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

[eliza61nyc]

This is the kind of thing that scares me everytime I consider DVC.

I posted this on the dvc thread but not sure what "service" is expected. Now dvc members don't mousekeeping and that is stated from day one and unless I have a problem with my room what "customer service" would I need? The servers at the hotel restaurants are great, attentive without being pushy, friendly and timely, again not know what else is expected. I do on line check in so I don't even remember going to the desk.
DVC is a pre paid room opportunity. It is not a reward program, perks are not a part of a contract.
I've never been treated any less than when I'm a cash paying guest
I will say I've been upgraded a time or two on a cash ressie but
That's about it

 

[dieboy]

I don’t think the price increases are surprising. Never said I did.

I said I’m surprised how resilient the consumer has been to price increases at Disney.

Yea, I know. I think the end of my post clarifies why most people keep coming back, it was those generations that got to experience the 'good' disney, that has created that mindset of 'my parents took me, i need to take my kids, grandkids, etc etc'. It seems to override the annoyance of regular price increases. Its an odd phenomenon for sure.

 

[flynnibus]

Yea, I know. I think the end of my post clarifies why most people keep coming back, it was those generations that got to experience the 'good' disney, that has created that mindset of 'my parents took me, i need to take my kids, grandkids, etc etc'. It seems to override the annoyance of regular price increases. Its an odd phenomenon for sure.

Brand loyalty... it's not that uncommon to be a 'learned' trait. As new buyers... people often gravitate to the brands they are familiar with through their upbringing.

What gas station brand do you goto?
What brand of bread do you get?
What kind of soap/shampoo do you use?
What brand of trash bags do you use?
Toothpaste?

This is why 'brands' are so essential. Most of the stuff 'on the shelf' is largely interchangable.. so how does a company get you to buy their brand is through recognition (marketing blasts) and trying to nurture longevity as a sign of 'preference' or quality.

It's why razor companies send their product for free to young teens, etc. Try to establish that familiarity.

Disney's strongest asset is that generational loyalty it built in the 70s and 80s.. that's why people have been voicing concern about how this erosion is a long term risk.. not just quarter to quarter.

 

[The_Jobu]

I posted this on the dvc thread but not sure what "service" is expected. Now dvc members don't mousekeeping and that is stated from day one and unless I have a problem with my room what "customer service" would I need? The servers at the hotel restaurants are great, attentive without being pushy, friendly and timely, again not know what else is expected. I do on line check in so I don't even remember going to the desk.
DVC is a pre paid room opportunity. It is not a reward program, perks are not a part of a contract.
I've never been treated any less than when I'm a cash paying guest
I will say I've been upgraded a time or two on a cash ressie but
That's about it

That’s good to know. I take it with the negative comments to help make my decision. Still evaluating a lot of feedback.

 

[It Is What It Is]

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”

Sir Walter, you are one of the few anti-Iger people on these forums that comes across as having an understanding of business. I'm hoping to learn something from you. What would you have done differently as CEO? If you have had Disney stock for the past 15 years, each share you own is up over 100 per. You mention relying heavily on the Parks segment. From what I read, Media Networks is the main workhorse for the company. Parks second and Studios three. A lot of effort goes into the Studios too, would you not agree? Isn't 2019 going to be a record breaking year in revenue? You mention 'rudderless', but aren't they full steam ahead with Disney+ in the Consumer Products division? As a business person, can you give some clarity on how they could be better run? You might have some great ideas and I would like to know. It is clear that you feel the are some problems, but isn't it best in business when solutions are offered to problems? I apologise if you have offered solutions in other threads that I may have missed. If so, please point me too them.

 

[It Is What It Is]

It is interesting how this 3% dip comes off as a victory to some here. Of course it could have been plus 5%, if it weren't for the AP blockouts.

Disney could fill the parks easily. Lift the blockouts, offer free dining, etc. But then there would be overcrowding.

To the naysayers, I ask, what might your strategy be? How would you handle issues if you were in charge?

 

[RobWDW1971]

Disney's strongest asset is that generational loyalty it built in the 70s and 80s.. that's why people have been voicing concern about how this erosion is a long term risk.. not just quarter to quarter.

