http://www.latimes.com/business/la-000061951jul30.story
DisneySea Is Joining Wave of Theme Parks Rolling Abroad
Entertainment: Tokyo project is one of several in the works as U.S. firms look overseas for growth opportunities.
By RICHARD VERRIER and MARK MAGNIER, TIMES STAFF WRITERS
In a few weeks, Walt Disney Co. will unveil one of its most lavish theme parks: a $2.8-billion playground in Japan themed to the myths and legends of the sea.
The 176-acre attraction, Tokyo DisneySea, draws some of its inspiration from a project once planned for Long Beach.
It will overlook Tokyo Bay next to the world's busiest theme park, Tokyo Disneyland. The park's opening Sept. 4 will come just six months after rival Vivendi Universal ventured into the nation with its second overseas theme park, Universal Studios Japan. The new attractions underscore not only the global rivalry between the entertainment giants but the growing push by the U.S. theme park industry into foreign markets. Faced with a sluggish economy and a largely built-out domestic market, theme park companies are increasingly shifting their growth plans abroad, from Madrid to Tokyo to Hong Kong.
"It's amazing how many companies are opening up theme parks overseas," said Susan Storey, spokeswoman for the International Assn. of Amusement Parks and Attractions, an industry trade group based in Alexandria, Va.
Last year, for example, Six Flags Inc. opened a theme park in Holland. It is opening a Warner Movie World attraction in Madrid in mid-2002.
Vivendi Universal, which says Osaka was its most successful park opening, might add as many as five international theme parks over the next decade.
Also next year, Disney will plant a second park next to Disneyland Paris. The company is building a park in Hong Kong, set to open in 2006.
"Clearly, we believe that internationally we are under-penetrated in terms of what our brand is capable of," said Paul Pressler, chairman of Walt Disney Parks and Resorts. "And clearly, theme parks are tent poles in establishing a relationship with our guests."
Japan, long infatuated with American culture and Hollywood, is ground zero for the globalization of the theme park industry.
Disney and its partner Oriental Land Co. opened Tokyo Disneyland in 1983. To limit risk, Disney didn't take an equity stake in the park. Oriental Land operates the park under a license with Disney, which receives a licensing fee--about 7% of ticket, merchandise and restaurant sales.
In retrospect, Disney probably wishes it had a stake in the park, which has become the most successful theme park in the world, drawing about 17 million visitors annually--even more than the Magic Kingdom park in Orlando. The park had to close its gates nearly 45 times last year because it reached capacity.
Jim Cora, chairman of Disneyland International, said the park is operating at capacity. "We're bursting at the seams," he said.
Tokyo DisneySea is intended to capture the overflow.
The new park is divided into seven theme areas, with more than 23 attractions--including a storm simulator and a volcano-themed roller coaster--33 restaurants and a luxury hotel. The park will feature water rides similar to Splash Mountain and Pirates of the Caribbean at existing Disneyland parks, but it will be based on cartoon characters from "Aladdin," "The Little Mermaid" and the "Indiana Jones" movies.
Disney chose to build its first sea-theme park because of the Japanese affinity for the ocean and marine life, and the site is surrounded by water.
The new park will target an older audience than Tokyo Disneyland and expects to draw mostly from the huge and affluent local market.
If recent history is any judge, Disney can count on a loyal following.
Hitoshi Katayama, a 44-year-old company worker, has been to Tokyo Disneyland 10 times over the years with his children. He estimates that he spends about $90 a day there on restaurants and souvenirs, not including the admission price. The recession has made him think more carefully about his spending in general, but he tries not to pinch his yen when the family makes a trip because it's a once-or-twice-a-year affair.
And like many of Japan's avid Disney fans, He's eager to check out Tokyo DisneySea.
Disney is so popular with the Japanese, Katayama said, because it's a great escape from the pressures of everyday life. "There's nothing else like it in Japan," he said. "It just makes people want to go back."
Disney made a few concessions to Japanese culture and tastes. For example, hamburgers sold at the park will be a mix of beef and soybean.
