Disney must be hoping that its new plan to build Avatar theme park attractions will be the shot in the arm the business may need. And, unbelievably, the new feature is coming courtesy of Fox Filmed Entertainment and James Cameron.
On paper, all looks well for Disney’s theme park revenues: they were up 9% to $8.7B for the three quarters that ended July 2, while operating income was up 13% to $1.1B. Also attendance has held steady. But most of the growth was due to Disney’s decision to raise prices for tickets, hotels, food, and merchandise. That probably can’t continue if the economy continues to weaken. Meanwhile, some analysts have been alarmed by the high capital expenditures for parks, which more than doubled to $2.1B in the nine-month period. Disney is still working on the $1.1B upgrade it announced in 2007 for its California Adventure park — it struck many visitors as a cheap, generic amusement park when it opened in 2001. Disney’s also investing in its Aluani Resort in Hawaii (it opens Thursday), Shanghai Disney Resort for 2016, expansion of the Hong Kong properties, a re-do of Disneyland’s Fantasyland, new cruise ships — and covering increased pension obligations.
Construction and licensing costs for the Avatar attraction from Fox and James Cameron could run about $400M, and there’ll be some revenue sharing for the merchandise. But the new project isn’t expected to change Disney’s forecast for its capital expenditures to peak in another year or two.
Financial engineering will help, but Disney parks also need more pizazz: Universal Studios stole a lot of the theme park thunder in Orlando last year when its new Wizarding World of Harry Potter attraction became huge hit. Largely due to Potter, readers of the website Theme Park Insiders recently voted Universal’s Islands of Adventure to be the world’s best theme park for the second consecutive year.