Earnings from Universal and Cedar Fair, Plus Tokyo Disney Ticketing Changes

Philip: From our studios in Los Angeles and Tampa, this is Green Tagged Theme Park in 30. I'm Philip, my co-host is Scott Swenson of Scott Swenson Creative Development. And Scott, earnings reports are out.

Scott: Yay!

Philip: Yeah, you know, we love a good earnings report. Right?

Scott: Good News?

Philip: Well, especially that's a good one, they have been good news, but there are some interesting details, I think, as there always are kind of hidden in the earnings report sections. Of course, earnings reports, you know, they're always trying to lead with the positive things, right?

Scott: Of course, because you don't want to start an earnings report with, well, we lost about, uh, 40% of our... Nobody wants to, that doesn't make you want to keep reading, you know?

Philip: Yeah. So, of course, Comcast was like, "oh, everything is going well, you know, we're, we're doing good." But some of the details are, you know, yes, their revenue rose 5.1% from earlier. So, they have shown an increase. They actually kind of beat Wall Street's predictions. So, it overall was good. But the key to that is that their streaming is not doing well, and neither is their cable. Those are the two things, like Peacock paid subscribers remained flat at 13 million after adding 4 million last quarter, so they're flat-lining on Peacock. Then their broadband subscribers were flat at 32.2 million, so it lost about 30,000. So, it's like their broadband they're losing, and then their Peacock it's flat when they should be growing, like this is their deep acceleration time for Peacock. They're only at 14, I mean, that is very low for streaming and it's kind of like right now was supposed to be their ramping time.

Philip: Of course, what saved them? Theme parks saved them. Really, theme park has been where they had huge increases in revenue, which again should be kind of, not like a duh, but kind of like an obvious. I mean, we all know the demand, we've been talking about ad nauseum on the show, our demand is so strong. Look at the last two quarters, that's when demand has been strong, and of course it's going to outperform because they've been trying to gear up and be on full cylinders. Of course, they're preparing for Halloween, and they did mention that Epic is on track to open 2025. So, they're kind of like really painting the future of this is strong now, but Halloween and Christmas are going to be even better. Also, when we open Epic, that's going to add a whole other revenue channel for this division. So, it's kind of seems like that's what's carrying them. But again, I feel like we've talked about all of these things. We've talked about how cable, value of that is continuing to be leeched out of it. We've talked about the streaming, how it's only going to really be the people that can consolidate to survive, and Peacock is not one of them. So, it makes sense. Why would you pay for Peacock when you have so many other options on Disney plus or on Netflix?

Scott: Yeah, I think it's interesting. Well, again, it's reinforcing that people are not sitting at home streaming right now, they're getting out. And it looks like that's going to continue at least for a while, we'll see. Again, I think it'll all come back and we'll even it out again. We've talked about this multiple, multiple times on the show, the trend will continue to even out. What I'm curious to see is in this particular microcosm, and I realize it's a massive company, so to call it a microcosm is kind of weird. But in this particular scenario I wonder if there's even been consideration, since the theme parks are kind of being their cash cow right now, if there was ever any possibility of tying Peacock back to the parks. Because, you know, for years you go to the, the basic model, which was started by Disneyland, is to take a movie or a TV series and bring it to life in a theme park. I'm wondering if they've thought about, you know, reverse engineering that and finding ways to take things that are popular in the parks and using that to create content or interest in Peacock.

Scott: The only reason I mention that is because I've seen on the standard network that they are constantly referencing Peacock, and they are constantly adding new material that is an offshoot of their broadcast stuff. So, it'll say like, "if you want to see more about this, we're going to be doing a special on Peacock, which is our streaming network coming up very shortly." So, I'm wondering if there's not an opportunity there to kind of reverse engineer that media flow. So, for years, the traditional way was to go from either film or TV to theme park. Since theme park is the cash cow right now, I'm wondering if there's a possibility to sort of back it up and reintroduce some of that enthusiasm in the live experience back in the streaming channels. I don't know.

Philip: I think that was maybe the intention originally. I mean, because it's very similar to what you know, Disney was trying to build, obviously with Disney plus they're trying to get big enough fast enough. Now you're seeing them do exactly what you said with Disney plus, quite frequently. They're making more and more tie-ins, and then we reported way back, like a year ago, where they kind of did the reorganization of the key departments to make it easier for people to do the cross content. So, I think that it's almost like I think their plan was really to do that, but I'm not sure that that is the plan now because there's far more, I think it was just shy of 200 million or so? I mean, there is a lot more Disney plus subscribers than there is Peacock subscribers.

