The issue, as many have pointed out already, is short-term thinking vs. long-term. Instead of looking at an investment directly and asking how much it specifially will return, one should be asking how the investment will strengthen the overall value of the brand and the property. This apparantly is how companies like Google and Apple (and Disney many years ago) have succeeded. They didn't look at each individual investment in terms of specific ROI so much as they looked at them as a means to strengthen the value of the brand. I'm not a business expert so I'm relying on information I've read from books such as "A Passion for Excellence" and simple common sense when it comes to Apple and Google. The theme park business however I do know!
For example the Test Track budget went though its normal budget cuts and we ended up with a stripped down rehab that only barely makes the grade. Sure there is some eye candy and the ride will be enjoyable for some and it is arguably better than the orginal Test Track (which isn't saying much at all in my opinion). What if instead, for once in the past 15 years, WDW decided to give us a $250 million blockbuster? In comparison to today's Test Track what would be the guest response? What would be the long-term result? Would more guests' word-of-mouth be something like, "wow!!! You really need to go to Epcot and check out the new Test Track..I mean I really felt like I was in another world...It was AMAZING!!??" That as opposed to an attraction that will be popular for a few years rather than a classic such as Pirates or Mansion that will be enjoyed by million for years to come.
My point is the person that brought up the argument regarding guest perception is spot on. He pointed out that while a guest may not be able to put his or her finger on the reason they are not 100% satisfied with an experience they still know that the experience could have been better. That's the difference between a low-budget upgrade and a "Cars Land" spectacular. Walking through Radiator Springs and being surrounded by high quality scenery invokes a positive emotion and thereby strengthens the possiblity that more guests will return and spend more money. This should be common sense but they don't teach that in business school.
Where are the long-term thinkers in the Disney company? Sure you can save $100 million in the short-term by giving the public a watered down version of Fantasyland but the price will be customers that leave indifferent, not excited or inspired. Indifferent customers don't complain but they don't recommend that experience voluntarily either. They also don't go out of their way to come back. WDW is in the business of emotional experiences whether they want to admit it or not. There are many ways to illicit that emotion and most of the methods require spending money on the right things. How about going back to spending on the core business again?
Universal, despite all the wonderful things happening now, is not at all immune from this poisonous thinking. Trust me when I say Creative Studios is a mess! If it weren't for J.K. and Warner Brothers Potter phase one would have ended up quite mediocre and Potter Phase two would possibly be worse. The only reason Phase two will be freakin AMAZING is solely because of J.K. and WB in spite of UC. Here's one example for you: recently all the video servers and associated hardware had been designed and ordered and equipment delivered for the Hogwarts Express. Millions of dollars in equipment and design labor. Before all this UC management was asked if they wanted the show critical video to be 30 frames per second or 60 frames per second. To save money they of course went with the 30 frames against the strong recommendations from designers. The difference in quality is huge! When J.K. found out about it she insisted they go to the 60. So now hundreds of thousands more will be spent to redesign and reorder and even more to upgrade equipment. That's the kind of quality control going on there...something that WDW does not have and something that will put Universal on top in terms of immersive experiences in Orlando. Yes they'll go over budget but it will pay off for them and their brand will strengthen. Now let's compare Per Capita spending and attendance increase percentages of the two companies. Hello Disney is anyone there?
