Disney, Universal square off in battle on the theme parks


Disney, Universal square off in battle of the theme parks - 17th August 2015

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Disney on Saturday announced expensive Star Wars-themed expansions at its California and Florida resorts. Getty Images

The empire is striking back.

While insisting they pay little attention to each other, America's two largest theme park operators, Disney and Universal, have lately been locked in what certainly seems like an arms race. Universal kicked it off in 2010 with a Harry Potter mega-expansion. Disney then introduced or announced new Cars, Avatar and Fantasyland attractions. Universal, which is owned by Comcast, has since upped the ante, spending billions on new rides and resort hotels.

Now, Disney is rolling out the heavy artillery: After a few years of aggressive investment in overseas theme parks, principally the $US5.5 billion Shanghai Disneyland - leaving an opening in the United States for Universal - Disney on Saturday announced expensive Star Wars-themed expansions at its California and Florida resorts.

The pair of Star Wars lands, each about six hectares, will be built at Disneyland in Anaheim and at Disney's Hollywood Studios, a down-on-its-luck park that is part of Walt Disney World in Orlando, Florida. Hollywood Studios will also get a new Star Wars-themed weekend fireworks show and 4 hectares of new Toy Story rides.

Estimated by analysts to cost more than $US2 billion, including parking and other infrastructure upgrades, the vast bicoastal expansion - Robert Iger, Disney's chief executive, described the Star Wars plans as "jaw-dropping" - marks a long-expected effort by Disney to use its parks to capitalise on its 2012 purchase of Lucasfilm.

Disney has long dismissed Universal as a challenger. But the bold building plans were, in part, read by analysts as a competitive response to Comcast, which is pouring billions of dollars into its own California and Florida properties, in particular focusing on wildly popular Harry Potter-themed attractions.

The movie-focused Hollywood Studios, which in some ways started the Disney-Universal rivalry when it opened in 1989, has been especially at risk from Universal's surge. Hollywood Studios attracted 10.3 million visitors in 2014, just a 2 per cent increase from the previous year, making it the least visited of Disney's four major parks in Orlando. Nearby Universal Studios handled 8.3 million guests, but that was a 17 per cent increase from the year before.

"It's hard for us to recommend spending $80-$100 on a park that has so little to offer," the new edition of The Unofficial Guide to Walt Disney World says of Hollywood Studios, calling a trip to the movie-themed Universal "the superior choice."

Disney had no comment on competition with Universal.

Robert Niles, editor of the news site Theme Park Insider, said by phone Sunday that Disney's announcement should be interpreted as a response to competition in a broad sense. "Sure, they are looking at Potter, but they are also looking at anything that can compete with a Disney vacation," he said. "They have to create not just a desire to go see, but a passion to go see."

Disney's theme parks unit, a $US15.1 billion annual business that is scrutinised as a consumer confidence bellwether, tends to open new attractions four to six years after announcing them. Disney declined to comment on the timing or anticipated construction costs related to its Star Wars announcements.

Disney has recently tried to tap the brakes on expectations for the upcoming film, Star Wars: The Force Awakens, which will restart the movie series after a 10-year dormancy. Analysts expect the film to take in more than $US2 billion. "We just want to be careful that the world doesn't get ahead of us too much in terms of the estimates," Mr Iger told analysts on an August 4 call. "We have to take a wait-and-see approach."

But the decision to move forward with Star Wars outposts signals both Disney's long-term belief in its theme park business as a growth engine and its confidence that The Force Awakens will be a juggernaut both at the box office and in the retail aisle.

Mr Iger made the announcement before a crowd of 7,800 at a biennial gathering of Disney fans here called D23 Expo, which attracted 70,000 people over three days. It was at the last D23 Expo that Disney first signalled Star War theme park plans; the D23 exhibit hall in 2013 had R2-D2 positioned with boxes of blueprints labelled "Project Orange Harvest." ("Blue Harvest" was the code name for The Return of the Jedi during production in the early 1980s.)

Disney has been quietly preparing Disneyland and Hollywood Studios for expansion. Last month, for instance, Disney won a 30-year exemption on ticket taxes from Anaheim in return for a pledge to spend at least $US1 billion on new rides and a 5,000-car parking structure. The investment must begin by the end of 2017.

In Florida, the 55-hectare Hollywood Studios in February tore down a 35-metre sorcerer's hat (like the one Mickey wore in Fantasia) that served as the park's centrepiece. The park - rushed into construction by Michael Eisner, Disney's former chief executive, to beat the 1990 arrival of Universal - has also closed an array of attractions, including a faux studio back lot tour, the Magic of Disney Animation pavilion and the Legend of Captain Jack Sparrow exhibit.

The Disney-owned Marvel movie brand was conspicuously absent from plans to rehabilitate Hollywood Studios. Although Disney bought Marvel in 2009 for $US4 billion, the Florida theme park rights to Marvel characters like Spider-Man, the Hulk and Captain America continue to be held by Universal under a long-term contract.

Asked in an interview in July if Universal would ever sell those rights, Thomas Williams, Universal's theme park chairman, answered with one word: "No."

(The New York Times)