In America, Walt Disney’s most dedicated fans are known as Disney adults. This is the group that loses thousands of dollars every year on park visits, fainting from the distinct smell of water in the Pirates of the Caribbean ride. For outsiders, their dedication to a children’s brand is embarrassing. Even Disney’s feelings towards them are complicated.
In an interview with The Hollywood Reporter this month, Disney CEO Bob Chapek hinted that fans who paid expensive annual passes visited so often they blocked out the parks: “We love superfans. , obviously. But we also love fans who don’t have the same expression of their fandom. . . we need to make sure there’s room in the park for the Denver family that comes once every five years. Access to many annual pass options has been suspended. Pre-booking of visits is now mandatory.
Few companies can claim superfans as customers. Maybe Tesla. Maybe Apple. At Disney, fan devotion has brought US theme park attendance back to pre-pandemic levels. This allowed the company to move from family-centric vacations to more expensive experiences such as cruise ships. Last quarter, Disney Parks, Experiences and Merchandise revenue grew to $7.4 billion from $4.3 billion a year earlier. Cutting a favorite product could be a risky decision.
I saw disney adults up close once. When I moved to California a few years ago, I persuaded a friend to come with me to Disneyland so I could see what I had missed growing up in England. We drove from Los Angeles to Anaheim on a quiet Tuesday in early December to visit the original park, built on an old orange grove in 1955. Because it was a school day, I assumed we would have the place for us alone. I was wrong. Thousands of vacationing adults swarmed around us, decked out in Disney merchandise. Each ride had a long queue. Just like every restaurant.
The hyperreality of Disney theme parks has made them the most popular resorts in the world. Setting up a haunted mansion next to the Wild West within sight of an enchanted castle and surrounding them with pretzel and hot dog stands creates sensory overload. For many visitors, the connection to childhood means Disney parks have more meaning than ordinary vacations. This means they are worth paying more for – park price increases outpace inflation. Yet even as other discretionary spending drops, Disney fans are still buying tickets.
The problem is that superfans don’t spend as much per visit as casual visitors to the park. There are only a limited number of Minnie Mouse headbands that one person can wear. For some, the annual pass that allows shoppers to visit Disney parks throughout the year is also great value. A day trip to Disney World in Florida costs $109. The annual Incredi Pass is $1,299 plus tax. Visit once a month and you will break even. Go weekly and you’ll save over $4,000. The lag has shades of the MoviePass debacle, in which subscribers paid less than $10 a month for multiple trips to the movies. MoviePass assumed they might visit once or twice a month. But their willingness to watch movies day in and day out bankrupted the company.
Disney needs its parks to help subsidize the company’s massive investment in streaming. In August, Disney overtook Netflix on streaming subscriptions, triggering an existential panic among the latter’s investors. With 221 million paying viewers, Disney+ is a hit. Its decision to price the service below its competitors has encouraged signups. Subscriptions for Disney+, Hulu and ESPN+ combined are expected to bring in nearly $12 billion in revenue this year, according to Insider Intelligence.
Disney’s ability to sell its intellectual property stands apart from services like Netflix, which has tried to sell merchandise but has no significant source of revenue other than streaming subscriptions.
But creating enough content to keep viewers watching is expensive. Disney has an impressive back catalog and has successfully leveraged franchises like Star Wars and Marvel to create new TV shows. But the costs are high. It posted an operating loss of $1.1 billion in the third quarter, three times more than in the same quarter a year earlier.
It is therefore essential to ensure that visitors to the park return and spend more. Disney is reportedly considering an Amazon Prime-style membership program that encompasses streaming, parks and merchandise.
Fans are not satisfied. At the recent D23 Expo, an annual event for diehard Disney supporters, there were complaints that annual passes were still suspended. Unfortunately for them, Chapek ran the parks division. He knows that the demand is far greater than the supply and that he is neutral enough to take advantage of it. Prices could double and visitors would buy them. Disney fans may groan but they will keep coming back.