Yup (although I would add 60's as well in terms of establishing Disneyland in the zeitgeist) and certainly my generation is living off those memories and Kool-Aid we guzzled back then. I honestly think 90% of my passion for the parks and my enjoyment of them is not what I'm actually seeing/experiencing anymore, but just through the rose-colored glasses of my memories. I notice this more when I'm at Epcot with my older kids and we're in Future World and I'm excited about The Land and they look at me like I'm nuts. "My" Future World still says Horizons, World of Motion, great exhibits in Innoventions, Journey into Imagination, etc. and so I just project all of that amazing originality onto what I'm actually seeing.

 

[OneofThree]

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.

Yes -it's about time Disney actually allows pricing to address demand, as they have been over-selling space in the parks for too long now.

 

[Sirwalterraleigh]

Sir Walter, you are one of the few anti-Iger people on these forums that comes across as having an understanding of business. I'm hoping to learn something from you. What would you have done differently as CEO? If you have had Disney stock for the past 15 years, each share you own is up over 100 per. You mention relying heavily on the Parks segment. From what I read, Media Networks is the main workhorse for the company. Parks second and Studios three. A lot of effort goes into the Studios too, would you not agree? Isn't 2019 going to be a record breaking year in revenue? You mention 'rudderless', but aren't they full steam ahead with Disney+ in the Consumer Products division? As a business person, can you give some clarity on how they could be better run? You might have some great ideas and I would like to know. It is clear that you feel the are some problems, but isn't it best in business when solutions are offered to problems? I apologise if you have offered solutions in other threads that I may have missed. If so, please point me too them.

I can only say that after decades of study of Disney’s business and it’s longterm trajectory and also some actual Disney business unit experience...

I worry a lot about the longterm implications of what I consider to be very short term strategies from Iger and company.

So while I’ve “made money” off him...I didn’t do anything for it. Stocks are fairly low risk/high reward gambling...so I would “give up” some of that “hard earned” cash if I thought they were not sawing the piers under the Boardwalk.

2-3x cost increase during iger’s tenure is dangerous. Consumer products that pass the unknown point of no return never recover. It’s a cliff...not a slope.

25% off and free dining won’t cut it when the mass audience - which Disney absolutely needs - moves on and forgets you.

IP does not counteract a screw job. Won’t work if they break the glass.

The other major problem I have is he’s a tv guy that was an absolute coward about addressing the decline of his espn money train...road it too long and too hard.

The streaming service would be in a much better position if they had not drug their feet till the last possible moment.

And while the movie studios have been pretty good, how much juice has he burned through? Obviously the box office works...too many reboots/remakes though. Don’t need endless copy cats.

The other fundamental idea is that with that much power/responsibility...it’s just too long to have what amounts to a corporate oligarch. They have a ceo, a puppet board, and NO executives worth a dump beyond bob.

No succession...soulless...fundamental change to the park formulas that have built the solid business it is.

...all things Roy said about Eisner. What’s changed other than bob is riding a bubble boom while Mikey has a crash?
People forget that slight variation.

 

[It Is What It Is]

...all things Roy said about Eisner. What’s changed other than bob is riding a bubble boom while Mikey has a crash?
People forget that slight variation.

Sir Walter, thank you for fleshing out your viewpoint. It's nice to have someone put analysis to their opinion. I can see how you have arrived at your viewpoint. I might not wholeheartedly agree but you have my respect.

 

[Sirwalterraleigh]

Sir Walter, thank you for fleshing out your viewpoint. It's nice to have someone put analysis to their opinion. I can see how you have arrived at your viewpoint. I might not wholeheartedly agree but you have my respect.

Todd

I have full appreciation of anyone that wants to engage in a discussion. Not “agree”...”engage”.

I change my mind and have counterpoints change my thinking all the time. It’s the whole point of a “discussion board”.

But too many won’t engage. It’s just talking up each other’s vacations to fill some type of obvious void back home. It’s sad, really.

But there is a place for that...they’re called “trip reports”

 

[It Is What It Is]

I have full appreciation of anyone that wants to engage in a discussion. Not “agree”...”engage”.

