Disney theme park division sees 21% boost to quarterly operating profit

Posted Wednesday, August 8, 2012 10:05 AM | Contributed by Jeff

Operating profit at Disney's global theme-park division surged 21 percent to $630 million on sales that rose 9 percent to $3.4 billion. That growth was driven by the late March launch of the Disney Fantasy cruise ship; the mid-June opening of a "Cars"-themed attraction in Southern California; and a rebound at Tokyo Disney, which was forced to close for a time last year following a devastating earthquake and tsunami in Japan.

Read more from The Orlando Sentinel.

Wednesday, August 8, 2012 10:17 AM

The economy is clearly as terrible as the politicians would like us to believe.

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Wednesday, August 8, 2012 11:32 AM

It will be interesting to see if PANDORA: The World of Avatar (apparently the official name of Avatarland) will have the same impact on Animal Kingdom that Cars Land has been having on Disney California Adventure.

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Wednesday, August 8, 2012 12:03 PM

The crazy thing about this is that Tokyo Disney is not even owned by Disney! Disney get paid the royalties, but all the massive profits stay with the Oriental Land company. So... why bother presenting it in this as a division that made a lot of money?

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Wednesday, August 8, 2012 12:11 PM

Maybe Disney got paid a lot of royalties

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Wednesday, August 8, 2012 2:21 PM

I think it's safe to assume that the licensing agreement favors Disney very heavily. They might not write the checks for operational expense, but you can bet they're raking in the cash.

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Wednesday, August 8, 2012 3:00 PM

International tourism remains strong in Florida even as domestic visitors have slipped. In fact, I wonder if Disney will see a boost here in August of people who chose to get out of England during the Olympics. August is a big vacation period for Europeans anyway.

But, there is no doubt that Carsland has finally turned the tide for California Adventure much in the way Potterland has lit a fire at Universal. Maybe it is just me but I just don't see Avatar connecting with people the way Cars or Potter do.

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Wednesday, August 8, 2012 3:47 PM

Cars vs. Avatar:

I think this site has debated the wisdom of the Avatar theme to death, but as a Socal Resident I can attest to the success that is Cars Land.

I didn't think it would be that big a hit outside the normal Disney nerds, but the tourists are eating it up. Average wait times for Radiator Springs Racers is 150-180 minutes. EVERY DAY. (yes, that is almost always the result of at least one breakdown a day, if not more), but it's consistent. They are scooping up the souvenirs at a healthy clip, and almost overnight have turned the tide on the negative impression of DCA. It's not the home run that Potter was, primarily because of the difference in the IP. However, Disney did an amazing job, and the "sense of place" is just so spot on, and most importantly, DCA is getting record crowds and those people are leaving SATISFIED. That's a huge change from the last 10 years with DCA. The level of detail is just so incredible. I watched Cars again, first time since the land opened, and was shocked at how much they had gotten right.

Now, that said, if they do essentially the same thing with Avatar (immense mountain back drop, realistic alien plant life, etc) I can see how it might be a winner. I still wonder if Avatar is the right IP, but seeing what has been done with Cars Land, if the imagineers are given the same budget and guidance, they might just produce a winner in Orlando also.

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Wednesday, August 8, 2012 3:57 PM

Having just visited Cars Land as well I'm starting to be a little more hopeful for Avatar's potential as a themed attraction/area. Like you said, Avatar might not be the ideal choice in terms of carrying what Harry Potter means to people (I still have never seen a crowd as expected to be in a theme park as the folks going into the Wizarding World of Harry Potter), but it can provide an immersive environment independent of what people do or do not remember about the movie. In many ways Cars Land succeeds more as a theme park attraction than either Cars succeeded as movies. With the right creative minds (and budget) it seems reasonable to assume that Avatar will go the same way.

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Wednesday, August 8, 2012 4:11 PM

At risk of going into that discussion again, I disagree. Avatar doesn't have the characters that kids recognize. How many people who have seen the movie can name the characters? If you have a kid in single-digit ages, how much Avatar merchandise do they have? My kid hasn't even seen Cars, and he has Cars stuff. He can identify the tow truck as Mater because his cousin can.

I think the whole Avatar thing is a horrible idea, and I haven't even bothered to see it yet.

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Wednesday, August 8, 2012 4:23 PM

I'm definitely keen to see how this will play out in the years ahead. There seems to be a trend with Disney parks, going back to and arguably including Epcot. The powers-that-be seem dead set on trying something original and different from the Magic Kingdom formula, only to be eventually led by turnstile clicks (or lack of them) back to what works, time and time again.

In this case, if it was necessary to have something vaguely animal-related at AK, the park would have been much better off building an immersive Muppet or Winnie the Pooh land. And they wouldn't have to pay through the nose for the licensing, since they already own the properties...

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Wednesday, August 8, 2012 4:48 PM

The earnings call went into the international bit. Not only is international visitation strong, but it provides some internal hedging through diversity. Here's the relevant summary of that bit of the call, from another Disney fanboy site:

Q3 international attendance at Walt Disney World was identical to last year’s number. A mix shift, Europe and Canada were down, picked up entirely by Brazil and Argentina. Currency swings could affect attendance, but hasn’t been an issue thus far.

Last edited by Brian Noble, Wednesday, August 8, 2012 4:49 PM
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Wednesday, August 8, 2012 8:30 PM

Jeff said:

My kid hasn't even seen Cars, and he has Cars stuff. He can identify the tow truck as Mater because his cousin can.

Yep. We have books, sippee cups, crocs, pajamas, and underwear and haven't seen any of the movies. If my other son were older (<1), we would definitely be considering a trip to DCA just so my first son (2.75) could see all the characters, even though he probably wouldn't get much out of anything else.

