News Disney plans to accelerate Parks investment to $60 billion over 10 years

[Disstevefan1]

I know you don't want to hear it but...

One, D+ will be out of the red soon, close to when they said it would when it was originally announced, so that shouldn’t be an issue much longer. Sure, it stinks that it has been sucking up resources to get to this point but it is something that needed to happen to recover some of the continuing drops in linear going forward.

Two, the movies have certainly had a bad run but this stuff goes in cycles. Fix the spending problem and tweak the content here and there and they are right back in the mix.

Bottom line is the studios have helped the company more than once when the parks have been down and the parks have done the same when the situation was reversed. Nothing new here in that sense and further proof that they need both segments.

I absolutely want to hear the D+ will eventually make money. This attempt at their own streaming business is very challenging and I am doubtful they will be out of the red when the say they will be.

As for the movies, I am not sure they even care about ROI when they make a movie. The create their art and who ever likes it likes it and who ever doesn't doesn't, most of the time lose money with a random winner here and there.

The good thing is TWDC has the theme parks that are actually run like a real businesses and actually make money to keep the lights on.

 

[flynnibus]

Time for a chart!

At first I thought, wow! $60B over 10 years at domestic & international theme parks, resorts, and DCL - pretty good!

But then I was shocked at how ordinary this is compared to previous Iger years, and poor compared to Eisner years and before. To appreciate this, I have to explain the following chart.

This chart looks at current year's Parks & Resort (P&R) revenue compared to the average P&R capex spent over the next 10 years.

For example, Disney announced plans to spend $60B over the next 10 years, an average of $6B per year. If 2023's P&R revenue is $30B, then this works out to 20% ($6B / $30B) in 2023.

For 2023 and before, actual P&R revenue and capex are used. For 2024 and later, I simply assume an average of $6B P&R capex per year.

When you chart what Disney has done in the past compared to what they've announced, it's just not impressive:

View attachment 743920

But this is nof a good comparison when talking about what you get. Your comparison to revenue penalizes them for driving sales. Attraction costs don’t grow because of better revenue.

Using your math… rise of the resistance is less of an addition simply because they added so much LL revenue compared to before.

It’s an interesting business metric of in terms of trying to quantify percentage of reinvestment- but a poor metric for ‘how much additional is this really?’ Discussion

 

[lazyboy97o]

And they never even announced an actual project before increasing the number nearly 4x, which is what I said. They haven't put a shovel into the ground on a new project in over a year. These are facts, not opinions or emotions.

Bottom line: They have nothing right now but blue sky ideas and Bob's Blue Ocean beliefs. And marketing announcements to keep the sheep in the field.

Why do you keep misrepresenting the investment amounts and how it changed? They’re not necessarily facts because you’re conflicting different things.

What you keep describing is securities fraud. It’s illegal. They can’t just make these announcements.

 

[ParentsOf4]

But this is nof a good comparison when talking about what you get. Your comparison to revenue penalizes them for driving sales. Attraction costs don’t grow because of better revenue.

Using your math… rise of the resistance is less of an addition simply because they added so much LL revenue compared to before.

It’s an interesting business metric of in terms of trying to quantify percentage of reinvestment- but a poor metric for ‘how much additional is this really?’ Discussion

The chart represents Disney's willingness to invest current revenue into P&R's future.

That $6B per year is spread across a lot more theme parks, resorts, and DCL ships than it would have been decades ago.

Pulling out a chart I created years ago, Disney used to spend a lot more per theme park than they do today.

No one should think $60B is a pittance. We're sure to see exciting new lands and attractions added to WDW, much better than the lean years of the early 21st Century.

But $60B spread across Disney's worldwide P&R ventures is not the "wow" number I first thought it was.

 

[JD80]

One day, many years from now, I'll tell y'all the Starcruiser stories that can't be told in public right now.

The is a reason Len is doubling his super model quota.

 

[Figments Friend]

Well, with 60 billion I think Disney can finally invest in refreshing the Imagination Pavilion over at Epcot.

There is a certain ride through Attraction that needs to be returned to its previous imaginative state, but enhanced to make it an even better experience.

No excuses now.
Bring it.


