Disney Parks Now a Major Revenue
Wednesday, July 19th 2000, 12:00 am
By: News On 6
LOS ANGELES (AP) â€” In 1952, Walt Disney had trouble convincing his brother and business partner Roy to back his obsession to build a family-oriented amusement park. So he formed his own company, WED Enterprises, to finance Disneyland, which opened in 1955.
Today, the theme park division of the Walt Disney Co. contributes nearly one-third of the company's revenues and will soon bring in more money than the company's movie businesses.
To be sure, Disney's theme park division has expanded far beyond the few hundred acres in Anaheim, Calif., that Disneyland inhabits. It also includes parks and resorts in Florida, championship golf courses and two cruise ships. Disney also owns a minority stake in EuroDisney near Paris and manages Tokyo Disneyland for a Japanese owner.
Theme parks and resorts contributed 44 percent of the company's operating profit in 1999, up from 31.5 percent in 1998, according to the company's annual report. While revenue from Disney's film division rose 4 percent in the first quarter of this year to $1.7 billion, revenue from theme parks jumped 11 percent to $1.6 billion, compared to the same period last year.
The resorts' fixed assets are generating a lot more profit for the company that its films. In the first quarter, income from films actually dropped 97 percent to $3 million while income from the parks rose 6 percent to $330 million.
``For the past five years, the growth in our business has been tremendous and very consistent,'' said Paul Pressler, chairman of Walt Disney Parks and Resorts. ``In the old days, films were dominant and theme parks were a smaller piece. Now were an important part of the overall portfolio.''
In the days before the Internet, the theme parks served as the place where people could interact with Disney characters and the company could cross-promote its movies and consumer products. Today, the parks have grown beyond thrilling rides and magic castles. They include five-star restaurants, convention complexes and technologically-sophisticated attractions.
The theme park business is highly seasonal, with revenue fluctuating wildly from winter to summer. Today, those bumps have been smoothed somewhat by the company's efforts to expand the appeal of its parks beyond children and to persuade guests to extend their stays and spend more money.
For instance, in the past, guests would spend as many as one or two hours waiting in lines for the most popular attractions. This year, Disney introduced the ``Fast Pass'' at its Disneyland resort, which allows people to book a ride time in advance.
``The idea is to get folks to use the time they would have had to wait to eat or buy merchandise,'' said David Miller, an entertainment and media analyst at Sutro & Co. ``It's working.''
Disney is also expanding its flagship park by adding the ``California Adventure,'' which will open next year. The new park is aimed at making Anaheim a destination and to attract couples in their twenties and thirties â€” people who have more discretionary income, according to Miller. Disney also plans an additional theme park in Tokyo and one in Hong Kong.
While the importance of the division to Disney has changed, its core mission hasn't, according to Pressler.
``Our formula hasn't changed very much and our guests seem to find it as compelling today as they always did,'' he said. ``We provide experiences that are fantastic and 'wow,' but the stories we tell are pretty traditional. The heart and soul of what we do is tell compelling stories.''
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