But most of the park's features and traits, including most performers, are American.
"We thought we'd have to make those kinds of concessions at Tokyo Disneyland, but they kept talking us out of it; they wanted it to be more Western," Cora said. "We had a hard time convincing them that some of the signs needed to be in Japanese."
Disney predicts the new park will draw 10 million visitors a year (25 million for both parks) and generate licensing income to Disney of $80 million to $100 million by its second year. Tokyo Disneyland produces $100 million a year for Disney.
Oriental Land financed the project's $4-billion price tag, which includes the cost of a luxury hotel and a monorail. Disney paid $10 million to design the project.
"From a financial standpoint, a deal like this couldn't get any better for Disney," said media analyst Scott Davis of First Union Securities. "The money that comes out is pure profit that flows right down to the bottom line."
Tokyo DisneySea, though, faces some challenges. As with its new park in Anaheim, which failed to draw expected crowds, Disney is opening a park in a down economy.
Toshihiko Okino, an analyst with UBS Warburg, said food and merchandise sales at Tokyo Disneyland, which average about $85 per visitor, could fall if the economy worsens. "Many of the visitors have come five or six times, and often they've bought most everything there is to buy," he said. "You don't necessarily need more than 10 Mickey Mouse dolls."
Still, Okino said, the sea theme has great resonance with Japanese culture. "It's a bit like cowboys for Americans."
Disney, which has virtually owned the Japanese premium theme park market for the last 17 years, said the weak economy won't hurt business.
"The down economy appears to have helped our business in that more Japanese are staying at home and not taking vacations, and we seem to be an escape to get away from it all," Cora said.
Yoshino Watanabe, an analyst with Shinko Securities, agrees.
"Consumers are still willing to spend for a good time, even if they are more careful about buying things," Watanabe said.
Disney also faces stiff competition from the $1.4-billion Universal Studios park in Osaka, which company officials said drew 1 million visitors in its first five weeks.
But executives at both companies said there's enough business to go around.
"We have 35 million people that live within 2 hours of our theme park, so we're not concerned with Disney's new park eating into our business," said Glenn Gumpel, president of international and global business for Vivendi Universal.
Disney's strategy--as it was with the opening of its California Adventure in Anaheim and a second theme park to open in Paris--is to encourage people to stay overnight, preferably at a Disney hotel, and in the process spend a lot more money on souvenirs, restaurants, lodging and admission tickets.
Persuading people to stay a few days will be easier because of a "Happy Monday" law Japan recently passed that will move more holidays to Mondays and Fridays, a system the U.S. has long enjoyed. And beginning April 2002, schools will end Saturday classes, expanding young people's leisure time, Watanabe said.
"Our vision for our parks continues to be a sense that we want to create family vacation destinations," Pressler said. "This new park in Japan is in keeping with our strategy."
Disney and Universal are looking beyond Japan. Like many U.S. corporations, Disney also wants a piece of the vast but potentially risky Chinese market. Disney will own 43% of the Hong Kong Disneyland for a proportionately small cash investment of $315 million. The Hong Kong government will provide $2.89 billion in cash, below-market loans and land reclamation costs at the Lantau Island site.
Disney also is exploring the idea of building a theme park in mainland China.
Though international theme parks account for a fraction of Disney's overall income, they help drive other parts of the business, including movies and merchandise sales, and extend the company's brand.
Analysts welcome the strategy as a bright spot for a company that has struggled to boost its stock price and fix nagging problems in its consumer-products division. "It's the most logical way to extend your brand," said Jeffrey Logsdon, an analyst with Gerard Klauer Mattison & Co. "There's enormous growth left to be achieved in international markets."
Vivendi Universal is studying various undisclosed sites around the globe for as many as five new theme parks, said Glenn Gumpel, president of international and global development for Vivendi Universal.