-

 

[Tha Realest]

The permanent addition of an entire park support team, from maintenance and custodial and vending, to GR and behind the scenes bureaucracy, up to additional infrastructure to get people into a park (parking staff, transportation staff) has been the thing that makes it not ever pencil out for me. They can’t staff all of this across Florida right now + they want leaner operations across the company. The indefinite operational commitment required to maintain any additional gate is antithetical to how the company operates in 2023. How does that equate to an additional gate by 2033 unless you live in a fantastic unreality?

They can’t staff two already built water parks.

 

[Tony the Tigger]

And they never even announced an actual project before increasing the number nearly 4x, which is what I said. They haven't put a shovel into the ground on a new project in over a year. These are facts, not opinions or emotions.

Bottom line: They have nothing right now but blue sky ideas and Bob's Blue Ocean beliefs. And marketing announcements to keep the sheep in the field.

That’s a lot of words, but still: complaining a shovel hasn’t been moved in 4-5 months just sounds like you don’t know how things work and/ or had unrealistic expectations.

That’s enough now.

 

[Tony the Tigger]

Time for a chart!

At first I thought, wow! $60B over 10 years at domestic & international theme parks, resorts, and DCL - pretty good!

But then I was shocked at how ordinary this is compared to previous Iger years, and poor compared to Eisner years and before. To appreciate this, I have to explain the following chart.

This chart looks at current year's Parks & Resort (P&R) revenue compared to the average P&R capex spent over the next 10 years.

For example, Disney announced plans to spend $60B over the next 10 years, an average of $6B per year. If 2023's P&R revenue is $30B, then this works out to 20% ($6B / $30B) in 2023.

For 2023 and before, actual P&R revenue and capex are used. For 2024 and later, I simply assume an average of $6B P&R capex per year.

When you chart what Disney has done in the past compared to what they've announced, it's just not impressive:

View attachment 743920

I’d be interested to see dollars now, rather than percentages.

 

[No Name]

What kind of weird scheme are they running here? They stand in front of fans and reveal ideas without a budget. 10 days later, at the same place, they stand in front of investors and reveal a budget without ideas. Meanwhile they haven’t announced a new ride for this place aside from the Splash Mountain thing in over 6 years.

If I were one of the nebulous beings responsible for setting Disney stock price, I would drop the price based on how unorganized or unadept they appear.

 

[orion54]

Time for a chart!

At first I thought, wow! $60B over 10 years at domestic & international theme parks, resorts, and DCL - pretty good!

But then I was shocked at how ordinary this is compared to previous Iger years, and poor compared to Eisner years and before. To appreciate this, I have to explain the following chart.

This chart looks at current year's Parks & Resort (P&R) revenue compared to the average P&R capex spent over the next 10 years.

For example, Disney announced plans to spend $60B over the next 10 years, an average of $6B per year. If 2023's P&R revenue is $30B, then this works out to 20% ($6B / $30B) in 2023.

For 2023 and before, actual P&R revenue and capex are used. For 2024 and later, I simply assume an average of $6B P&R capex per year.

When you chart what Disney has done in the past compared to what they've announced, it's just not impressive:

View attachment 743920

Great chart. Is this Parks and Resorts alone? The $60 billion is for Parks, Resorts, and Cruiseline so the the $6 billion/year is spread even more around besides just Parks and Resorts.

 

[orion54]

Disney's "Parks & Resorts" was renamed to "Parks & Experiences" a few years ago, but it's still the same basic business unit. It also was combined with "Consumer Products" to form a new division called "Disney Parks, Experiences and Products" (DPEP), but Disney still reports most "Parks & Experiences" numbers as separate line items, so it's still possible to compare current performance with performance before the reorganization.

Quoting from the 2022 10K:

• Parks & Experiences:
  • Theme parks and resorts, which include: Walt Disney World Resort in Florida; Disneyland Resort in California; Disneyland Paris; Hong Kong Disneyland Resort (48% ownership interest); and Shanghai Disney Resort (43% ownership interest), all of which are consolidated in our results. Additionally, the Company licenses our IP to a third party to operate Tokyo Disney Resort.
  • Disney Cruise Line, Disney Vacation Club, National Geographic Expeditions (73% ownership interest), Adventures by Disney and Aulani, a Disney Resort & Spa in Hawaii

The numbers I use are from the "Parks & Resorts"/"Parks & Experiences" business units as published since 1971 in Disney's annual reports or 10K's.

