Chapek: Nearly 1/3rd of Disney World Guests are Purchasing Genie+

[Brian Noble]

A fact lost on the bean counters and corporate executives is that this "aligning with the industry" mentality actually devalues their branding.
Disney parks never has and never will need to align with the industry, unless of course it's to nickel and dime its patrons

That only matters if people stop coming and/or stop spending money. Conversely, if "aligning with the industry" means that the Parks are more profitable, then management is arguably negligent if they don't make the change.

Every time some change like this comes along (removing valet parking for DVC, separating DVC retail/resale, charging for parking at the resorts, increasing food and beverage costs, increasing ticket costs, etc. etc. etc.) the Disneyana community reliably claims: "This time, they've gone too far! It will cost them when people stop coming back!"

So far, the Company has been right and The Community has been wrong nearly every single time. There have been a few changes that were undone relatively quickly, but they are the exception, not the rule. Is this one of those times? I don't have a crystal ball, so I can't tell you for sure, but I know which way the odds point.

 

[VAlegacy]

Sorry, not sure I understand the comment. Are you saying people hate it perhaps for cost, but not how it works at the parks?

Im saying the haters probably wont have 1st hand experience ever, because they dont care if it works well or not.

 

[Mousey0324]

The haters dont hate it for its useability though.

I don’t like it multiple reasons:

1. Yes, it’s easy to use and navigate for users who are 10-40 years old. But likely not user friendly for older demographics that aren’t familiar with smart phones and apps.

2. the app is very glitchy. It’s constantly loading with every screen touch. Super annoying.

3. I didn’t see much value in the $15. Most lightning lanes saved us only a few mins. Most of the long high demand lines were out into the evening hours; forcing us to use standby lines after having spent $15 to skip lines.

4. I have ethical concerns with disney advertising inflated wait times to lure in customers.

overall I just don’t like it. Will I use it again…don’t really have a choice especially on busy days.

 

[Mousey0324]

That only matters if people stop coming and/or stop spending money. Conversely, if "aligning with the industry" means that the Parks are more profitable, then management is arguably negligent if they don't make the change.

Every time some change like this comes along (removing valet parking for DVC, separating DVC retail/resale, charging for parking at the resorts, increasing food and beverage costs, increasing ticket costs, etc. etc. etc.) the Disneyana community reliably claims: "This time, they've gone too far! It will cost them when people stop coming back!"

So far, the Company has been right and The Community has been wrong nearly every single time. There have been a few changes that were undone relatively quickly, but they are the exception, not the rule. Is this one of those times? I don't have a crystal ball, so I can't tell you for sure, but I know which way the odds point.

stock price, market sentiment, and customers say otherwise…

just saying

 

[Brian Noble]

Did you read any of the analysis? The stock price/market sentiment is a reaction to D+ subscriptions slowing down (plus, I'm guessing, the usual concerns about ESPN's cost of content going up while its paid subs go down). It has nothing to do with G+.

We here on the DIS think the company's fortunes rise and fall with the day-to-day variations at WDW. It's a small part of a big picture. Even so, I'm willing to bet that attendance over the next year or two will be just fine absent some renewed pandemic friction or another Great Recession (which may well be possible).

 

[mom2rtk]

That only matters if people stop coming and/or stop spending money. Conversely, if "aligning with the industry" means that the Parks are more profitable, then management is arguably negligent if they don't make the change.

Every time some change like this comes along (removing valet parking for DVC, separating DVC retail/resale, charging for parking at the resorts, increasing food and beverage costs, increasing ticket costs, etc. etc. etc.) the Disneyana community reliably claims: "This time, they've gone too far! It will cost them when people stop coming back!"

So far, the Company has been right and The Community has been wrong nearly every single time. There have been a few changes that were undone relatively quickly, but they are the exception, not the rule. Is this one of those times? I don't have a crystal ball, so I can't tell you for sure, but I know which way the odds point.

Didn't the recent earnings call confirm that Disney had a bad quarter while the kids up the road had one of their most profitable ever?

 

[Brian Noble]

I haven't listened to the call or read the transcript yet. But, from the earnings release: Parks and Experiences notched a $640M profit in 21Q4. The report's comparisons to prior year aren't that interesting because in the prior year parks were either fully closed or only open for part of the quarter. The report also mentions that parks are still generally operating at reduced capacity. The cruise ships are also part of this segment, and I think they've only recently re-started, so that's a drag on earnings too.

Given that part of 21Q4 was during the tire fire of Florida's peak covid caseload, that doesn't sound too bad to me. It looks like Seeking Alpha has the transcript up, so I'm looking forward to reading it for more color.

