The “wealthy” is not going to work

[Sirwalterraleigh]

Capitalism doesn't work slowly. Capitalism performs miracles if allowed to work without government intervention. Disney is an experience, not like cellphones which are tools, used every day.

There are competitors to Disney. Six Flags, Sea World, Universal, Cedar Point, etc. You can't have unlimited amounts of theme parks because they are too costly to build, maintain, and keep the steady flow of guests.

The market is likely saturated with theme parks. Even Disney makes relatively low operating margins and Wallstreet essentially hates the Parks biz. Too capital intensive, too unpredictable, too lower of margins, etc. Disney just put up record park numbers and Wallstreet has sold off DIS by 50% from the high.

The reason Disney can get away with some stupid decisions is because they are 100 years old and have an incredibly huge competitive advantage, nostalgia, a massively strong brand, etc. That part takes time to build, but that's not evidence capitalism is slow. It just means consumers still like Disney despite prices increases and some stupidity. Ask Blackberry how slow capitalism is when a better product comes along.

You’ve never seen “capitalism”…nor would you want to. Greed is an inherent human instinct and unfettered “capitalism”…like any other “system” would be destructive and hurt a lot of people in many ways.

You think that’s what we have in Los Estados unidos?

I’m not advocating that there’s anything better out there…but big brother is in control here too.

 

[DisneyHead123]

Capitalism doesn't work slowly. Capitalism performs miracles if allowed to work without government intervention. Disney is an experience, not like cellphones which are tools, used every day.

There are competitors to Disney. Six Flags, Sea World, Universal, Cedar Point, etc. You can't have unlimited amounts of theme parks because they are too costly to build, maintain, and keep the steady flow of guests.

The market is likely saturated with theme parks. Even Disney makes relatively low operating margins and Wallstreet essentially hates the Parks biz. Too capital intensive, too unpredictable, too lower of margins, etc. Disney just put up record park numbers and Wallstreet has sold off DIS by 50% from the high.

The reason Disney can get away with some stupid decisions is because they are 100 years old and have an incredibly huge competitive advantage, nostalgia, a massively strong brand, etc. That part takes time to build, but that's not evidence capitalism is slow. It just means consumers still like Disney despite prices increases and some stupidity. Ask Blackberry how slow capitalism is when a better product comes along.

I agree that products can be created much faster than recreational zones. Disagree that Disney is a nostalgia driven niche market that will likely be overlooked by Wall Street for easier gains. I don’t mean theme parks exclusively but I think that in our “I want experiences not things” zeitgeist, experience marketing will explode over the next few decades. Disney’s competition might not come from another theme park directly but there will be other recreation based experiences that will compete for dollars that would otherwise be spent at Disney.

 

[hopemax]

That brings up a good question for this board, given the topic...

How do you define wealthy?

Your financial "assets" column, as compared to everyone else. "Expenditures" are always choices. They may not always feel like it, but humanity's ingenuity to create a gazillion ways to spend your assets does not negate what you have vs everyone else.

Not even the people who are in the Top 10 wealthiest individuals on the planet feel like it's enough. They have different dreams, but still not enough money to accomplish them. The Moon, Mars, food & water security for various places, global health. They would still be wealthy, even if they were to choose to go into debt to try and accomplish them.

 

[Sirwalterraleigh]

I agree that products can be created much faster than recreational zones. Disagree that Disney is a nostalgia driven niche market that will likely be overlooked by Wall Street for easier gains. I don’t mean theme parks exclusively but I think that in our “I want experiences not things” zeitgeist, experience marketing will explode over the next few decades. Disney’s competition might not come from another theme park directly but there will be other recreation based experiences that will compete for dollars that would otherwise be spent at Disney.

I would say that the majority of Disneys pull is brand recognition and their long cultivated - intentionally - emotional tie to that…

So corner cutting will erode them longterm more than really any other business.

I’d invite anyone to come up with a more vulnerable target?

 

[Lilofan]

I would say that the majority of Disneys pull is brand recognition and their long cultivated - intentionally - emotional tie to that…

So corner cutting silk erode them longterm more than really any other business.

I’d invite anyone to come up with a more vulnerable target?

I wonder how brand recognition is now with Disney after the Disney merchandise stores mostly closed up, cast laid off from mall stores in the USA during covid.

 

[drizgirl]

I wonder how brand recognition is now with Disney after the Disney merchandise stores mostly closed up, cast laid off from mall stores in the USA during covid.

Disney Stores were closing long before Covid.

 

[Sirwalterraleigh]

I wonder how brand recognition is now with Disney after the Disney merchandise stores mostly closed up, cast laid off from mall stores in the USA during covid.

That’s a good question…and it certainly doesn’t “help”…

But I think that’s more chalked up to shifting retail than a direct thing about Disney.