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Wednesday, August 8, 2012 9:19 PM

I assume Disney is aware of how "soft" Avatar is on the merchandise front, so they must be banking on the film's high grosses as an indicator of the public's appetite to visit Pandora. I'm not sure how it will translate to people buying stuff at Animal Kingdom the same way they buy wands and Hogwarts scarves at Harry Potter and the traffic cone cups and Luigi's Flying Tires hats at Cars Land.

I think the attraction/area itself has the potential to be successful "artistically" in the sense of being well-executed, immersive, and visually impressive but it doesn't seem likely that it will impact Animal Kingdom and Walt Disney World in general the way Harry Potter and Cars Land have impacted their respective parks.

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Wednesday, August 8, 2012 10:42 PM

Jeff, I agree with you that Avatar is a risk, not arguing that one bit, and as I put in my initial post, we've beaten that horse to death.

However, it's intriguing to watch the adults in Cars Land, those who really don't give a crap about Lightning McQueen and/or Mater. The buildings and everything else about the land are so over the top spot on (the cozy cone motel, Luigi's shop, Flo's Diner), that people buy into it. And they're buying the food in the cute containers, and basically believing that they have managed to find themselves in the land of Cars. The Rock Work in and of itself is amazing. forget the shot straight down route 66, the side entrance from the Wharf area, is striking, and at twilight/early evening it is just so over the top.

Avatar 1 didn't have any cute and cuddly ewoks, or talking hillbilly tow trucks, or etc, so there will be a hard problem selling this thing. I'm not sure that most people could even name a character, I mean repeat the character's name (blue chick, guy in wheel chair, lady from Alien, lesbian who flies helicopter, bad guy, badder guy). I know nothing of Avatar 2-3, and maybe this is all being done concurrently with the story development for those two movies. If so, then maybe there is a whole cast of anthropomorphic creatures targeted to 5 year olds, that become the icing on the cake.

However, the level of detail at Cars Land goes beyond what Disney has done in the states, and IF that's the rule for Avatar, then there's promise.

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Thursday, August 9, 2012 11:57 AM

Jeff said:

The economy is clearly as terrible as the politicians would like us to believe.

I dunno.

When it comes to this kind of spending, I'm not sure it's representative.

My guess is that people who could normally afford to go to Disney are just fine and are clearly still spending at Disney. The people who couldn't are further than ever from making it ever happen.

Yeah, I think I buy into the widening gap.

No idea where the technical line is, but I prefer to classify it as:
People who were doing well before are doing as fine as ever. People who were struggling before are struggling more than ever.

I base that on nothing more than my own anecdotal evidence.

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Thursday, August 9, 2012 12:11 PM

Plus, the unemployment rate is still higher than it has been since the early 80s. It's better than it was a couple years ago, but it's still far from good.

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Thursday, August 9, 2012 1:27 PM

Lord Gonchar said:
My guess is that people who could normally afford to go to Disney are just fine and are clearly still spending at Disney. The people who couldn't are further than ever from making it ever happen.

So it's like any other time?

The unemployment issue can in part be attributed to state and local government job cuts that aren't coming back. The last stats I saw said it was something like 700,000 jobs lost since 2007. Allegedly, that's what people want, fewer people on the government payroll (until it's a fireman or a teacher). Factor out the government job losses and unemployment is more like 7%. Still high, certainly, but I think it's important because it demonstrates that the pressure has shifted a bit to the private sector.

More to the point, the political rhetoric about the "rich" versus the "middle class" is not easily validated. Disney, Six Flags and now Cedar Fair are all posting record quarters. They aren't doing it without the middle class that's "suffering."

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Thursday, August 9, 2012 1:51 PM

Jeff said:
So it's like any other time?

Sorta. But magnified.

At least that's how I'd describe it to the best of my ability.

People who would have always been able to go to Disney are spending even more because they're doing as well as ever.

People who can't or were on the fence aren't thinking they might make it happen, they're miles away from Disney being a reasonable choice.

More to the point, the political rhetoric about the "rich" versus the "middle class" is not easily validated. Disney, Six Flags and now Cedar Fair are all posting record quarters. They aren't doing it without the middle class that's "suffering."

I don't even think it's an unemployment or class thing, I think it's a quality of life thing.

If you lived a life where you were comfortable before the economy got flip-turned upside down, you're still doing that easily. If you were struggling to make ends meets, it's harder than it ever was to keep treading water. I say that regardless of income, status, class or whatever.

Again, I'm not even going to pretend I have facts or numbers or studies or any of that crap to back it up. I just know a wide range of people and in my circle of influence those that were doing fine before seem to be the ones asking what the problem is and those that were on the fence or worse are having a hell of a time.

And even if one doesn't buy into the 'widenening gap' - the alternative view is that people who would normally be spending on more extravagant vacations are now slumming it at amusement parks. It's cheap entertainment. When times are bad people look for cheap entertainment.

And lastly, I haven't looked beyond a glance at any of the reports but is attendance up or is spending up (or both)? Because that goes a long way in reverse engineering the actual trend.

I guess my point is that the increased revenues at amusement parks isn't enough evidence to generalize about the state of the economy for me. It's entirely possible for things to be less than great economically and amusement park spending/revenue still be up.

EDIT - just read the article and it mentions attendance has actually slipped at Disney World. Which kind of supports what I'm getting at. It's less people spending a lot more.

Last edited by Lord Gonchar, Thursday, August 9, 2012 1:54 PM
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Thursday, August 9, 2012 2:45 PM

Anecdotal evidence at the Disneyland Resort is that total attendance up slightly (significant increase at DCA and flat at Disneyland) but that with the price increases (massive) the overall result is increased revenues.

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