I don't know what Universal did. Sea World had a gangbuster quarter, but it was in comparison to...not much the prior year. One interesting thing: Sea World significantly increased it's per-capita gate and had strong attendance, which means they were under-charging previously. Maybe Disney's got the right idea by increasing the per-capita revenue of their parks.

https://coasterbuzz.com/Forums/Topi...spite-decrease-in-attendance-compared-to-2019
Edited to add: and if you mean the quarter overall vs. the quarter in Parks and Experiences: again, that's largely due to D+ performance in Media and Networks.

 

[Mousey0324]

Did you read any of the analysis? The stock price/market sentiment is a reaction to D+ subscriptions slowing down (plus, I'm guessing, the usual concerns about ESPN's cost of content going up while its paid subs go down). It has nothing to do with G+.

We here on the DIS think the company's fortunes rise and fall with the day-to-day variations at WDW. It's a small part of a big picture. Even so, I'm willing to bet that attendance over the next year or two will be just fine absent some renewed pandemic friction or another Great Recession (which may well be possible).

I don’t need to hear any of the analysis. I can read a stock chart. It goes DOWN ; not UP.

and my comment has to do with your response saying “everything Disney has done, has been the right decision”

that’s comical

 

[Brian Noble]

I don’t need to hear any of the analysis. I can read a stock chart. It goes DOWN ; not UP.

But it didn't go down because some $5/pp/pd increase in the gate per-cap made some hardcore theme park fans angry but not angry enough to stop coming. It went down because the new D+ subscription momentum undershot expectations.

Those things matter, but you can try to quip your way out of it if you like. It's your nickel.

 

[Mousey0324]

But it didn't go down because some $5/pp/pd increase in the gate per-cap made some hardcore theme park fans angry but not angry enough to stop coming. It went down because the new D+ subscription momentum undershot expectations.

Those things matter, but you can try to quip your way out of it if you like. It's your nickel.

re-read my response. my comment had more to do with your “Disney does no wrong, they are always right; stop whining”

 

[Mousey0324]

But it didn't go down because some $5/pp/pd increase in the gate per-cap made some hardcore theme park fans angry but not angry enough to stop coming. It went down because the new D+ subscription momentum undershot expectations.

Those things matter, but you can try to quip your way out of it if you like. It's your nickel.

Here I’ll put your exact post, since you seem to have forgotten.

So far, the Company has been right and The Community has been wrong nearly every single time. There have been a few changes that were undone relatively quickly, but they are the exception, not the rule. Is this one of those times? I don't have a crystal ball, so I can't tell you for sure, but I know which way the odds point.

 

[Jrb1979]

I haven't listened to the call or read the transcript yet. But, from the earnings release: Parks and Experiences notched a $640M profit in 21Q4. The report's comparisons to prior year aren't that interesting because in the prior year parks were either fully closed or only open for part of the quarter. The report also mentions that parks are still generally operating at reduced capacity. The cruise ships are also part of this segment, and I think they've only recently re-started, so that's a drag on earnings too.

Given that part of 21Q4 was during the tire fire of Florida's peak covid caseload, that doesn't sound too bad to me. It looks like Seeking Alpha has the transcript up, so I'm looking forward to reading it for more color.

I don't know what Universal did. Sea World had a gangbuster quarter, but it was in comparison to...not much the prior year. One interesting thing: Sea World significantly increased it's per-capita gate and had strong attendance, which means they were under-charging previously. Maybe Disney's got the right idea by increasing the per-capita revenue of their parks.

https://coasterbuzz.com/Forums/Topi...spite-decrease-in-attendance-compared-to-2019
Edited to add: and if you mean the quarter overall vs. the quarter in Parks and Experiences: again, that's largely due to D+ performance in Media and Networks.

https://twitter.com/x/status/1453704234684256267

Universal according to their CEO had their most profitable quarter in their history.

 

[DisneyKidds]

But even if we use the largest possible number, and even if we assume it’s fully accretive (It won’t be, because some G+ spending will cannibalize other parts of a vacation budget) it’s about $300M, or less than 0.5% of total revenue.

If the $300M were typical revenue I could see looking at it as a percentage of gross revenue. However, as others have pointed out, that full $300M falls to the bottom line. As such, a better comparison would to Net Income. A $300M increase (profit in Disney coffers) on $10B (estimated net income, 2019 was $11B) equates to a 3% increase in profit. That’s pretty significant.

 

[TreAntDeu]

Here I’ll put your exact post, since you seem to have forgotten.

So far, the Company has been right and The Community has been wrong nearly every single time. There have been a few changes that were undone relatively quickly, but they are the exception, not the rule. Is this one of those times? I don't have a crystal ball, so I can't tell you for sure, but I know which way the odds point.