Philip: I think the problem is now it would kind of like hamstring them. It's kind of like a chicken and egg, they didn't get moving on Peacock fast enough, so now it's like it would almost limit the accessibility of that type of content because the subscribers are so few. It also seems like they haven't quite reorganized the company enough to also have that content cross division. You know, Disney is like A to Z kind of content first company, I guess I would kind of say, versus Comcast who they still do a lot of broadband installation that is still big, they're an internet company and they're also do cable. I mean, they're not that kind of content A to Z and they're seeing broadband slow down and they're seeing these kind of things slow down. So, I'm not sure. It's way above our pay grade.

Philip: It is also interesting that they are facing competition in the broadband space. Because I think we had thought, we had talked about a while back when we talked about the infrastructure plan, and we were like, oh the infrastructure plan getting put through, having there be so much for making sure that everyone has internet, that should have boosted Comcast significantly because of their work in putting in infrastructure in places. But, I think, actually, what it did was make that field more attractive to competitors, so you see competitors putting in a huge investment. If all you are is a broadband company, you know, it seems to be like it's a little bit easier than if you are also a theme park, and also a film company, and also a broadband company trying to make all three divisions work versus just one.

Scott: I love your phrase, you know, the content first companies, because basically what's happened, and I don't think Disney's there yet, but they've always led the way, and I think Universal is coming in there in a close second, is to recognize that the content is what people want and having various opportunities to distribute that content in different ways: whether it's streaming, whether it's live, whether it's movies, whether it's Broadway shows. I mean, just the ability to do that smoothly and evenly is something that's going to really benefit, I think, them moving forward. Because we're still not a hundred percent sure where everything is going to go, and once we figure it out it's going to change. You know, the only thing consistent is change, there are always trends, there are always cycles that we go through, if lead with the content and keep people interested in the content, and then have the ability to put it on their phones, their computers, their movie screens, their stages, their theme parks, and execute that relatively seamlessly, it means that you're very versatile and it means that you can pretty much adapt to any trend.

Philip: Yeah. Also just for reference point, Disney plus is at 137.9, so basically 138 million, subscribers on Disney plus. So, roughly like what, 10 times the X of Peacock.

Scott: But Disney plus has also been very aggressive in creating exclusive content.

Philip: That's exactly what I mean. They did that deliberately.

Scott: Of course. Exclusive content on existing IP that they own/purchase/lease. Okay, own. There's things that you can only see on Disney plus, and Peacock, from what I've seen, there's some of that, but the majority of it is building off of the material that they already own, that people have already seen, and that's not nearly as aggressive a strategy. It's also cheaper, but I don't think it's going to work.

Philip: Yeah, their content strategy is not as aggressive and that's biting them in the butt right now, which we talked about. So, Cedar Fair also posted their earnings reports. Again, they were positive. I will just kind of point out that, of course, they're spinning it as super positive. In fact, the big quote people have been using is from Zimerman and he says, "[we are] well on our way to putting the effect of the pandemic fully behind us". And I'm like, well, that's a nice kind of bow you want to put on it. I'm just going to point out that even though they're like, oh, we've been seeing all this record attendance, blah, blah, it's still 6%, right now, lower than the same time period of 2019. So, even though they're like record attendance, people might be spending more per person, and they are selling more, their big thing this time was that they have the most current annual passes they've ever had. I'm like, that's great, and their focus is in making people spend more and blah, blah, blah, but their attendance is still lower.

Philip: When you look at his, I guess his plan, he said, “While demand for our parks is foundational to our success, one of our primary objectives is to drive revenue growth by optimizing both attendance and guest spending levels.” So, it does seem like, again, they're following the thing we've been talking about forever, which Disney started, how do we get the spend per guest to be higher if our attendance has to be reduced? It seems like that's what he's saying, so the idea I think would be, even though their attendance is lower overall than 2019, they would look for those opportunities. But, just in my opinion, I'm not sure that they have the offerings really kind of fleshed out yet to be kind of banking on that as a solution to their growth problems. But, I also think that, again back to staffing, I'm not sure that all their parks are really fully up to speed. Like, I'd be surprised if all their parks could handle right now, the 2019 levels.

