Can You Afford Disney? Are You Disney's Target Audience?
With costs increasing at Disney Parks, guests are wondering if they are being “priced out of the market”. In truth, is Disney more about making money than ever before? We look at a number of assumptions that guide Disney’s financial choices, many of which target their audience focus. We look at ways in which Disney is targeting audiences in a different way, and whether you may be part of that audience. We’ll also overview a new price tier for those who can’t afford to visit the parks at all. Intrigued? Then this podcast will help you re-think how Disney looks at its audience.
The key points along with links and graphs are below, but you can hear the narrative of my analysis on our podcast, available on Podbean, iTunes, Spotify, and ListenNotes. Please subscribe to the podcast and to this website so you can be notified of upcoming posts and podcasts!
Key Points:
Disney Must Pay Attention to Shareholder Value. This has been the case since 1984, and continues to be the defining difference between how a company like Disney thinks about pricing and how a company like Oriental Land Company approaches it. Organizations like Disney in the United States approach a more short-term view of increasing shareholder value than the Japanese do.
There are Still Wolves on Wall Street. The same kinds of forces that nearly devoured and ripped up The Walt Disney Company back in the 1980s exist today. They may be different players, but they still could come to the table. Would you want Disney to be owned by a Jeff Bezos Amazon-style firm or a Tim Cook Apple-style firm? Either would dilute the brand and make what Disney is less special. When the value of Disney’s products and services seem undervalued in the marketplace, then the wolves start to wonder if they couldn’t buy up Disney and make more money than what is currently being made. In other words, even if executives at Disney wanted to give this away for free, they would lose their jobs and the company would be ran by others–others who might even charge more than what is being charged now.
The ramifications of this is a different reality than in Walt Disney’s day. When Walt Disney World was being built, Walt’s vision that Walt Disney World would offer accommodations for every kind of guest, from “a sleeping bag to a suite.” In other words, create an experience that would allow guests along the economic scale the greatest advantage for attending. But scarcity of product against demand along with high shareholder expectations make that a more difficult scenario to play out fiscally.
Disney Must Think Globally. This is no longer about California and Florida. The world impacts those places. But the company is bigger than that. Disney is a multi-national company with an immense global reach. For instance, in 2016, Disney became the strongest global brand in the world according to Marketing Week, overtaking other organizations like Coca-Cola, LEGO, Nike and Google.
That said, Walt Disney World is still the company’s biggest theme park revenue generator, so who visits this park really matters. But the net of potential visitors is very different than it was in 1971 when most people who visited came by car. People throughout the world travel to Walt Disney World, and guests living in the UK, Canada and Brazil make a very important demographic.
Disney Targets More Than Families. Does Disney care about families being able to visit the parks? Absolutely! No one does tourism toward the family market like Disney–especially with younger ones. But even Walt Disney conceded that on weekdays during the school year, Disneyland park’s attendance was primarily adults with no children. Disney has never stayed away from any market–primarily if they had dollars. Their presence in the marketplace allows Disney to drive up the price, because adults without children can typically pay more and will usually spend more than those with families.
Certain Markets Are More Lucrative Than Others. Also, certain group business is far more far more lucrative for Disney than other forms of business. Convention business prior to the pandemic was a major contributor to bottom line revenues. Wedding business is a different, but also profitable venture.
Even a marathon runner can be more profitable than an average guest coming that same weekend, often because they will spend on the run plus merchandise related to the run, while also taking time to visit the parks and do what other guests do. Someone doing a land and sea experience involving both the parks and the Disney Cruise Line is much more attractive to Disney. Perhaps more attractive is someone who participates in Adventures by Disney. But all those options take money, and the ones who are easily willing to pay for that are those that make more money.
There are More Customers On this Planet Than Ever. There were 3.7 Billion People in 1971. There were 7.75 Billion People in 2020. Exponentially, there are more people who can enter a Disney park than ever before. Disney can not build enough parks to keep up with the world’s population growth.
Given that scenario, a strategy that focuses on attracting 10 different parties who may only come a couple of times in a 20 year period might be a better choice than one person who comes once a year over the same 20 year period. That of course assumes that it didn’t cost more to attract those 10 different parties than it did for attracting one party 20 times.
What about annual pass holders? It might be a better strategy to use annual pass holders as a filler, but not as a primary source of revenue. Indeed, if the park is filled with pass holders it may deny others who might bring in more revenue. For instance, Disney would rather rent a room out to someone who is also paying for tickets, rather than a party that is utilizing their annual pass during a weekend stay.
Wealth Has Increased. The Brookings Institute back in 20“18 described a “tipping point” where for the first time, just over 50 percent of the world’s population, or some 3.8 billion people, lived in households with enough discretionary expenditure to be considered “middle class” or “rich.” In other words, more people were wealthy for the first time than poor. Important in this is that the dominant growth was in Asia.
That’s not necessarily true in the United States. Historically the rich have become richer faster than the rest of the population.
Globally, You Are Considered Probably Wealthy. But that said, the Pew Research Center allows you to calculate where you are in terms of wealth globally. For instance, if you are a party of two and you make 45K a year, you are considered globally a high income earner.
Wealth Will Increase. Since wealth will increase, Disney can increase pricing. They can make more money. More people, making more money, means Disney can charge more. That’s important because the middle class is emerging and more people are capable of earning the kind of income that would permit them to go to a Disney theme park–perhaps not every year, but easily a time or two during a child’s development years, or at least once in a lifetime.
Disney Takes Its Price Increases Seriously. They are not capricious to increasing the price of a large soda. That is something that is managed across the board, and is frankly not done overnight. So it is with any additions made to the parks and especially price increases to tickets. Consider the interview Jay Rasulo gave a few years ago at a MoffetNathanson Media Communications Summit.
What About Those Who Can’t Go to the Parks? There will always be those who can’t afford Disney. There always has, and there will always be. There has always been people who saw a Disney park on the Wonderful World of Disney, imagining a day where they could visit themselves. Now guests have Disney+ to provide that same outlet. But could there be something more?
Imagine paying $10 dollars a month to visit the Disney Parks–virtually! In this new pricing tier, you can go any time you want to The Happiest Places on Earth and explore the parks in new ways via the Metaverse. Perhaps it becomes an option to Disney+ in the same way you can add Hulu or ESPN. Your virtual annual pass allows you to go day and night. In fact, you might experience a “Night in Walt Disney World” in a manner comparable to a Night in the Museum. And then when you eventually have the money to visit the parks, your virtual experience will play out all the more in a physical setting, allowing new technologies to see and interact with the park in ways you never have before.
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Hopefully this podcast has made you realize you need help and support in planning your next trip to Disney. David and Leah with Out the Door Travel know Disney in ways few do and they can make your next trip on land or sea an exciting one–or at least less stressful! Be sure to contact them as you explore your next vacation, whether it is a Disney theme park vacation, a cruise, or an Adventure by Disney. There is no charge to utilize their services, but it will save you enormous time getting all the details right, and with their insight you can be assured you’re going to experience the best trip possible. Contact them today!
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