Seems to me the original commenter should have said "So far, the Company has been right and The Community has been wrong nearly every single time when it comes to specifically the parks division"

Cause it's pretty clear thats what they meant, but you want to hyper focus on its vague wording to discredit them entirely when their points about Disney+(the division thatt has clearly influenced the stock price by far the most, both good and bad, since its inception) are well said.

 

[Brian Noble]

If the $300M were typical revenue I could see looking at it as a percentage of gross revenue. However, as others have pointed out, that full $300M falls to the bottom line.

I don't think it does, though, because I suspect there is a cannibalism effect on what guests might otherwise spend on vacation. If you buy one or two fewer boxes of popcorn, suddenly that $15 becomes $10 or $5. I suspect it's a net positive but as I suggested above not fully accretive.

And, there will probably be some people who do get turned off and stop coming. Some of that is by design---management has been consistent about the idea of slightly reducing attendance in favor of higher per-caps, giving fewer people a better experience at the same or higher revenue. But that will eat into the benefits too.

 

[VAlegacy]

That only matters if people stop coming and/or stop spending money. Conversely, if "aligning with the industry" means that the Parks are more profitable, then management is arguably negligent if they don't make the change.

Every time some change like this comes along (removing valet parking for DVC, separating DVC retail/resale, charging for parking at the resorts, increasing food and beverage costs, increasing ticket costs, etc. etc. etc.) the Disneyana community reliably claims: "This time, they've gone too far! It will cost them when people stop coming back!"

So far, the Company has been right and The Community has been wrong nearly every single time. There have been a few changes that were undone relatively quickly, but they are the exception, not the rule. Is this one of those times? I don't have a crystal ball, so I can't tell you for sure, but I know which way the odds point.

Your points may be true historically, but those changes you mentioned happened over the period of decades, and were relatively small. No advanced or any FP for DVC/AP/onsite is significant.
You forget one of Disneys long term goals is to control crowd levels. Profits may remain the same due to higher prices subsidizing lower attendance.
To suggest there is no breaking point is naive.
I can only speak for myself, but I will visit less, due to the new disparity of value/experience. I have to assume im not alone.

 

[DisneyKidds]

Conversely, if "aligning with the industry" means that the Parks are more profitable, then management is arguably negligent if they don't make the change.

Not grabbing at every low hanging piece of profit just because the other guys are doing it, especially when grabbing at said profit goes against how a successful company has been operating for decades, is not Corporate negligence. One could argue that grabbing at that profit, at the expense of the brand of that company that has been successful in the long term, borders on negligence.

 

[Brian Noble]

You forget one of Disneys long term goals is to control crowd levels. Profits may remain the same due to higher prices subsidizing lower attendance.

If you read the post just prior to yours, you'll see that I didn't forget that. Those statements date back several years to Iger around the time that date-specific single-day tickets came around. I remember thinking at the time that they were just getting started in yield management

To suggest there is no breaking point is naive.

I guess I'm not being clear. I don't believe the breaking point doesn't exist. I very much believe there is a price point that would be a disaster for WDW. After all, theme parks are not a necessity, and the demand for them is certainly elastic. (You might not know that from reading DIS, but...)

However, I also believe that Disney---a company that is fanatical about surveying guest opinion---probably knows where those breaking points are better than we do, and they will generally stay well under them.

 

[DisneyKidds]

I don't think it does, though, because I suspect there is a cannibalism effect on what guests might otherwise spend on vacation. If you buy one or two fewer boxes of popcorn, suddenly that $15 becomes $10 or $5. I suspect it's a net positive but as I suggested above not fully accretive.

And, there will probably be some people who do get turned off and stop coming. Some of that is by design---management has been consistent about the idea of slightly reducing attendance in favor of higher per-caps, giving fewer people a better experience at the same or higher revenue. But that will eat into the benefits too.

Fair enough! They also have to staff a few people at the LL entrances, and a programming adjustment or two. However, even if those things result in G+ margin erosion, and only half of the $300M falls to the bottom line, that’s a 1.4% increase in net income, another $150M of profit in the coffers. That’s still pretty significant. Looking at the G+ revenue increases as a % of gross revenue doesn’t really give an accurate picture of the overall significance of that revenue, IMHO.

 

[gharter]

https://twitter.com/x/status/1453704234684256267

Universal according to their CEO had their most profitable quarter in their history.

the difference in comparing Disney and Universal is by a percentage much more of Disneys income comes from the parks whereas a much smaller percentage of Universals comes from parks. Looking at the numbers, Universal park revenue is up, but not a huge amount.
Most of their profit came from media. Not surprising. As they build more parks, that number may swing more to the percentages that Disney has.