------------------------
These Japanese parks were good for Disney but Disney didn't relize it
Sources: International Assn. of Amusement Parks and Attractions, Amusement Business
DisneySea Is Joining Wave of Theme Parks Rolling Abroad
Entertainment: Tokyo project is one of several in the works as U.S. firms look overseas for growth opportunities.
By RICHARD VERRIER and MARK MAGNIER, TIMES STAFF WRITERS
In a few weeks, Walt Disney Co. will unveil one of its most lavish theme parks: a $2.8-billion playground in Japan themed to the myths and legends of the sea.
The 176-acre attraction, Tokyo DisneySea, draws some of its inspiration from a project once planned for Long Beach.
It will overlook Tokyo Bay next to the world's busiest theme park, Tokyo Disneyland. The park's opening Sept. 4 will come just six months after rival Vivendi Universal ventured into the nation with its second overseas theme park, Universal Studios Japan. The new attractions underscore not only the global rivalry between the entertainment giants but the growing push by the U.S. theme park industry into foreign markets. Faced with a sluggish economy and a largely built-out domestic market, theme park companies are increasingly shifting their growth plans abroad, from Madrid to Tokyo to Hong Kong.
"It's amazing how many companies are opening up theme parks overseas," said Susan Storey, spokeswoman for the International Assn. of Amusement Parks and Attractions, an industry trade group based in Alexandria, Va.
Last year, for example, Six Flags Inc. opened a theme park in Holland. It is opening a Warner Movie World attraction in Madrid in mid-2002.
Vivendi Universal, which says Osaka was its most successful park opening, might add as many as five international theme parks over the next decade.
Also next year, Disney will plant a second park next to Disneyland Paris. The company is building a park in Hong Kong, set to open in 2006.
"Clearly, we believe that internationally we are under-penetrated in terms of what our brand is capable of," said Paul Pressler, chairman of Walt Disney Parks and Resorts. "And clearly, theme parks are tent poles in establishing a relationship with our guests."
Japan, long infatuated with American culture and Hollywood, is ground zero for the globalization of the theme park industry.
Disney and its partner Oriental Land Co. opened Tokyo Disneyland in 1983. To limit risk, Disney didn't take an equity stake in the park. Oriental Land operates the park under a license with Disney, which receives a licensing fee--about 7% of ticket, merchandise and restaurant sales.
In retrospect, Disney probably wishes it had a stake in the park, which has become the most successful theme park in the world, drawing about 17 million visitors annually--even more than the Magic Kingdom park in Orlando. The park had to close its gates nearly 45 times last year because it reached capacity.
Jim Cora, chairman of Disneyland International, said the park is operating at capacity. "We're bursting at the seams," he said.
Tokyo DisneySea is intended to capture the overflow.
The new park is divided into seven theme areas, with more than 23 attractions--including a storm simulator and a volcano-themed roller coaster--33 restaurants and a luxury hotel. The park will feature water rides similar to Splash Mountain and Pirates of the Caribbean at existing Disneyland parks, but it will be based on cartoon characters from "Aladdin," "The Little Mermaid" and the "Indiana Jones" movies.
Disney chose to build its first sea-theme park because of the Japanese affinity for the ocean and marine life, and the site is surrounded by water.
The new park will target an older audience than Tokyo Disneyland and expects to draw mostly from the huge and affluent local market.
If recent history is any judge, Disney can count on a loyal following.
Hitoshi Katayama, a 44-year-old company worker, has been to Tokyo Disneyland 10 times over the years with his children. He estimates that he spends about $90 a day there on restaurants and souvenirs, not including the admission price. The recession has made him think more carefully about his spending in general, but he tries not to pinch his yen when the family makes a trip because it's a once-or-twice-a-year affair.
And like many of Japan's avid Disney fans, He's eager to check out Tokyo DisneySea.
Disney is so popular with the Japanese, Katayama said, because it's a great escape from the pressures of everyday life. "There's nothing else like it in Japan," he said. "It just makes people want to go back."
Disney made a few concessions to Japanese culture and tastes. For example, hamburgers sold at the park will be a mix of beef and soybean.
