2/8: Disney’s Reinvention Problem, Part III

[Al Lutz]

Kevin continues his series, and here you can continue your discussion about it!

[Evil Minion]

I thought DCA cost $1.4 billion, not $600 million.

I think the studio park at Euro Disney cost $600 million max, but not DCA.

[innerSpaceman]

$600 Million was the "theme park," the rest was the price tag for the Grand Cal.

At first blush, that may seem like a backwards allocation of money. But think about it ...... how much time to you spend in DCA, and how much time do you spend in the Grand Cal? Eh?

[Gemini Cricket]

The photos for Everest Expedition are awesome. That thing is going to be huge!

[Evil Minion]

So the $1.4 billion was for the total expansion (DCA+hotel+DTD) ?

[thunderl]

So the $1.4 billion was for the total expansion (DCA+hotel+DTD) ?

Yes!

[Jspider]

I've heard that DCA's actual price was closer to a billion then that

I've also heard that DTD was paid for mostly by the buisnesses that would later move into the buildings (not sure how true that is) we already know that the city of anihiem payed for the parking garage

oh well either way DCA could've been executed much better (or better yet been something totatly different)


I'll agree on the investment in Go.com not making any since (what did Go even do? all I remeber is it making Disney's web addresses all have go in it which was rediculous, of course most of the web was still rediculous at that point in time)

I don't think Disney has invested much in power rangers at all, it was a package deal when they bought Fox Family and Haim Saban's entertainment company rights or whatever (though Disney did move the show's production over to New Zealand and start making it contain less Japanese footage, they also brought back Jason David Frank *Tommy, aka the green ranger who was oh so popular when I was a kid*, yeah why is it that Disney will throw a bone to the Power Ranger fans but not to us theme park peoples :P)

[Wendy]

Great article, Kevin- thank you!

[Indy]

Excellent article, Kevin!!! Very thorough! At some point, you should comment on the big anomaly to all of this which, of course, is Tokyo DisneySea - a park financed by Oriental Land Company which had Immerision towards Illusion on the brain rather than a re-invention ala DCA. The result is what people consider to be the greatest theme park experience SINCE Disneyland. Why? Because they stuck to that tried and true formula of a theme park which you brilliantly mention in your article. They also believed that if you spend money, you will make money. There's a reason why DisneySea cost more than DCA to build, yet it turned a profit faster. One can only hope an Eisner successor can have the vision for this model for success.

[Wotan]

As far as reinvention goes, the Disney problems with creativity are becoming more fundamental to the company. Eisner has driven creative people out of the company for ages, and now there aren't any around to annoy him. So things stagnate.

Witness the discontinuation of "traditional animation". Creative people are passionate, and temperamental, and as such, don't necessarily "fit in" to an organization. They upset the apple cart. Some managers can't deal with that.

To acknowledge that it's time to do things differently means to acknowledge that you've been doing things wrong lately. Too many people are too insecure there for that to happen anytime soon.

[Angus McGonnigle]

decline in stock value for the day.

[sediment]

$600 Million was the "theme park," the rest was the price tag for the Grand Cal.

At first blush, that may seem like a backwards allocation of money. But think about it ...... how much time to you spend in DCA, and how much time do you spend in the Grand Cal? Eh?

How much money do you spend in DCA versus what you spend in GCH? One thing Pressler understood was to invest where there's a direct (and measurable) return. Too bad it results in a crappy, unDisney park.

[Jspider]

How much money do you spend in DCA versus what you spend in GCH? One thing Pressler understood was to invest where there's a direct (and measurable) return. Too bad it results in a crappy, unDisney park.

the more there is to do in the parks the longer you'll stay and the more Disney can make off the rooms they have in their hotels (and the larger amounts of rooms they can sustain)

the Hotels are dependant on the parks being worth building so you can't say that the parks arn't to be considered when building a hotel

[sediment]

the more there is to do in the parks the longer you'll stay and the more Disney can make off the rooms they have in their hotels (and the larger amounts of rooms they can sustain)

the Hotels are dependant on the parks being worth building so you can't say that the parks arn't to be considered when building a hotel

You're right, but that doesn't mean that Pressler and Eisner knew what they were doing.
I mean, to have the carpet match up with the marble on the floor in the lobby -- amazing how they thought that was important enough to waste money on.