Scott: Right, but again, this goes back to after 20 years of being in a theme park, we always arm wrestled back and forth as to what is success. Is it money or is it attendance? And there is a very old school thought that says it's attendance, and there is a newer school thought that says, it's money. Now, that may flip flop over the next 20 years, who knows. I always say, "well, wait a minute, I don't get paid in attendance. So, if we can reduce our attendance," and when I said things like this, of course, they looked at me like I had three heads. But I said, "what if we can reduce the attendance, increase the quality of the guest experience, and increase revenue, wouldn't that be success?" So, you do point out that their attendance is down, but if their attendance is down and their revenue is up, I see that actually as a positive, not at all as a negative. I think it's important to recognize that in theme parks, if you've ever been to a theme park, especially in the middle of the summer, especially in Florida or California, where it's absolutely shoulder to shoulder people, it is an unpleasant experience. Your length of stay goes down, and you'd think it would go up because you'd be waiting in lines longer, but it actually goes down because, especially if you have kids, you're like, "oh dear God, let's just go back to the pool and swim." That's what the little kids want to do anyway.

Scott: So, you have to kind of find that ongoing balance between revenue and attendance. I think it's important to look closer and closer at what that sweet spot is, and I think this is something that's relatively, I won't say new, but they're digging in deeper at Cedar Fair to try to figure out, you know, what is that sweet spot? What does it look like? And how can we create an experience that guests are going to enjoy, that they're going to be willing to spend money on, or spend money doing without overwhelming the situation? Because, again, another term that we've used over and over again, there's still the staffing issue. We still have to figure out that whole conundrum. So, you know, with less attendance that helps in regards to the staffing situation, because less people in the park means you can survive with less employees, less staff members. So, I don't see the lower attendance as necessarily a bad thing, I think it's interesting that you point it out. What it really says to me, and this is true whenever you look at any sort of spending report, data can be spun to say anything you want it to depending on where you've put your focus. So, you have to use data, not as the answer, but as the guiding point to the right questions.

Philip: Just a note of clarity. So, they're saying right now their revenue and their attendance are up, but when compared to 2019, both are down. That's the key, they are like, "oh, it's doing great. Everything is great." And I'm like, right, but you're not at 2019 levels yet. That's fine, to your point, it's totally fine because we don't expect, or at least we don't, we don't expect everyone to be like already... we talked about this ad nauseum too, about full ramp, take a whole tourism structure that took decades to create, and then ramp it back up in a few months. I'm just saying, right now, what he's saying their plan is, is to increase spend per person. So, I think I'm kind of reading between the lines of being like, oh, even though their attendance is an at full capacity, and they're maybe not capable of that capacity yet due to staffing, it seems like they're trying to encourage more spend to make up for that shortfall in the budget. It seems like, even though he didn't say that, I'm like, that's what it seems like he's saying. But then I'm just over here being my usual skeptical self of being like, can you do that? And how are you going to do that?

Scott: You're looking at it from, you know, making it up and I'm looking at it for increasing guest experience. And it can do both, that's the coolest thing.

Philip: And we're excited to see if it does actually do both. I'd be excited to see like any new plans they have for that. Well, so speaking of actually doing both, someone who is thinking about the same problem is Tokyo Disney Resort. Let me just start by saying, things are a little bit different in Tokyo, things are very different actually everywhere abroad that is not the US. The US theme park market is very advanced, but it's also kind of very saturated and just very crazy in many ways. It's not this way at parks across the world, certainly not at Tokyo Disney, and of course, Tokyo Disney is run by a different company, Oriental Trading Company. I'm sure our listeners know that, but just to give a background.

Philip: So, basically, there's a report that came out, and I will relatively summarize it, but basically the report came out and they're like, we're going to need to more aggressively look at dynamic pricing, and still not offer a season pass thing. The reason that they are looking to do that is to do both things, to bring capacity up and to kind of increase spend, but also to preserve the guest experience. Because they think that their capacity from 2019 was too much, like too many people and it eroded the guest experience. So, they're literally trying to find that line of what percentage, where do we push to make sure the guest experience doesn't erode. How do we do that with dynamic pricing? How do we do that with capacity restrictions? And all that kind of jazz.

Philip: Some of the numbers, to give you the numbers, they're currently restricted to 50%. They project 26 million people will go to the resort in 2024, 80% of their 2018 figure. So, basically, they're looking at, right now, 50% dialing that up to potentially like 80 or 90, and trying to see where the sweet spot is. And he says, “We will be deciding how to set the daily visitor ceiling after taking account of changes in values of experiences we provide and the degree of customer satisfaction with them,” and they're still suspending the annual passports. He said, even if they do resume, that passports may not be able to enter Tokyo Disney Resort during peak periods. Although they declined to give a clear perspective on that. I feel like they are looking at all of this stuff and they're being very smart about it. Cause they're doing exactly what you said, they're testing what is the capacity it's going to make this experience good? Where is that line? Then he's holding off, they're not promising to bring back the annual passes, and talk about them at all. I feel like that's smart. You know, it's smart to just be like, "we're going to stop them." I feel like that's what maybe should have happened on this side, where if you can't guarantee that people can get in any day, don't sell a pass that tells them they can get in every day. Right? Just, stop it. It's a different culture though.