I change my mind and have counterpoints change my thinking all the time. It’s the whole point of a “discussion board”.

But too many won’t engage. It’s just talking up each other’s vacations to fill some type of obvious void back home. It’s sad, really.

But there is a place for that...they’re called “trip reports”

Sir Walter, as topics come up that we may not agree on, I look forward to engaging you in healthy conversation!

 

[Goofyernmost]

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.

It is a combination of both, however, the price has kept going up and it has not created a decrease in crowding at all. It has established the other types of guest. They are either wealthy or are going deeply in debt to have the Disney experience. The wealthy are naturally entitled and the in debt feel that they should get more for the financial strain this puts on them and their family. There are a lot of people out there that are fiscally responsible, but there are more that aren't apparently.

All that said, the day I listen to a person that is paid more money in a day then most middle class earn in a year say that there is no pricing issue all I can think of is how out of touch he is. He wouldn't know, to him it is parking meter change. I have gone steadily over the years in both genres, not wealthy but comfortable and early on when I had to use credit to do it. Now I can only go if I ask my children for gift certificates for birthdays, fathers day and Christmas, to take the sting out so that doesn't happen often.

I have stated before that I think that when you figure the entertainment value of a Disney Park, it is very inexpensive, but, with families for many it has become unaffordable. It is the same as deciding that because of the quality of a BMW it is reasonably priced and that price is also the reason why Ford can still sell a Fiesta. It is because that is what they can afford.

Spoiler

I'll let you in on a little secret, that Fiesta will get you to the same places that the BMW will go for a lot less money for the car, the gas, the repairs and everything else related to car ownership.

Spoiler

I once owned a Dodge Caravan with 180,000 miles on it and commuted twice a month to Boston from North Western Vermont. and the majority of the cars broken down on the side of the road were the BMW's, Mercedes, etc. I was told by a mechanic that many people that purchased them could not afford to maintain them so since they paid so much for them they felt that maintenance was not necessary so they ran them until they turned into a FORD... Found On the Road Dead.

Spoiler

Me and my very low status Caravan sailed right past them.

Spoiler

Oops! Sorry to have wandered off into more about cars then Disney pricing, but I think there is a fundamental difference between good value and affordability.

 

[RobWDW1971]

the customers have revolted and brand loyalty to ESPN is dead.

The negative impact to the ESPN brand is absolutely going to be part of his legacy. When you think of the power of the brand 20 years ago and fans reaction to the ESPN WWoS, ESPN Club, ESPN Zone, SportsCenter ads, etc. It was one of the strongest, passionate, most envied brand connections to sports fans.

Also, you have to include the intense politicalization of the shows and personalities to the key reasons the brand is now so damaged. I watched Chris Berman, Tom Jackson, Stuart Scott, etc. for twenty years and had no idea (nor did I care) how they thought politically. They just loved sports like I do.

 

[flynnibus]

The loyalty of ESPN was sown in an era where it’s only competition was broadcast networks sports. There was no such thing as 24/7 sports.

Contrast that now with fox, nbc, and every major conference and team having their own content networks... on top of some leagues having their own networks too! And none of that was because of any failure of espn or Iger. That was everyone seeing the money and fighting to carve out their own exclusive kingdoms.

Yes there have been cultural and program changes that have hurt espn... but don’t hang the shift purely on that. The sports network world is any entirely different place now than it was even 20 years ago.

Espn is under the microscope because it was the big stick Disney used to leverage carrier networks with. And now in the age of cord cutting and price pressures that come with that... the curtain is pulled back and people see what they didn’t realize what was happening all along and they were just ignorant of it.

Don’t worry... we are fast approaching cord cutter reality version 2... when fragmentation causes everyone to buy so many separate services they start wishing for some consolidate provider that brings together much more under a single roof. And we will get right back to where we were with how bundling worked for cable companies.

 

[flynnibus]

That’s what brand loyalty is for.
Iger killed the brand and brand loyalty for short term gain. Once you lose that the competition stiffens.

He’s doing the same thing to Disney that he did to espn and Universal can smell it

Except this was not competition in the pure sense... not like a theme park vs a theme park. The avenues where something could be consumed was fragmented... and the number of suitors for content also grew significantly.

