Seems like people need a refresher...
Too often people are like "Why wouldn't Disney want more people"
or buy into the line "Disney is doing this for guest satisfaction"
Don't let half truths confuse you. Let's look at the basic principals in play. These numbers are artifical, but the actual numbers themselves don't matter, it's the relative trends that matter and are true.
Let's look at Guest Satisfaction... in general, people love non-busy parks! Nothing to get in their way, they can do all they want...
So yes if totally listening to guests, Disney should not 'over stuff' the parks.
But.. more people = more money right? Disney should always want more people! Yes, that is true.. but only to an extent. Eventually you hit congestion... and people simply can't spend as easily as they could when things were less crowded. So revenue vs crowd isn't always a 1:1 straight line.. eventually you start choking your own ability to sell.
Think about a simple ODV cart... it has a max # of sales it can do an hour. Once the # of customers exceeds that you don't make more money, you just have more of a wait. This happens across the board with crowds limiting movement, increasing waits, etc. Literally if you spend more time in lines, it reduces your opportunities to spend.
So clearly... Being busy, but not TOO busy makes sense yeah, especially if you are aiming to keep your customers happy.
But there is another monster hiding in the corner... OpEx. What does it cost to run the operation. Something that for obvious reasons, they want to keep as low as possible.
Thing is.. the park has a really high minimum cost to open the place and staff it as minimially as possible. For instance, a ride like BTMRR has a minimum staff needed to run it, no matter if there are 5, or 20 people on each train. As such, Operating costs are basically fixed at the bottom of the chart and don't keep scaling down with crowds.
This is why Disney is willing to stuff the offseason with discounted admission and other activities to boost the minimum crowd levels in parks. It's also why the park hopping rule helps the lesser parks. It keeps more people in a park that may otherwise defect to another park... keeping the utilization of your park higher. After all, you're paying to open it, you want to USE that capacity.
But OpEx isn't flat, nor is it linear. Eventually excessive crowds drive costs up higher and higher. Bigger crowds take more people to manage. Bigger crowds generate more trash, more load on just about everything. So as you run near your upper limits, costs actually start to climb FASTER than they did previously. Running at the ragged edge is very labor expensive for Disney. It also strains other systems like upkeep, maintenance, etc.
So for Disney... Opex wise they want people to make it worthwhile to run... but not TOO many people that it starts requiring them to spend more and more money for less and less gain.
This is what leads to our 'sweet spot' of operations.
If you were to just focus on Guest Satisfaction... running the park with the smallest crowds would be the best! But reality is the business is chasing revenue and profits. So in reality they want as many people as possible as that in general will drive higher revenues.
But that's the catch... more people seems like easily more revenue.. but as we mentioned before you start to block yourself when things get saturated and congested. So why does Disney care, 5% is still better than 0% right?? They care because of the Opex increase. The business is measured not just by how much money they bring in, but by how much they spend to do it. That's what really drives profits. And spending is usually hard cash out... which can be heavily scrutinized. And when people are chasing 'how to make more' its much easier to just DO LESS (aka SPEND LESS) than it is create something (generate new demand).
If someone tells you 'make us more money, without spending any more money than you have' -- you will be chasing efficiencies and how to reduce costs.
This is really what drives Disney trying to 'cap attendance'. It's not to make your vacation better -- It's because when the parks are stuffed you spend less. Your opportunities to spend are reduced. You are frustrated so you don't make whimsical purchases as easily. And on top of that, they are spending MORE in OpEx per guest than when the crowds are less.
This is what leads to our sweetspot or Goldilocks zone. Disney wants as many people in the park as possible to drive the revenue line as high as possible... until the costs and revenues start to decline. So you end up with the zone where attendance is high enough to offset minimimum operating costs... but not too high to drive costs higher than necessary.
They want to limit attendance so they can shape customer demand into visiting patterns that keep the parks operating in the Goldilocks zone as much as possible.
Get as many people in, to drive revenue, until the point where costs are rising faster than revenue. That's how they optimize margins and what Bob is doing. He's not trying to make your vacation better - he's trying to keep his engine running at the best possible operating point.
It just so happens guests also like not dealing with maximum crowds... so they can 'sell' that story to the public and it sounds great to them.
finance.yahoo.com
He seems to think that streaming is the be-all-end-all for media companies.