Ok. Thanks. Didn't know Cruise line got wrapped in with the Parks division.

 

[doctornick]

That’s a lot of words, but still: complaining a shovel hasn’t been moved in 4-5 months just sounds like you don’t know how things work and/ or had unrealistic expectations.

That’s enough now.

Eh. I agree that it doesn’t mean much that we haven’t seen progress yet but by the same token - there’s no reason there couldn’t be something already being built (eg starting the PW replacement). It’s Disney’s own slow nature that is preventing more stuff and more quickly

 

[DisneyHead123]

This is the main reason I believe these big expansions are now finally going to happen. The last few years have been proof of concept for Individual lighting lanes as far as the huge revenue it’s generating. Each one of these new E tickets now have ROI due to LL. It’s similar to the old ticket books where they could see the actual revenue each ride brings in. I’m sure they are drooling at having multiple rides at each park that warrant individual LLs. Right now only MK has been pulling that off and I’m sure they would love even more than 2 per park.

This is a good point - the parks are messy and difficult to operate, and probably not their first choice for expansion compared to something like streaming. But they’ve really proven themselves, in terms of being money makers, recently.

 

[DisneyHead123]

One, D+ will be out of the red soon, close to when they said it would when it was originally announced, so that shouldn’t be an issue much longer.

I’m very skeptical. What do you see bringing in such a big uptick in revenue?

 

[bmr1591]

They can’t staff two already built water parks.

They can, they just don’t want to. In their minds, we never come close to selling out even when it’s only one water park open, so why not open them each half the year to provide a mix, but keep useless costs down?

 

[doctornick]

I’m very skeptical. What do you see bringing in such a big uptick in revenue?

Increased subscription fees. Plus more people shifting to the with ads version which actually makes more money per sub.

 

[flynnibus]

I’m very skeptical. What do you see bringing in such a big uptick in revenue?

1 - controlling costs
2 - raising prices
3 - ad money

None of this is secret… its what they’ve already laid out

 

[DisneyHead123]

1 - controlling costs
2 - raising prices
3 - ad money

None of this is secret… its what they’ve already laid out

I didn’t think it was some kind of secret, I just find it implausible. Which is why I was curious regarding what metric for profitability you found convincing.

My take is… I think controlling costs and raising prices are opposing goals. Controlling costs means decreasing output. (Unless they have some kind of hack for that, that I’m unaware of - more output, without reality shows, for less cost? Now that would be a secret.) Content is expensive as heck to make. But D+ already lags behind platforms like Netflix when it comes to content. Reduce it more, plus increase prices? People will pop in for a month to catch up and then peace out.

There may be a path to profitability for D+. But I think it will involve something a little more uncharted than just assuming people will pay a much higher monthly fee as Disney’s production costs somehow go down.

 

[EricsBiscuit]

Time for a chart!

At first I thought, wow! $60B over 10 years at domestic & international theme parks, resorts, and DCL - pretty good!

But then I was shocked at how ordinary this is compared to previous Iger years, and poor compared to Eisner years and before. To appreciate this, I have to explain the following chart.

This chart looks at current year's Parks & Resort (P&R) revenue compared to the average P&R capex spent over the next 10 years.

For example, Disney announced plans to spend $60B over the next 10 years, an average of $6B per year. If 2023's P&R revenue is $30B, then this works out to 20% ($6B / $30B) in 2023.

For 2023 and before, actual P&R revenue and capex are used. For 2024 and later, I simply assume an average of $6B P&R capex per year.

When you chart what Disney has done in the past compared to what they've announced, it's just not impressive:

View attachment 743920

The chart is a little manipulative. Sure, as a percent it’s not as high. That’s because the business is much much bigger than it was 10 years ago, much less 50 years ago. You can’t expect a mature business to constantly reinvest 70% of revenue. This isn’t 1972. 10% of today’s revenue dwarfs 70% of 1972, even adjusted for inflation. The parks being in $10 billion in accounting profit (cash flow is much greater when you account for depreciation and other clever tax saving measures) nowadays.