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

[Sirwalterraleigh]

let me just say that the laws of economics stress that once you DO cross that tipping point.. even if just a fraction.. its extremely hard to go back.. and to be in denial does not help the Disney situation.. Now maybe Iger is posting a big front.. but that he knows that they have gone too far and doesn't want to panic the shareholders.. and that some way some how he is going to reach into his bag of tricks and Pixie Dust and bring us all back.. maybe the Sorcerer will return in time to save the park from drowning in the endless buckets of water.. but he better get ON HIS HORSE and start spurring.. because any ANY COMPANY can go down the tubes.. i.e. General Motors or the number one and number sales stores for most of my life time Sears and Penneys..

Agree completely...

Collapse of a disposal product based on pricing is a cliff, bot a slope.

Once it’s a ripoff...there’s no going back. It’s not like they can hit the wall and charge $3000 for an AP and then roll it back to $2800 and the droves return. People won’t want it at all or will scoff at $1500

It never has and never will work that way.

 

[OneofThree]

Collapse of a disposal product based on pricing is a cliff, bot a slope.

I have to disagree here. Disney has brand equity almost like no other.

 

[Sirwalterraleigh]

I have to disagree here. Disney has brand equity almost like no other.

So did Dow 30 companies prior.

You can believe Disney can’t fall...that is- however - not close to reality

 

["El Gran Magnifico"]

I have to disagree here. Disney has brand equity almost like no other.

Here's what I got. ~$2.5k WDW APs - ~$1.5k Uni APs - Both on an annual basis. Now the question becomes discretionary spend. I find myself spending more money at Uni every year (Hotel Rooms, Food, Merchandising etc..). Disney still gets more of my dollar every year, but Uni is gaining. Heck, the places on I-Drive, 535, and Sandlake are starting to gain.

 

[eliza61nyc]

So did Dow 30 companies prior.

You can believe Disney can’t fall...that is- however - not close to reality

Lol and there are also a bunch of companies that have been in business since 1859.
Of course realistically any and all companies have the probability of going bust. The question becomes how great is that probability??
Will Disney go under?? Will Wdw go under??
I'm betting they're good for at least another 15 years. Now don't get it twisted, they will continue to morph but I think to quote Mark twain " the rumor of it's demise has been great exaggerated".
Again it will have a valley just like the economy but I'm just not seeing this mass customer revolt with empty parks anytime soon.

sssh, and I'm too old to worry about it after that time.

 

[OneofThree]

Here's what I got. ~$2.5k WDW APs - ~$1.5k Uni APs - Both on an annual basis. Now the question becomes discretionary spend. I find myself spending more money at Uni every year (Hotel Rooms, Food, Merchandising etc..). Disney still gets more of my dollar every year, but Uni is gaining. Heck, the places on I-Drive, 535, and Sandlake are starting to gain.

We bought Uni AP's (7 of them) about the same time as we let our Disney AP's lapse. I'm happy with that decison. At the same time, Disney is not a substituble good for me and based on most of what I see, it isn't for a great number of other people either.

 

[OneofThree]

You can believe Disney can’t fall

That's taking quite a bit of license with my comment. As I mentioned above in response to a separate post, I'm of the opinion that Disney has a unique and enduring form of brand equity (much of i based on history, IP, and nostalgia), which I believe provides a certain degree of insulation to the "cliff" you mention.

 

[thomas998]

Lol and there are also a bunch of companies that have been in business since 1859.
Of course realistically any and all companies have the probability of going bust. The question becomes how great is that probability??
Will Disney go under?? Will Wdw go under??
I'm betting they're good for at least another 15 years. Now don't get it twisted, they will continue to morph but I think to quote Mark twain " the rumor of it's demise has been great exaggerated".
Again it will have a valley just like the economy but I'm just not seeing this mass customer revolt with empty parks anytime soon.

sssh, and I'm too old to worry about it after that time.

For a company like Disney their demise isn't likely to be caused by gate prices at the parks. If they were to have serious problems going forward they would most likely start in some of their other businesses that have a greater risk of having major problems. Such as ESPN that is 80% Disney and which has high dollar annual licensing fees for sports that given the current climate may become vastly over priced in the future. More and more of today's youth are tuning out off of sports and doing other things. If the audience for ESPN takes a big hit then they could end up with a big money drain with ESPN in the future... must less likely to ever see them losing money in the parks anytime soon.

 

["El Gran Magnifico"]

That's taking quite a bit of license with my comment. As I mentioned above in response to a separate post, I'm of the opinion that Disney has a unique and enduring form of brand equity (much of i based on history, IP, and nostalgia), which I believe provides a certain degree of insulation to the "cliff" you mention.