Stores are a bad deal now. Just look at kohls/macys/etc…that are fractioning off their own floor space for 3rd party pop ups that defer their cost/risk

 

[EngineerMom]

Disney isn't even going after millionaires necessarily. They're just going after high income families; starting around that $200,000 household income mark (top 10%). Often people in this income category are not millionaires and they may not even have a positive net worth.

I agree.
Disney is going to people who have a higher income and are WILLING to spend it!
That family making over $150K might not have a positive net worth because they are willing to spend it.

 

[Sirwalterraleigh]

We don’t have to postulate on “brand/nostalgia” with Disney…

Just believe Iger. Look at what he bought:
1. Marvel was CHEAP. But it also had a 70 year history.
2. Pixar was hollywoods darling for 10 years prior to the buyout and licensing titan. That was the most “aspirational” of the buys
3. Lucasfilm…no matter the bluster…is almost all nostalgia. Not for the movies as much as the era. Sure…they can rehash Star Wars over and over again…but it’s old guys and nostalgia and drive the sales. Go look at a Lego store…or a target…and see for yourself.

 

[drizgirl]

We don’t have to postulate on “brand/nostalgia” with Disney…

Just believe Iger. Look at what he bought:
1. Marvel was CHEAP. But it also had a 70 year history.
2. Pixar was hollywoods darling for 10 years prior to the buyout and licensing titan. That was the most “aspirational” of the buys
3. Lucasfilm…no matter the bluster…is almost all nostalgia. Not for the movies as much as the era. Sure…they can rehash Star Wars over and over again…but it’s old guys and nostalgia and drive the sales. Go look at a Lego store…or a target…and see for yourself.

And to many people, those things really aren't "Disney".

 

[Sirwalterraleigh]

Disney isn't even going after millionaires necessarily. They're just going after high income families; starting around that $200,000 household income mark (top 10%). Often people in this income category are not millionaires and they may not even have a positive net worth.

I agree.
Disney is going to people who have a higher income and are WILLING to spend it!
That family making over $150K might not have a positive net worth because they are willing to spend it.

Yeah…but that it is the problem.

They need a mass to fill those puppies…and that can’t be sustained if it’s ONLY that group.

One of the reasons is - frankly - those people can afford other things…and don’t need to rope drop the tea cups twice a year.
They are shrinking their customer pool…and it’s not unlimited.

There’s a lot of kidding ourselves that goes on about this unlimited pool…particularly on Disney forums.

 

[Sirwalterraleigh]

And to many people, those things really aren't "Disney".

Correct…but buying/hedging them longterm is a direct show of corporate philosophy that is built almost entirely on emotional nostalgia.

So is D+…which is mistakenly called a “technology move” When the majority of reasoning is banking on nostalgia.

Loosing their emotional attachment would be fatal for Disney. They survive. They’d be gobble up.

Which is why bad management is so dangerous.

 

[eliza61nyc]

I would say that the majority of Disneys pull is brand recognition and their long cultivated - intentionally - emotional tie to that…

So corner cutting will erode them longterm more than really any other business.

I’d invite anyone to come up with a more vulnerable target?

I wonder Sir how much of the brand recognition is from the parks and how much to the dreaded IP??
Us old foggies remember our great family vacations to wdw, etc etc. We lovingly remember the "good old days ".

My grandbavies, neices and nephews.... brand recognition is frozen, encanto and the princesses. They youngins want ip in every nook and corner.
It's gotta be hard trying to balance the two

 

[SteveAZee]

Yeah…but that it is the problem.

They need a mass to fill those puppies…and that can’t be sustained if it’s ONLY that group.

One of the reasons is - frankly - those people can afford other things…and don’t need to rope drop the tea cups twice a year.
They are shrinking their customer pool…and it’s not unlimited.

There’s a lot of kidding ourselves that goes on about this unlimited pool…particularly on Disney forums.

I think Disney's in the process of figuring out how deep and wide the pool really is. If they discover that they're not filling the resorts and parks, they'll start having "coupon day" or something.

 

[Sirwalterraleigh]

I think Disney's in the process of figuring out how deep and wide the pool really is. If they discover that they're not filling the resorts and parks, they'll start having "coupon day" or something.

It’s more than just that.

You have to look at where the money is made and who’s gonna buy it?

It’s not a hard equation. There’s a reason why there’s always money to be made in cheap crap and margins fall on “luxury” products.

 

[Sirwalterraleigh]

I wonder Sir how much of the brand recognition is from the parks and how much to the dreaded IP??
Us old foggies remember our great family vacations to wdw, etc etc. We lovingly remember the "good old days ".

My grandbavies, neices and nephews.... brand recognition is frozen, encanto and the princesses. They youngins want ip in every nook and corner.
It's gotta be hard trying to balance the two

I think you identified why this “luxury” tact is dangerous.

