes save huge amounts of cost and don't really impact the long term marketability and attracting guests. On top of that... Disney has a second water park to push people to.
Disney has the margins and demand to make two water parks viable most of the time... so your whole 'why would it be open' challenge is dumb... its open because it's profitable for them to do so. But when you are slashing expenses short term... you are usually willing to sacrafice lower margin revenues to make immediate cash flow impacts.
Your entire premise could be simplified to 'Why does Disney run 2 buses if they can run just one at other times?" -- Because they can make 2 buses work for all their inputs.. and they can still cut it and run 1 bus and sacrifice other things if operating expense pressure dictates they do so. The entire 'well why do they run it' is a stupid strawman.
FigmentFreak
Well-Known Member
I'd bet a company like Disney, prone to being a cyclical business, have a cost reducing plan at the ready for at least the first stage of cost cutting in situations like this where they assume it will be at least a short term slowdown.
el_super
Well-Known Member
OH I don't at all disagree with any of this, but this is a far different thing than suggesting that the price of admission went up because Shanghai was closed or entertainment was cut because of the riots in Hong Kong. At the most basic level, Disney isn't going to risk disrupting revenue by closing parks or reducing offerings because they are concerned about missing targets. That's absolutely not how it works. Should be pointed out that Disneyland has a new parade being offered today that could have easily been pushed back to summer if there was that much concern about spending, but the revenue being generated probably outweighs the cost to run it. Which was my point: if these things didnt generate more revenue they wouldn't be offered at all.
Same basic concept: if they make the same amount of money closing the park at 11:00pm instead of midnight, why wouldn't the park ALWAYS close at 11:00pm?
Why do you think they can somehow get away with this temporarily but not long term?
el_super
Well-Known Member
It's profitable until someone sneezes in China? I would believe that a general dip in attendance would be enough to justify reducing capacity, but if it were as simple as just convincing people to go somewhere else and not losing out on any revenue, theme parks would be closing instead of water parks.
dizneeboy
Active Member
I'm surprised they dont have credit card reader to use them
flynnibus
Premium Member
You're wrong and history is there to prove it.
This is again some simplification that is simply ignorant of an operational model like Disney's. They can run the parade, but they do things to reduce cost without always impacting the customer's perception of what they are getting. Doing things like reducing frequency, reducing number of staff, etc.
FOR THAT EXACT REASON - it's temporary so they can mask it vs the common perception.
It's the very idea of making small changes that the common guest don't necessarily catch onto or perceive as a negative... or simply are seen as temporal and don't change the larger perception.
Doing things like having some attractions open later... or closing dining locations early.. or limiting the # of ODV carts operating on a day. There is literally a encyclopedia of operational tweaks the management uses to manage their expenses given their operating parameters.
mikejs78
Premium Member
Are you going to tell me too that the moon landing was staged, that JFK wasn't assassinated, and that 9/11 was a hoax? Your opinion doesn't match what's been reported.
News - Expect closure of Hong Kong Disneyland and Shanghai Disneyland to impact Walt Disney World
I'm hearing that in the wake of closures of both Hong Kong Disneyland and Shanghai Disneyland that there will be some tightening of the belt at Walt Disney World. Savings will need to be made, likely starting with labor.
flynnibus
Premium Member
There is a spread between what Disney must do 'at a minimum' to try to protect the perception of their product vs what Disney CAN CHOSE to do to build a perception of their product.
Disney doesn't always run at 'maximum customer experience' -- Not sure why you take this reality to mean they CAN'T run above the minimum and be a sound business practice.
They have built a perception of exceeding customer expectations. Doing that requires running beyond minimums... and often even in excess.
But that also gives them the power to cut back and run at less than optimal conditions if they so choose. The magic is in balancing those two conditions to protect the perception without being wasteful all the time.
el_super
Well-Known Member
Riiiight....
So when do we get to find out what crisis will "cause" the cuts next year?
el_super
Well-Known Member
What's been reported by... the anonymous insiders on the internet?