Only a "Fool" Would Believe the 5th Park is Near...

[Jimmy Thick]

Let's see, 10am and looks like there are already a couple 60 minute waits. The point of no return has been breached WDW needs another park just to handle the higher multitudes of humans. New attractions or not, WDW is drawing people more than Hulk Hogan in his hay day.

Jimmy Thick-And paying a ton of cash.

 

[Mike S]

Lol. No.


I'll make this simple. You and I each sell apples.

Last Year
I sold 100 apples (91% market share)
You sold 10 apples (9% market share)

This Year
I sold 120 apples (Increase of 20 apples, 86% market share)
You sold 20 apples (Increase of 10 apples, 14% market share)

I sold 90 more apples than you last year and I sold 100 more apples than you this year. I increased by more apples than you year-over-year. However, your market share "grew" as a percentage relative to mine because you started with a smaller base. When the bases are such different sizes, percentage-based statistics like market share are just about meaningless. Market share only matters if the market is static. When the market is growing in total, smaller players are going to show larger percentage increases than larger players.

You're right, the clobbering only comes from the attractions built in the last 6 years. Heck you could even make it 10 to include everything opened at both resorts including Everest and Universal still wins.

Let's see, 10am and looks like there are already a couple 60 minute waits. The point of no return has been breached WDW needs another park just to handle the higher multitudes of humans. New attractions or not, WDW is drawing people more than Hulk Hogan in his hay day.

Jimmy Thick-And paying a ton of cash.

Or just build out their current parks more to better absorb crowds. Epcot alone has tons of space.

 

[Homerclaus]

Lol. No.


I'll make this simple. You and I each sell apples.

Last Year
I sold 100 apples (91% market share)
You sold 10 apples (9% market share)

This Year
I sold 120 apples (Increase of 20 apples, 86% market share)
You sold 20 apples (Increase of 10 apples, 14% market share)

I sold 90 more apples than you last year and I sold 100 more apples than you this year. I increased by more apples than you year-over-year. However, your market share "grew" as a percentage relative to mine because you started with a smaller base. When the bases are such different sizes, percentage-based statistics like market share are just about meaningless. Market share only matters if the market is static. When the market is growing in total, smaller players are going to show larger percentage increases than larger players.

Cap, I agree with what you providing in general, but using a smaller sample size of the last financials, wasn't Disney showing a flat attendance (admittedly, I haven't compared that to Universal's quarterly...I'll let smarter folks do that)?

 

[GhostHost1000]

Disney though? DAK, Epcot and DHS all have plenty of space for expansion and unused/closed attraction areas. Make a list of attractions you'd want in a fifth gate, and I bet you could find room in the existing parks for them.

At the moment you have one full park and three half parks, when they get to the point where all four are fully built out... then let's talk fifth gate.

completely agree... they need to built out the existing parks first....however there is some possible truth in a 5th park spreading out the crowds more which may not be a bad thing. Pandora is opening at AK, let's see what happens with DHS, give EPCOT future world some TLC (energy, imagination), and then go from there

 

[CaptainAmerica]

Universal has two fully built out parks, struggling for expansion space, so it makes total sense for them to want a third main gate.

Disney though? DAK, Epcot and DHS all have plenty of space for expansion and unused/closed attraction areas. Make a list of attractions you'd want in a fifth gate, and I bet you could find room in the existing parks for them.

At the moment you have one full park and three half parks, when they get to the point where all four are fully built out... then let's talk fifth gate.

I agree with your general point that expansion within the existing parks is the priority, but I don't think it's as bad as you do. Once the known DAK and DHS projects are complete, I think the only remaining need will be Future World.

I also don't think Disney will ever build a fifth gate, nor do I think they should. Fully built, Magic Kingdom will be two full days, Epcot will be two full days, DHS will be at least one full day and DAK will be at least one full day. That's a full vacation week. Any more would be too much.

 

[rael ramone]

Just ignore fool.com - it's complete garbage these days. Just trying to regain relevance through click bait and horrible reporting

Actually @Rickster7 's articles are pretty decent for investment articles that consider what's happening in the swamps.

Now, if you want to see *pixiedust* beyond even DISboard levels, read some of the Seeking Alpha article comments...

 

[stretchsje]

Lol. No.


I'll make this simple. You and I each sell apples.

Last Year
I sold 100 apples (91% market share)
You sold 10 apples (9% market share)

This Year
I sold 120 apples (Increase of 20 apples, 86% market share)
You sold 20 apples (Increase of 10 apples, 14% market share)

I sold 90 more apples than you last year and I sold 100 more apples than you this year. I increased by more apples than you year-over-year. However, your market share "grew" as a percentage relative to mine because you started with a smaller base. When the bases are such different sizes, percentage-based statistics like market share are just about meaningless. Market share only matters if the market is static. When the market is growing in total, smaller players are going to show larger percentage increases than larger players.