But most of the park's features and traits, including most performers, are American.
"We thought we'd have to make those kinds of concessions at Tokyo Disneyland, but they kept talking us out of it; they wanted it to be more Western," Cora said. "We had a hard time convincing them that some of the signs needed to be in Japanese."
Disney predicts the new park will draw 10 million visitors a year (25 million for both parks) and generate licensing income to Disney of $80 million to $100 million by its second year. Tokyo Disneyland produces $100 million a year for Disney.
Oriental Land financed the project's $4-billion price tag, which includes the cost of a luxury hotel and a monorail. Disney paid $10 million to design the project.
"From a financial standpoint, a deal like this couldn't get any better for Disney," said media analyst Scott Davis of First Union Securities. "The money that comes out is pure profit that flows right down to the bottom line."
Tokyo DisneySea, though, faces some challenges. As with its new park in Anaheim, which failed to draw expected crowds, Disney is opening a park in a down economy.
Toshihiko Okino, an analyst with UBS Warburg, said food and merchandise sales at Tokyo Disneyland, which average about $85 per visitor, could fall if the economy worsens. "Many of the visitors have come five or six times, and often they've bought most everything there is to buy," he said. "You don't necessarily need more than 10 Mickey Mouse dolls."
Still, Okino said, the sea theme has great resonance with Japanese culture. "It's a bit like cowboys for Americans."
Disney, which has virtually owned the Japanese premium theme park market for the last 17 years, said the weak economy won't hurt business.
"The down economy appears to have helped our business in that more Japanese are staying at home and not taking vacations, and we seem to be an escape to get away from it all," Cora said.
Yoshino Watanabe, an analyst with Shinko Securities, agrees.
"Consumers are still willing to spend for a good time, even if they are more careful about buying things," Watanabe said.
Disney also faces stiff competition from the $1.4-billion Universal Studios park in Osaka, which company officials said drew 1 million visitors in its first five weeks.
But executives at both companies said there's enough business to go around.
"We have 35 million people that live within 2 hours of our theme park, so we're not concerned with Disney's new park eating into our business," said Glenn Gumpel, president of international and global business for Vivendi Universal.
Disney's strategy--as it was with the opening of its California Adventure in Anaheim and a second theme park to open in Paris--is to encourage people to stay overnight, preferably at a Disney hotel, and in the process spend a lot more money on souvenirs, restaurants, lodging and admission tickets.
Persuading people to stay a few days will be easier because of a "Happy Monday" law Japan recently passed that will move more holidays to Mondays and Fridays, a system the U.S. has long enjoyed. And beginning April 2002, schools will end Saturday classes, expanding young people's leisure time, Watanabe said.
"Our vision for our parks continues to be a sense that we want to create family vacation destinations," Pressler said. "This new park in Japan is in keeping with our strategy."
Disney and Universal are looking beyond Japan. Like many U.S. corporations, Disney also wants a piece of the vast but potentially risky Chinese market. Disney will own 43% of the Hong Kong Disneyland for a proportionately small cash investment of $315 million. The Hong Kong government will provide $2.89 billion in cash, below-market loans and land reclamation costs at the Lantau Island site.
Disney also is exploring the idea of building a theme park in mainland China.
Though international theme parks account for a fraction of Disney's overall income, they help drive other parts of the business, including movies and merchandise sales, and extend the company's brand.
Analysts welcome the strategy as a bright spot for a company that has struggled to boost its stock price and fix nagging problems in its consumer-products division. "It's the most logical way to extend your brand," said Jeffrey Logsdon, an analyst with Gerard Klauer Mattison & Co. "There's enormous growth left to be achieved in international markets."
Vivendi Universal is studying various undisclosed sites around the globe for as many as five new theme parks, said Glenn Gumpel, president of international and global development for Vivendi Universal.
------------------------
These Japanese parks were good for Disney but Disney didn't relize it
Sources: International Assn. of Amusement Parks and Attractions, Amusement Business