They do have an enduring brand loyalty. However, brand loyalty is generational at best. So there is insulation for a bit. Two decades from now...it's anybody's guess. The recent decisions they've made I don't believe have endeared them to the younger generation by the way of affordability. I could be wrong though.

 

[bjlc57]

I have to disagree here. Disney has brand equity almost like no other.

so did GM... so did Sears, Penney's , Kmart, and numerous others that have gone bankrupt.. my ma lost most of her retirement as a lifelong GM employee.. and all her stock was worthless.. ( but the guys at the top some how did " okay" .. ) Gimbals , Schusters', Pan AM, Kodak, Compaq , Gateway, all had " brand equity that " no other had"... all bit the dust.. TWA, the list goes on and on.. so sorry my friend but I have to absolutely disagree with this post..

 

[bjlc57]

let me also say that I am a dinosaur and a Disney stalworth.. but I am going to be 62.. and all the rest of us Dinosaurs, who watched the Mickey Mouse club each and every day become less and less by the minute.. ( heck I had a brother in law who survived a heart attack in Orlando last week).. but we have been "the core of Disney".. we grew up with the Mouse club daily and the wonderful world of color on sunday nights.. however, we are being replaced by others who haven't had Pixie Dust flowing through their veins for 60 years.. I learned good manners and how to be a good person , and respect by watching the Mouse Club.. I cry when I enter the park.. I cry at the Park enterance .. and I cry when I leave.. and that in the long run has equals DOLLARS SPENT.. My wife's family never traveled.. my two son in laws never went to Disney.. I brought each and every one of them along for the ride.. its been MY BURNING DESIRE to come back,, that has given Disney tens of thousands of dollars since 1971.. just from my family alone.. in fact i am sure that including my entire outer family we have given Disney over $20,000 in the past 10 years.. probably closer to $40,000 if I really push and add the numbers.. and that may even be low.. but my son in law.. can't see given them this kind of money in the future.. and my other kid, has no children of her own at this time.. Disney has made a major mistake.. and this is going to be one that 's hard to bounce back from.. NEVER EVER have I seen post after post here on this forum saying that Disney's prices have gone too far.. until now..

 

[Chef Mickey]

so did GM... so did Sears, Penney's , Kmart, and numerous others that have gone bankrupt.. my ma lost most of her retirement as a lifelong GM employee.. and all her stock was worthless.. ( but the guys at the top some how did " okay" .. ) Gimbals , Schusters', Pan AM, Kodak, Compaq , Gateway, all had " brand equity that " no other had"... all bit the dust.. TWA, the list goes on and on.. so sorry my friend but I have to absolutely disagree with this post..

None of those are comparable to Disney. Disney is stronger than ever, like the prices or not. Just look at the content. How do you begin to compete with Disney?

Amazon killed department stores. The car business is ultra competitive with many manufacturers making an excellent product.

Disney is in such a powerful position that competition literally can’t compete. Too big, too many assets, too much brand equity, too much content, too many physical assets, and a dominant distribution network.

Disney can’t be beaten with technology or some rogue startup on the horizon; it literally takes decades to build what Disney has built.

You’re never invincible, but all of your examples didn’t produce anything that couldn’t be replicated with another or better gadget or retail network. Disney’s position is deep within peoples’ minds, hearts, culture, and doesn’t even mention the assets owned. It is a completely different company. It’s also much larger and has more earning power than any of the companies you mentioned.

 

[ObscurityPoint]

Compared to WDW and DL, isn’t it much cheaper to visit the overseas parks? Considering we convert our money to their currency and take out airfair and travel costs.

 

[OneofThree]

None of those are comparable to Disney.

This, and the economic reasons it is so seems to escape some.

 

[flynnibus]

None of those are comparable to Disney. Disney is stronger than ever, like the prices or not. Just look at the content. How do you begin to compete with Disney?

Amazon killed department stores. The car business is ultra competitive with many manufacturers making an excellent product.

Disney is in such a powerful position that competition literally can’t compete. Too big, too many assets, too much brand equity, too much content, too many physical assets, and a dominant distribution network.

Disney can’t be beaten with technology or some rogue startup on the horizon, it literally takes decades to build what Disney has built.

Yeah? Then why did marvel do it so quick? Yes Disney as a whole is massive... but every side of Disney can be challenged pretty swiftly.

Your position is exactly what took down the American automakers.... we are so big... so much market... so much assets.. how can anyone compete?

Disney’s biggest asset is the ability to buy out or try to block competition before it gets out of hand.

 

[It Is What It Is]

I guess I disagree sort of. not the cost part but for middle class family. I ask this question and have yet to really get an answer. If the product is too expensive for so called middle class families, exactly who is taking up that space now?? are you meaning that all those people are rich?