I understand this, but Universal is winning in absolute growth, too.

Growth since 2009:
Disney: 6.5 million
Universal: 8.2 million

Disney's goal of getting its other three parks up to MK levels of attendance is admirable but the trends show that Universal's existing two parks could get there first and for less capital investment.

I wonder if the lack of drop in Hollywood Studios' attendance means its demand is inelastic and less subject to drop or growth relative to Universal's properties. I'm eager to see next year's numbers. I suspect a lot of Disney's attendance is driven by nostalgia. I know that's part of the equation for me.

Further, I am arguing that a 3rd Universal gate would accelerate Universal's growth beyond its current track to where Universal and Disney are routinely swapping spots in the 2nd-7th most popular parks in Orlando. This would be good news for park-goers.

 

[MagicHappens1971]

A little off topic, but if Disney wanted to, couldn't they have it like Universal, where Universal is owned by NBCUniversal, but operated by Universal Parks & Resorts. Couldn't they create a subdivision for operating the parks and then spin parks & resorts off? Wouldn't that give the parks more leeway in the budgetary department?

 

[Brad Bishop]

In my mind:

DHS needs a rebuild, which is coming/happening.
EP basically needs a rebuild - Most people concentrate on FW but WS could AT LEAST use a few more countries and attractions.
DAK is getting Panadora, which looks great but I still contend that people aren't going to flock to Orlando to see Pandora - it's more of a "..may as well while we're here"-sort of thing. SWL will pull people in, though - you can see that just by what used to happen with SWW at DHS.

I agree with @CaptainAmerica in that it'll likely be a very long time, if ever, that a 5th gate will be added, partly due to what he said which was WDW is basically a week long vacation as it is, but also due to them being fairly tight with the purse with regards to WDW. You'd need a new team of managers who were visionaries to get something more than just trying to 1-up Universal down the street (which they really haven't succeeded in doing, yet - NFL certainly didn't do it; SWL - maybe).

I know that the attendance numbers have a fairly huge gap between Universal and WDW but the one big difference between the two resorts is that Universal is Hell-bent on expansion right now with redoing their parks, buying land, and, in the not too distant future, building more parks. I think that there's a very good chance that a decade down the road that we won't be seeing WDW's numbers trumping UNI but more like them being nearly on par with each other if not more in UNI's favor. UNI is growing. They're rebuilding the old/crappy sections of their parks. WDW is largely stagnant. Not 100% but more reactionary than anything. UNI is growing because they want to grow (higher attendance). WDW generally thinks in terms of, "They come, anyway.." and I think SWL is more like, "Yeah - I guess we better do that," than, "Oh, wouldn't it be cool if we...!!!" NFL, in retrospect, feels like it was approached the same way (and I was really excited for NFL when it was announced).

 

[CaptainAmerica]

A little off topic, but if Disney wanted to, couldn't they have it like Universal, where Universal is owned by NBCUniversal, but operated by Universal Parks & Resorts. Couldn't they create a subdivision for operating the parks...

Walt Disney Parks & Resorts exists. It's the same thing.

...and then spin parks & resorts off? Wouldn't that give the parks more leeway in the budgetary department?

No, for several reasons.

1. Diversification mitigates risk. Theme park attendance, cable subscriptions, ad sales, box office performance, and toy sales can all be very volatile. By having all of them under one corporate umbrella, the segments that are performing well can prop up sluggish performance in others.

2. Parks and Resorts is already the capital hog of The Walt Disney Company. It's not really competing with any of the other segments for investment dollars because it's really the only segment that needs investment dollars. "Budgetary competition," at least on the capital side, is between lines of business within Parks and Resorts (Epcot vs. DHS, WDW vs. DLR, Domestic vs. International, Parks vs. Ships, etc.).

ETA: "Capital" in this context is an accounting term referring to fixed assets. Rides, resorts, NextGen, major refurbs, etc. This is contrasted with "operating expense," which refers to things like labor, utilities, routine maintenance, etc.

 

[stretchsje]

I agree with your general point that expansion within the existing parks is the priority, but I don't think it's as bad as you do. Once the known DAK and DHS projects are complete, I think the only remaining need will be Future World.

I also don't think Disney will ever build a fifth gate, nor do I think they should. Fully built, Magic Kingdom will be two full days, Epcot will be two full days, DHS will be at least one full day and DAK will be at least one full day. That's a full vacation week. Any more would be too much.

I agree with this except it assumes Disney will expand without closing old attractions which hasn't been the case. Disney would rather you spend time eating and shopping instead of riding and that is their business model now. So, I think Disney is being careful to create environments to spend time in (again, eat and shop and spend money in addition to an anchor ride or two) rather than building too numerous amounts of attractions with queues that remove you from shopping. Considering this, does it make more sense to build two-day parks or to build more numerous single-day parks? I genuinely don't know the answer. My guess is that second days are shorter and yet with more downtime for shopping, but they are still going to feel optional for most guests whereas omitting a visit to a fifth park is a tougher choice.