Scott: Theme parks in general, especially the revenue generating departments within theme parks, other than the gate admissions people, they've been trying to eliminate season passes or reduced season passes for years. Because season pass holders are notorious for not spending money in the parks. That is different with Disney, it is different with Universal properties, because those are the absolute crazies who live there.

Philip: And they have more velvet ropes, and if we have more velvet ropes, your pass holders are more likely to do them because they have options and they want to, they're the ones that want to do the velvet ropes, the pass holders

Scott: Correct. Now, I will say that this dynamic pricing is something that is actually already happening in the United States, but not as much in the theme park industry, and not this transparently. Where I notice it is in the live concert series, or the live concert ticket market. The pricing there is completely dynamic. Cruise ships have done it for years, they do dynamic pricing based on attendance. Actually Disney, Disney Resorts has done it for years, they do dynamic pricing as far as room rates go based on how book they are at any given time. So, you know, all of this stuff has been going on, it's just that in the US, the pushback has always been, "well, that's not fair. Why can't I get it for that price?" Well, because you bought it early. "Yes, but I should get a discount because I bought it early, and not be penalized because I bought it early."

Scott: So, it's cultural. As you pointed out, things operate very differently outside the United States, and as a cultural thing that I think, you know, perhaps they can get away with it a little bit easier. In the United States, there is a certain sense of entitlement that comes into play, and I think it's important to recognize. I'm not saying it's right or wrong, I'm just saying culturally, that is something that is here. If you tell somebody," your theme park ticket that you bought six months ago, we're now selling the exact same admission, the exact same experience, for 30% less because of dynamic pricing." There're going to be people who are livid in the United States. You also have to be careful with dynamic pricing, because at times, culturally, traditionally Americans will hold off for a deal. They'll wait and go, "oh, well maybe we should hold off a little bit longer. Maybe we should..." And then they end up not going. So, there is a level of breakage there as well that you have to kind of look into. I am very curious to see how this plays out for Tokyo Disney, because again, I can see it working. I don't know the culture in Tokyo as well as I do, obviously, the United States, but I can see it working better there than here. I can promise you though, if it works there, there'll be someone who's able to spin the data and say it can work in the US as well.

Philip: Yeah, exactly. I just want to end up, I do really like their approach of being so transparent and just kind of explaining it so simply. Like, if you do this, this is how... I could see that piece potentially working in some way in the US. But anyway, so let's, let's pivot a little bit to talk about, we talked a little bit about Universal, we talked about how all these parks are trying to figure out their lines, and what they're doing and how to get their earnings up. So, the next few stories kind of have to do with, in ways, Universal. Of course, they're doing well, their attendance and their profit are up. So, they really are on path, I think, to have a completely record breaking Halloween. I really do, and that's one I a hundred percent agree with.

Scott: You were just at a trade show that they did an announcement there, weren't you?

Philip: Yeah, and this is exactly what I was thinking. I was like, you know, they're not only for our listeners, they're doing a lot of things that are not necessarily very expensive tactics, but they're doing a lot of tactics that, I think, maybe you might think they're above doing these things. I guess you would think maybe they're above them, but they're doing them anyway. I think that's part of why they are having success in this, they are doing all of these tactics, they're really trying really trying to get out. So, I was at trade show, I was at Midsummer Scream, and they did a whole main stage panel presentation. They flew John Murdy out, I'm not sure if he was already in town, but you know, he doesn't live here, he lives in Ireland. So, he was in town, he went on stage himself, they brought Slasher in to do kind of like a guest appearance, which wasn't planned, so that kind of just was completely out of normal. But they did a maze reveal on stage, talked about it. So, outside of this, they've been doing a press release for every maze, then they did this big fan convention, and it was about 2000 people, I think, was the capacity for the room. But then you have to account for all of the bloggers, all the YouTubers, and all the media who were live streaming it, and you're seeing tens of thousands of views on this all over. I mean, they really were able to make an environment of like a mini press conference through doing this main stage presentation with Midsummer Scream. You might think, well, they don't need to, because they can do their own press releases, they can do their own whatever, they don't need to partner with the local community, but it's just showing that they're partnering anyway, that they're doing all this stuff anyway.