I think those videos and articles are intentionally deceptive.
how many middle class families would go for only 1 day? (not talking about locals with AP's)?
Also it seems to make the assumption that a trip to disney is a spur of the moment thing. I think (and I admit my sampling pool is small) most middle class families do what they have been doing for decades. they plan and save for it. most folks I know book some times a year in advance and then save.
so you are right, most families don't wake up and spend 800 bucks on a day at the parks but they will set a budget say of 3K for a family of 4 and save for it.

lastly the whole concept of "middle class" is a bit ambiguous. the Pew foundation give it as an income range of about 40K to 122K. Ok but 55K a year which is supposedly middle class is one thing in lower cost Alabama but darn near poverty in New Jersey.

Every time Disney has a price increase there are a multitudes of articles and threads about how Disney is out pricing the middle class and or average family. so who the heck is in the parks? I went in April and while I didn't ask strangers what their income was I suspect they would consider themselves middle class.

Supply and demand. The parks will either be too crowded or expensive to get into. There will be fluctuations in this when the formula gets tweaked. Sometimes the tweak will result in a drop in attendance, as with GE, sometimes there will be a spike: offer free dining. Annual passes: if their quota is met quarterly or annually, prices will go up. If not, a break in price will most likely bring buyers back. This company has little competition in the parks division. Are there really a lot of people that would rather go to Universal over Disney? The tipping point might affect the die hard Disney fan, but that must be a single digit percent of the whole. If Disney believes the average person in their demographics (that would be up from your average middle class person) will pay more for the Cadillac vacation than the Chevy version, they don't need to worry about jacking up the price like McDonald's would overpricing a Big Mac compared to what you would get with Burger Kings Whopper.

The people here on these forums are very much in the minority of who Disney is paying attention to. When Universal is considered to be an equal of Disney, it is then they will value the tipping point and the voices of those here.

 

[Sirwalterraleigh]

That's taking quite a bit of license with my comment. As I mentioned above in response to a separate post, I'm of the opinion that Disney has a unique and enduring form of brand equity (much of i based on history, IP, and nostalgia), which I believe provides a certain degree of insulation to the "cliff" you mention.

I actually don’t disagree...

But you’ll notice in my comments on these types of threads is that I question how much of that “insulation” has been already used?

 

[larryz]

None of those are comparable to Disney. Disney is stronger than ever, like the prices or not. Just look at the content. How do you begin to compete with Disney?

Amazon killed department stores. The car business is ultra competitive with many manufacturers making an excellent product.

Disney is in such a powerful position that competition literally can’t compete. Too big, too many assets, too much brand equity, too much content, too many physical assets, and a dominant distribution network.

Disney can’t be beaten with technology or some rogue startup on the horizon; it literally takes decades to build what Disney has built.

You’re never invincible, but all of your examples didn’t produce anything that couldn’t be replicated with another or better gadget or retail network. Disney’s position is deep within peoples’ minds, hearts, culture, and doesn’t even mention the assets owned. It is a completely different company. It’s also much larger and has more earning power than any of the companies you mentioned.

I agree - the only company that can do Disney in is... wait for it... Disney.

 

[zurj]

This company has little competition in the parks division. Are there really a lot of people that would rather go to Universal over Disney?

This is the crux of where I disagree with you. everyone knows Disney theme parks are the best, BUT Disney is not only in competition with other theme parks... They are in competition with vacations EVERYWHERE! Caribbean Cruises, beach resorts, Hawaiian Islands, trips to Italy, Universal Studios, Pigeon Forge, etc. The crowd Disney runs the risk of losing (and already is losing) aren't all going to only shop a Universal trip and then decide between the two. These families take an annual vacation, and if Disney is a good value, then it will be in the rotation. But if the value is not there then it loses its spot to a beach house or a cruise or a trip overseas.

 

[Sirwalterraleigh]

None of those are comparable to Disney. Disney is stronger than ever, like the prices or not. Just look at the content. How do you begin to compete with Disney?

Amazon killed department stores. The car business is ultra competitive with many manufacturers making an excellent product.

Disney is in such a powerful position that competition literally can’t compete. Too big, too many assets, too much brand equity, too much content, too many physical assets, and a dominant distribution network.

Disney can’t be beaten with technology or some rogue startup on the horizon; it literally takes decades to build what Disney has built.

You’re never invincible, but all of your examples didn’t produce anything that couldn’t be replicated with another or better gadget or retail network. Disney’s position is deep within peoples’ minds, hearts, culture, and doesn’t even mention the assets owned. It is a completely different company. It’s also much larger and has more earning power than any of the companies you mentioned.

This is the classic “not my Disney” strawman...

I’m sure Kodak, GE, Sears and GM supporters thought that at one point too

Disney doesn’t have “too many assets”...their IP other than the classic cartoon icons is subject to precipitous decline...and their most “tangible” things are a small group of theme parks and tv delivery outlets that are evolving