 

[IMFearless]

Here is an interesting diagram which illustrates the cross pollination between the theme park business and the other segments of the company.

This is taken from 1957, but it shows how a dollar spent in one segment of the business actually improves another segment.

 

[Buried20KLeague]

I don't think they need to build a 5th gate.

What they should do instead is spend eqivalent dollars of an entire park to somehow develop a technology that allows the guest to spend less time in lines and more time clogging walkways, or more time in shops spending money, should you so desire. Also, the action of moving my hand toward a pocket for a device that interfaces with their technology seems cumbersome. Maybe it should be wearable. "Pie in the sky", I know... But hey. I'm just "Blue Sky"ing here.

Also it would be cool if Small World said my name at the end. C'mon. The ride is 50 years old. It needs updating. It's boring. A TV screen at the end with names on it would be the bee's knees.

I'd much rather have that than a 5th park.

 

[fractal]

Universal is trying to become a weekly destination like WDW.

They are trying to change this WDW vacationers mindset from

"Going to WDW for a week, will spend a day or two at Universal"

to

"Last year we spent a week at WDW, this year we are doing a week at Uni"

That would be a major shift in spending dollars in UNI's favor.

 

[CaptainAmerica]

Universal is trying to become a weekly destination like WDW.

They are trying to change this WDW vacationers mindset from

"Going to WDW for a week, will spend a day or two at Universal"

to

"Last year we spent a week at WDW, this year we are doing a week at Uni"

That would be a major shift in spending dollars in UNI's favor.

That's absolutely not what's happening to the market, on aggregate. What's actually happening is they've been successful in changing non-Orlando-vacationers mindset from:

"Not going to Orlando, that place is dumb."

to

"Let's go to Orlando and check out WDW and/or Universal."

Case-in-point: WDW's room occupancy is insanely high. The biggest indicator of WDW-only people becoming WDW-and-Universal people would be WDW on-property room occupancy decreases. If people are still staying on property, that means (in general) that they're staying in the bubble. Universal has had some tremendous success recently and they've sustained their Potter surge better than I expected them to, but it has not come at the expense of WDW.

 

[IMFearless]

I think the market as a whole is growing across the world, with Orlando being the theme park capital it makes sense for a rising tide to lift all ships.

I think the true test will come when/if something disrupts the growth.

I would be interested to see how both resorts fair in that climate.

People seem far less fanatical about Universal compared to Disney.

 

[BrerJon]

I don't think they need to build a 5th gate.

What they should do instead is spend eqivalent dollars of an entire park to somehow develop a technology that allows the guest to spend less time in lines and more time clogging walkways, or more time in shops spending money, should you so desire.

Brilliant. If it wasn't so sad it would be funny.

 

[Fox&Hound]

Lol. No.


I'll make this simple. You and I each sell apples.

Last Year
I sold 100 apples (91% market share)
You sold 10 apples (9% market share)

This Year
I sold 120 apples (Increase of 20 apples, 86% market share)
You sold 20 apples (Increase of 10 apples, 14% market share)

I sold 90 more apples than you last year and I sold 100 more apples than you this year. I increased by more apples than you year-over-year. However, your market share "grew" as a percentage relative to mine because you started with a smaller base. When the bases are such different sizes, percentage-based statistics like market share are just about meaningless. Market share only matters if the market is static. When the market is growing in total, smaller players are going to show larger percentage increases than larger players.

Thank you! The people that believe Universal is beating Disney are sadly mistaken. Maybe from a personal standpoint, people may like what Universal is doing more than Disney, fine, that's opinion. But to state that Universal is even in the same league as Disney is comical at best.

 

[Todd H]

I don't think they need to build a 5th gate.

What they should do instead is spend eqivalent dollars of an entire park to somehow develop a technology that allows the guest to spend less time in lines and more time clogging walkways, or more time in shops spending money, should you so desire. Also, the action of moving my hand toward a pocket for a device that interfaces with their technology seems cumbersome. Maybe it should be wearable. "Pie in the sky", I know... But hey. I'm just "Blue Sky"ing here.

Also it would be cool if Small World said my name at the end. C'mon. The ride is 50 years old. It needs updating. It's boring. A TV screen at the end with names on it would be the bee's knees.

I'd much rather have that than a 5th park.

 

[CaptainAmerica]

Thank you! The people that believe Universal is beating Disney are sadly mistaken. Maybe from a personal standpoint, people may like what Universal is doing more than Disney, fine, that's opinion. But to state that Universal is even in the same league as Disney is comical at best.

Even Disney and Universal don't view it that way. Everyone likes to bash "blue ocean," but "blue ocean" is real. You don't need to beat the other guy in your market, just grow the market.