Boosting Pricing and Lowering Rapport with the State
Disney picking a fight with the state of Florida was a mistake in a moment that will have generational ramifications, but Disney has been making generational mistakes that will cause them far more trouble.
It’s not your imagination, and it’s not just inflation; a day at a Disney Park costs more now than it used to, even accounting for the net present value of currency. Return with us now to those thrilling days of yesteryear, when in the late 1980’s-early 1990’s the Magic Kingdom was about 20 years old, EPCOT was still a center, Disney’s MGM Studios was brand new, and Animal Kingdom was just over the horizon.
Maybe they weren’t going in style, but back then a family of 6 could pile into the station wagon (or one of those new minivans Mom’s been seeing all the other mom’s get) and visit a park for the day for “only” a couple hundred dollars. These days tickets alone for a family of 6 can be over $1,000 (depending on the day) once you include taxes. That far outpaces growth in disposable personal income since 1990. Lest you think this is an old man complaining about how a cup of coffee used to cost a nickel, consider that 50 years ago a young couple scrapped together enough money to vacation at Disney World, then 15 years later they took their growing family, and now those 80’s/90’s kids get to share lasting vacation memories with their own children, children who 20 years from now can take their kids. This is about tradition. The tradition of paying mountains of cash all day long to one company at one resort.
That’s how you raise Disney Diehards. That’s how you make pixie dusters. Generically those customers are sometimes called brand evangelists (it’s a stupid name and my soul hurts for typing it). A select few companies are so widely beloved that it’s common to see fans tattooed with trademarks: Disney, Apple, Harley Davidson… You’re breathing rarified air when a girl disgracing herself on the internet is also advertising for you.
Disney figured out that the spend per customer is higher when there are fewer people in the parks, and then built a strategy around that. Obviously, this can’t be carried to the extremes. For instance, a park with one extraordinarily rich guest will likely not make as much money as a park filled to the brim with middle income guests. There is going to be a sweet spot you have to hit and maximize revenue versus expenditures. In the static environment of economic analysis this is an entirely valid strategy. We don’t live in that environment.
A pixie duster in a less crowded park may make you more money today, but what about tomorrow? Those customers whom you have priced out of a magical day… how many of those little boys and girl will grow up without formative memories of teacup rides and spaceship earth? If they don’t have those memories for themselves how invested will they be in making those memories with their kids?
The mouse has made the mistake of assuming its privileged place in the middle American heart will always be there, and that the demand for park admission will be more or less the same at the new price point.
Maybe, but maybe they find out a whole lot of people will never miss what they’ve never had.
For all the news that should be fun, keep checking out That Park Place.
