5 things Disney CEO Bob Iger said about Parks expansion

Walt Disney Co. CEO Bob Iger sat down with Michael Nathanson for 45 minutes to discuss the future of the company’s business during the MoffetNathanson’s Media, Internet & Communications Conference, and spending a lot of time on the Disney Parks expansion.

During the session, he delineated three pivotal facets of the business: Experiences, encompassing Disney Parks and Disney Cruise Lines; Entertainment, spanning the movie studio, streaming, and networks; and Sports, embodied by ESPN.

The driver of the company’s success the past few years as primarily fallen on the shoulders of the Experience division, especially during COVID and the subsequent writer’s strike which shut down the studios and release of films. Recently Disney has pledged spending $60 billion over the next 10 years in Experiences as part of its strategy to turbocharge the parks.

Here are 5 key takeaways from his discussion about the Disney Parks:

IP Does Matter in the Parks

A big issue among many parks fans is the feeling that there is too much IP (intellectual property), or Disney characters from movies and TVs in the parks. Iger said using IP helps the success of park expansion. A successful film and successful characters from those films translates into returns in the parks.

“If you analyze carefully how we achieved those returns on investing capital in the parks it was all about the IP. So for quite a long time, new attractions and lands at the parks were based on essentially, either very old IP or, no IP, or just an attraction,” he said. “Starting really with Cars Land and Toy Story and a few others .. . we decided that almost all of our investment in the parks, in terms of attractions and lands, would be using that IP, and it’s very, very clear what that delivered.”

Epic Universe Coming To Orlando – No Worries

During the discussion Iger was again asked about the new Epic Universe theme park from Universal Studios opening in 2025 in Grand and the potential impact on Walt Disney World, as well as what attractions would be added to potentially compete with the park.

“Well, first of all, if you look at the last 6 or 7 years, we’ve opened up a lot, you know, in, Orlando,” Iger said, including Star Wars: Galaxy’s Edge with two e-ticket attractions and Guardians of the Galaxy coaster in EPCOT, Including e call Galaxy’s Edge, which is Star Wars land was two e-ticket attractions, which is also been enormously successful, is a relatively new Guardians of the Galaxy Coaster in Epcot and Tron at Magic Kingdom and Pandora at Animal Kingdom.

“We’ve been investing aggressively there and there will be continued investments. As we’ve seen in the past when Universal’s expanded it does bring more visitation to Orlando. That’s fine. We’ve had competition from them for a long time. And I’m mindful of what they’re doing. But I’m confident. I like our hand. I’m confident in what we built. And I’m confident well we’ll continue to build.

“It’s not something that should be distracting to us or anxiety provoking. We should just continue on the path that we’ve been on, which is mine the great IP, deliver continued growth for that business and see double digit returns on invested capital.”

Post –COVID Travel Normalization Still Means Big Growth

During the most recent earnings call Iger mentioned how the post COVID travel bubble is bursting and travel is normalizing again. When revisiting the discussion he talked about how this scaling back still means growth in the parks, maybe not at the huge levels of the past years, but growth.

“We’ve had double digit revenue growth in that business for quite some time, and that’s extraordinary really. But I think we’re being realistic, too. And that, you know, delivering double digit revenue growth, you know, into the well into the future is not necessarily that achievable. It doesn’t mean that we’re not going to have growth,” he said.

“I want to emphasize that we believe we’ll be able to grow these businesses nicely over the, you know, the near term, meaning the next few years,” he said.

During the second quarter the Experiences business had a record per capita spending. “We had record attendance in every one of our parks except Disney World, which was still strong. We had, you know, tremendous double digit growth to the bottom line.” Due to one time expenses and timing the third quarter will end up being the high single digits and then return to double digits in the fourth quarter.

“And again, we’re talking about of incredible success post post-Covid. So I just think we are we just be realistic about it. We’re not in any way concerned about not being able to grow that business,” he said.

Real Life Park Experiences Might Become More Valuable

As people are spending more time online and in the virtual world a visit to the Parks might become more valuable. “I don’t think the popularity of call it, collective, outside physically immersive experiences is in any way going to wain. If anything, it may increase. Hopefully it will. Whether that’s because people are tired of being, you know, basically umbilical to their devices or inside or not – I don’t know – but it’s very, very clear that the experience that we deliver, whether it’s at a park or in a cruise ship, is an extraordinary experience that I think, where the value is not going away, showing no signs of ebbing at all,” Iger said.

What’s fascinating and heartening, he continued, is that the experiences Disney offers is multi-generational. It doesn’t wane even for older people. “Interestingly enough, the number of people who visit number of people going to our cruises with kids because of their connection to the brand and the IP is extraordinary, and their kids and their children’s children and so on and so on.”

There’s something about that immersive experience when it is shared with others, particularly if you’re engaging with stories and characters that you know,” he said.

Don’t Expect A Comprehensive 10-Year Park Expansion Plan

Iger again says he is bullish about what Disney will be investing in, whether it’s the additional cruise ships or whether it’s in the lands and the attractions and the hotels and the Disney Vacation Club. It’s a portfolio expansion, he said.

At this point Disney has publicly said that is adding three cruise ships, will be bringing the largest expansion of Disneyland since Disney California Adventure, at Disney World there will be new area coming behind Big Thunder Mountain and at Disney’s Animal Kingdom and Tokyo Disneyland is expanding. Those will be rolling out during the next few year, but beyond that Disney won’t say what will be coming “because we’ll be opportunistic if new IP emerges. Or if we want to lean into a given market,” Iger said.