What generations have a tighter tie to brand? Is it boom and X…or Y, Z, AA, etc?
I think it’s the former…and the reason is digital technology.

So what makes Disney more vulnerable in 10, 20 years?

 

[DisneyHead123]

I would say that the majority of Disneys pull is brand recognition and their long cultivated - intentionally - emotional tie to that…

So corner cutting will erode them longterm more than really any other business.

I’d invite anyone to come up with a more vulnerable target?

I think brand recognition is a huge deal but I also think they just offer a unique service. It would be very hard to get that much recreation in one place almost anywhere else. The sheer scale of things to do, all in one self contained little universe (vs., say, going to NYC and having a lot to do but scattered all over a big urban area) is mind boggling. And they have a strange situation going where even their Orlando “competition” serves to increase the attractiveness of the entire area which could actually benefit Disney.

Honestly I’m not even sure what meaningful competition for Disney would look like because it seems so impossible for a startup to recreate that type of experience. I do think entrepreneurs are endlessly innovative when there’s money to be made so something will come along eventually though.

 

[Sirwalterraleigh]

I think brand recognition is a huge deal but I also think they just offer a unique service. It would be very hard to get that much recreation in one place almost anywhere else. The sheer scale of things to do, all in one self contained little universe (vs., say, going to NYC and having a lot to do but scattered all over a big urban area) is mind boggling. And they have a strange situation going where even their Orlando “competition” serves to increase the attractiveness of the entire area which could actually benefit Disney.

Honestly I’m not even sure what meaningful competition for Disney would look like because it seems so impossible for a startup to recreate that type of experience. I do think entrepreneurs are endlessly innovative when there’s money to be made so something will come along eventually though.

No doubt…their “compounds” give them a well planned strategic advantage.

But a lot of that is a Florida thing too. Florida is fake. It’s where the most amount of people on earth have no desire for “serious” at a given time. By design because it was empty in 1950. Disney was wise to play it the way they did.

I’ve never considered competition much of a thought…but I have to say these next few years are more interesting than anything prior.

But the danger is not someone coming in to further “ear their lunch”. It’s that they will push all the “riff raff” out, Wall Street will not allow them to increase the quality after - which they would need to do, and then they’d have an aging compound with old timeshares that blink out.

What then? The reality is there is no longterm plan by management. It’s a rollercoaster ride. It is D+.

Prices hit a ceiling on every product…whether it’s made of steel or glass. Eventually.

 

[DisneyHead123]

No doubt…their “compounds” give them a well planned strategic advantage.

But a lot of that is a Florida thing too. Florida is fake. It’s where the most amount of people on earth have no desire for “serious” at a given time. By design because it was empty in 1950. Disney was wise to play it the way they did.

I’ve never considered competition much of a thought…but I have to say these next few years are more interesting than anything prior.

But the danger is not someone coming in to further “ear their lunch”. It’s that they will push all the “riff raff” out, Wall Street will not allow them to increase the quality after - which they would need to do, and then they’d have an aging compound with old timeshares that blink out.

What then? The reality is there is no longterm plan by management. It’s a rollercoaster ride. It is D+.

Prices hit a ceiling on every product…whether it’s made of steel or glass. Eventually.

I mean yeah, it does feel that way at this point. The mentality at the moment seems to be to wring every last dollar out of guests while cutting every possible perk, and I get that this is what shareholders demand they do, to some extent. But if attendance starts to fall, I do think the concept of “you have to spend money to make money” occurs to even the most short sighted shareholder at some point. If Disney hadn’t been willing to do that, historically, they’d never have gotten to where they are today. And Universal is doing it now. So I do think the market has at least something of a correction mechanism for the tendency for companies to want to cheap out as much as possible to boost margins. True, they will always be looking to see what they can “get away with” without losing profit (which is a rotten dynamic to be in, with a vacation venue that you love) but the list of cuts they can make and improvements they can skip is not endless before consumer behavior shifts.

 

[Sirwalterraleigh]

I mean yeah, it does feel that way at this point. The mentality at the moment seems to be to wring every last dollar out of guests while cutting every possible perk, and I get that this is what shareholders demand they do, to some extent. But if attendance starts to fall, I do think the concept of “you have to spend money to make money” occurs to even the most short sighted shareholder at some point. If Disney hadn’t been willing to do that, historically, they’d never have gotten to where they are today. And Universal is doing it now. So I do think the market has at least something of a correction mechanism for the tendency for companies to want to cheap out as much as possible to boost margins. True, they will always be looking to see what they can “get away with” without losing profit (which is a rotten dynamic to be in, with a vacation venue that you love) but the list of cuts they can make and improvements they can skip is not endless before consumer behavior shifts.

I agree.

The problem with the “spend to make” is the now well documented problem that they either cannot or will not get anything done on a reasonable timeline.

5+ Years on a mini land isn’t exactly how to draw a market back.