[Alchimedes]

Kevin thank you for the article.
The ideas and imaginations seemed stifled by Eisner for DCA. Putting a flood of money into DCA right away to save Eisner's blunder would just cause more Deficit right?

[sediment]

Kevin thank you for the article.
The ideas and imaginations seemed stifled by Eisner for DCA. Putting a flood of money into DCA right away to save Eisner's blunder would just cause more Deficit right?

Probably, since it wasn't built to be flexible. Frankly, I don't see where the money went. For example, why weren't utilidors utilized? Why wasn't the lake built on a base of pipes for a future fountain/fireworks show? Why aren't there any AA's on Grizzly River Rapids?

[dshimel]

The comparison between how Eisner and Warren Buffett steered the course of their company is flawed, to say the least.

Let's start by comparing Disney's balance sheet to Berkshire Hathaway's. Oh wait.... Can't be done because Berkshire Hathaway doesn't have a balace sheet. It is a holding company. It sells shares in itself, and uses that money to buy shares in other companies. It has NO hard assets. It is the sum of the shares it holds in other companies....

As a result of having no hard assets, there was never a risk of hostile take over.

Compare this to Disney, a media company, a market segment that was a prime target of hostile take overs. AOL-TimeWarner ring a bell? How about Vivindi-Universal? Or the less known purchase of CBS by Viacom in 1999.... We're ALL aware of Disney's purchase of CapitalCity-ABC in 1995.

Eisner didn't partake in the late 1990s stock bubble just for personal profit. Had he not, 1 of 2 things would have happened.... 1) The stock holders would have replaced him with someone that would. 2) We'd all be lamenting how screwed up the company has gotten since the hostile take over by AOL or Vavindi.



Reading the full series, it seems Kevin missed the #1 point. EPCOT Future World was a bad investment. It generally takes 7-10 years to pay off a ride's construction cost. EPCOT isn't even 25 years old, and already every ride in Future World has been redone, or desperately needs redone.... and has for some time.

Disney can't be profitable having to replace rides every 10-20 years. It needs rides like Pirates, Mansion, Matterhorn, Pan, Toad, Indy.... Rides that are every bit as popular today as they were 2 years after they opened. Rides need to be repeatable!

"Immersion Toward Interesting Illusion" is half right.... The real payoff for the company comes from "Immersion Toward Interesting Illusion... that has a high repeat value and real staying power".

Wander through Yesterland.com and take a peak at all the attractions that have come and gone. People Mover and Country Bears and Inner Space and America Sings and Horizon's may have been Immersion Toward Interesting Illusion, but they lacked the timeless-ness or detail or "magic" necessary to create repeatability and staying power.

For non-E-Tickets, the track record is even worse. Yesterland is packed full of "non-cartoon" based smaller-rides that have come and gone, but hardly a cartoon based one to be found.


And, I've been assured that official company documents filed with the city of Anaheim demonstrate the DCA's construction cost is just under a full $ billion. However, I suspect A LOT of this is imagineering costs of other projects that didn't get built.... $100 million spent on Imagineering Disney's America... Well, we used the raft ride, airport and coaster, so that money was "really" spent on DCA...

As for DTD, Disney paid for the infrastructure (electric, water, sewer, walkways, parking, etc) and the base buildings. The tenants paid for everything from the walls in, plus exterior theming.

[dshimel]

the Hotels are dependant on the parks being worth building so you can't say that the parks arn't to be considered when building a hotel

DCA is a sucky park, but GCH sells 90%+ of its room/nights. Most hotels struggle to get 50-60% occupancy rate on an annual basis.

DCA is good enough to sell hotel rooms, and that may be exactly what they were aiming for when the park was designed... Hoping for better? Sure. Willing to accept "just good enough to keep the hotels full"? Possibly. If so, DCA, despite being pretty sucky, is doing its job.

[Cousin Orville]

I don't stay at that hotel to see DCA, I go to Disneyland. The only thing that hotel has to do with DCA (other than theme selection) is the fact that it was opened with the development. I would be interested to know how many people think of the GCH as their new Disneyland Hotel of choice.

[soundtracker]

This question is a little off topic, but still relevant. Does anybody know how much it cost to develop and build the Walt Disney Studios Park in Paris? It sufferes from DCA syndrome, only worse, and every person I ask seems to quote a different figure!