Scott: They're embracing the organic media that they're getting out of it. You know, they're looking at it going, "this is our way to guarantee that we will be on every blogger's lips. This is the way to guarantee that we hit the super fans." I'm sorry, I'm just going to interject real quick. I was talking to some of my old cohorts, or actually people who work for my old cohorts at Busch Gardens in Tampa, and they're doing their Howl-O-Scream audition process right now. They said, the smartest thing they have done this season is they had a booth at ComicCon, just from a staffing standpoint. That's obviously a teeny tiny chip of what Universal has done, but still by going to these conventions by appearing in the live arena and sharing with the sneezers who are going to take their message and spread it like a virus, sorry, probably a bad analogy, but spread it around via social media, et cetera, is something that people I think are recognizing more and more. We always want to talk about takeaways, recognize this. Universal is doing it on a massive scale, Busch Gardens Tampa is doing it on a much, much, much smaller scale. But even if you're an FEC, you can do this same thing by offering up something to a local trade show, you can reap the benefits of it, and if the big, the big boys and girls, and all those in between are doing it, then I think it's, it's important to recognize that you too can do it.

Philip: Yeah. It doesn't need to be a huge flashy thing. The takeaway is, participate locally, and that's what they're doing. I will also say, Knott's, again making the Cedar Fair comparison, we just talked about Cedar Fair not kind of getting where they were previously, they declined to do a presentation in Midsummer. So, Cedar Fair is not above, that's what I'm kind of like... I know because their new marketing person who is leaving, gee, I wonder why, did decline to do any fan outreach, any community outreach. So, they cut the entire thing.

Scott: Again, I can't comment on that intelligently, because I don't really know any of the details behind it, you probably know more than I do. I will say, if they already knew that Universal was doing a big rollout, I can certainly see where that would make some of the higher ups within other competing parks a little nervous, be a little bit concerned. I personally, especially in the Halloween arena, I don't agree with it, because I think that Halloween is one of those few things that the more you put out, the more people go to, because you can't get scared the same way twice. If you've ever seen me do a seminar at any Halloween convention, you've heard me say that exact phrase. So, competition is a unique thing in the haunted attraction industry, which is why I've always been about, let's share the best ideas so that everyone can elevate their game. Because if a guest goes to a bad Halloween event in a theme park or a backyard, they're not going to go to another one, but if they go to a good one, they're going to look for the next one. So, I guess my point is, I understand if they declined because they didn't want to compete with Universal, at the same time I think it's less of competition and more engagement and interaction that they kind of missed out on.

Philip: Well, other things I think are big takeaways Universal is doing is, they have started to kind of just put just pieces of their scare zones, just leave them out. So, in previous years, I think what "normal" park protocol is that you work on these set pieces for your scare zones and your mazes, and you keep them backstage. Then when the event is starting to get ready, as in like the day of the event, you pull them out, right? But they're starting to just leave them out there. They have been out there for several weeks. Guess what's happening, people are going to the park, bloggers are going to the park just to take pictures of the sets and do like, kind of just pictures of the set pieces. Again, just little changes like this, like we're going to put these out there. We hear it all the time, people are like, "I don't want to give away all the secrets, and we're worried about blah, blah, blah." It's like, just like you can't get scared the same way twice, watching a video of a set is not going to replace walking through that set in person and getting scared by it in person. So, it's not really a threat to ruining the experience, but what it is is getting all these people excited and it's for this, it's all this free marketing. Literally, they're just like, "let's just put this set, let's move this set like a hundred feet to the left and put it on stage." And then that's it, look at all the marketing that they get for literally no effort.

Scott: Right, and I will say that is a change since the early days of Halloween and theme parks that I worked on at least, so 20 years ago it was counterproductive.

Philip: Blasphemy, yeah.

Scott: And it impacted the day product. You know, when you've got a park where the day product and the night product target two very different audiences, you have to make certain that you find that balance and you don't dumb down your sets so much that they are appropriate for a younger, more family audience. Or you find ways to hide the gross stuff so that the family audiences don't become offended by it. That said, I totally agree and support this idea of get it out there. It's the Museum of Ice Cream across the entire park. It's now a selfie stop, which is perfect marketing. So, you know, good for them. Good for you guys for getting it all out there.

Scott: Speaking of getting it all out there, we tried to get it all out there. Once again, we've run out of time before we've run out of things we want to talk about. So, hopefully we've sparked some interest, got you guys to think about some questions, and even more importantly, we hope that we will see you again next week. On behalf of Philip, my name is Scott Swenson. This is Green Tagged Theme Park in 30, and we will see you next week.