Discover the exact amount Disney will invest in its theme parks over the next 10 years. We reveal the numbers and the group’s strategy.
The Walt Disney Company, better known as Disney, plans to invest around $60 billion over the next decade to develop its theme parks, cruises, and hotel complexes. This was announced by Bob Iger, Disney’s CEO, and Josh D’Amaro, head of Parks, Experiences and Products, at an investor summit held at Walt Disney World in Orlando, as reported by our colleagues at the Wall Street Journal.
A Doubling of Investments
This massive investment represents nearly double what Disney spent on its parks and resorts division over the past decade. The goal is clear: continue growing Disney’s park activities, which currently represent the group’s primary source of profits.
Disney executives provided few details on the specific projects that will be financed. But they hinted at some possibilities, like potential new Frozen-themed attractions at Disneyland Resort in California or the creation of a universe inspired by Wakanda, the fictional kingdom from the movie Black Panther.
Maximizing Revenue Per Visitor
Disney still has over 1,000 acres of developable land to build new attractions and hotels. The aim is to welcome the over 100 million visitors who come to Disney parks worldwide each year.
The company also wants to expand its cruise ship fleet and establish a presence in Singapore. In recent years, Disney has modified how its parks operate to maximize revenue per visitor. The group has raised ticket prices, offered paid options to enhance the customer experience, and increased prices at restaurants and shops.
Disney’s New Cash Cow
This strategy has alienated some visitors, particularly annual pass holders, who feel access to Disney parks has become too expensive. But it has paid off financially. Revenue from park and resort activities has increased significantly and now represents Disney group’s primary economic engine.
A Confirmed Transition
For the past three quarters, this division’s operating profits have far exceeded those of traditional linear television, Disney’s traditionally dominant sector. This reversal of revenue streams reflects a profound change in the company’s business model.
For years, Disney relied on pay TV subscriptions, particularly to ESPN, ABC and FX, to finance risky bets like launching the Disney+ streaming platform in 2019. But with the rise of cord-cutters, these channels generate less and less profit. Hence the shift to parks and cruises as the group’s cash cow.
A Massive Investment
The announced $60 billion investment in the parks over the next ten years confirms this strategic reorientation. Although Disney’s stock price dropped after this announcement over concerns about short-term negative cash flow impact, it is a bet on the future.
Disney is counting on the continuous development of its parks with new attractions and revenue optimization to offset the decline of traditional TV channels. The $60 billion investment demonstrates Disney’s confidence in the growth potential of this activity.
It is therefore a considerable sum that the group plans to dedicate to its theme parks, hotel complexes and cruise ships over the next decade. Disney confirms the strategic shift undertaken in recent years, with parks and cruises as the primary revenue source compensating for the decline of traditional television.
Cover image credit: Pixabay