No amount of brand loyalty will make the team you want to watch magically appear on ESPN if another network has the exclusive.. or that team decided to start their own network.

ESPN didn't 'choose' to pay more for content.. the number of suitors drove up the cost.

I think the management choices between ABC Sports and ESPN were more damning than the reasons people brought up here. People also forget ESPN was a vanguard when it came to online content to match their broadcast stuff.. as well as lead in a number of online initiatives.

The market is highly fragmented and competitive now.

 

[RobWDW1971]

The market is highly fragmented and competitive now.

It absolutely is, but the damage to the brand and loss of emotional connection to the brand has made it easier for people like me to easily switch to the other channels and websites where I would never have done that 10 years ago.

 

[Chef Mickey]

ESPN is a prime example of what the soulless Iger can do in terms of long term damage.

He took a top brand and severely damaged it by cutting staffing costs, killing personalities (which is what made ESPN), overpaying for product (SEC, ACC, NBA, NFL TV contracts) and charging high fees.

As a result of the high fees more and more people are cord cutting or avoiding the ESPN/ABC/Disney packages.
His NBA product is alot worse than when the NBA was on NBC and is inferior to the TNT/TBS NBA product.
He's chased away top Sportscenter talent and there's been a failure to develop and bring up new talent. When the Beeker like Scott Van Pelt is the headliner you have a huge problem.

They have massive problems because they overpaid for all those TV contracts, trying to corner and monopolize the market and content (analogous to the acquisition of the Fox movies) and the customers have revolted and brand loyalty to ESPN is dead.

I think when people look back they will see him as a grand failure to a much larger degree than with the regard with which he is looked at right now. Now some may separate that out by saying that it's Iger later years that was the problem just like people are separating Eisner/Wells from Eisner/Ovitz.

ESPN is terrible now, I must say.

Endless arguing, way too much Stephen A Smith, and typical cliche sports arguments like “who is better” or “does this hurt Lebron’s legacy? Terrible personalities, terrible play by play guys, MNF is awful, Marc Jackson and Mike Breen are soooo incredibly bad, and all the halftime shows are all awful. Waaaayyyy too much politicized content and polarizing topics designed to incite anger.

Disney has terrific management, but I can’t help but think they dropped the ball on ESPN. It’s still hugely popular and people will watch for the content, but the product is awful because of the people. I only watch because I want to see certain games.

 

[RobWDW1971]

ESPN is terrible now, I must say.

Endless arguing, way too much Stephen A Smith, and typical cliche sports arguments like “who is better” or “does this hurt Lebron’s legacy? Terrible personalities, terrible play by play guys, MNF is awful, Marc Jackson and Mike Breen are soooo incredibly bad, and all the halftime shows are all awful. Waaaayyyy too much politicized content and polarizing topics designed to incite anger.

Disney has terrific management, but I can’t help but think they dropped the ball on ESPN. It’s still hugely popular and people will watch for the content, but the product is awful because of the people. I only watch because I want to see certain games.

Spot on. I used to have SportsCenter on as my "background noise" whenever I was home and had ESPN.com on my favorites and was something I checked throughout the day. I can't even have ESPN on for 5 minutes anymore because of the shouting and fighting, virtue signaling, and political anger. I just chock it up to the fact I am not their core consumer anymore - I was from the Chris Berman/Linda Cohn/Stu Scott era and they just don't want my viewership any longer so I have moved on. That is not a competition issue, that is a conscious decision on their part to change their product and target a different demographic. It may be smart financially in the short-term, but the entire "every sports fan" brand they built is being systematically destroyed.

 

[DisAl]

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.

So says the man who doesn't even have to pay to go to a Disney park and makes hundreds of millions a year.
Iger will say anything to justify the price increases and blame lower attendance on ANYTHING else.
He can blame it on people waiting for SWGE if he wants to but I am more inclined the think they have finally reached the tipping point where more and more people just don't think it is worth it any more. The statement "The pricing is based on the "value of the franchises"" is just double speak for "we will squeeeze them for every penny we can.""