How Disney Genie Secures Disney’s Future
I know many of you have forgotten, but The Walt Disney Company took a beating last year.
When we discuss theme park revenue quadrupling, that reinforces how bad things got during those middle months in 2020.
Disney’s CEO, Bob Chapek, used to run the theme parks. He would be derelict in his duty if he didn’t protect them.
Chapek and his staff came up with a plan to increase park revenue without adding capacity, and it’s brilliant, albeit divisive.
Let’s examine how Disney Genie+ secures Disney’s future.
The High Cost of Doing Business
Do you know how much Disney spent on the development and construction of Star Wars: Galaxy’s Edge? The answer is $1 billion American dollars.
Also, while you may have forgotten the story from forever ago two years ago, many critics suggested that the themed land was a bust!
That’s the problem with short-sighted hot takes. People want to write off the entire existence of something after few data points.
To wit, the criticism of Galaxy’s Edge centered on the fact that attendance didn’t rise.
The point those analysts missed entirely is that Disney doesn’t want more attendance at its parks. When that happens, guests complain about crowds.
Instead, Disney must thread the needle of generating more revenue in fixed circumstances.
Please consider how you would approach this problem. First, you need to earn more money to pay for future park improvements.
Unfortunately, you have spatial limitations stemming from a lack of acreage at Disneyland Resort.
At Walt Disney World, you own plenty of land. But, unfortunately, seeding that land with new attractions (and possibly even a theme park) costs money.
I’m talking about a lot of money. As second and third data points, let’s consider other recent expansions.
Pandora – The World of Avatar came with a price tag of $500 million.
Meanwhile, when Disney California Adventure upgraded, Disney spent $1.1 billion across the park. Radiator Springs Racers alone cost $200+ million!
That’s not even the first time Disney spent so much on a single attraction. Some estimates place Test Track’s development and construction at $300 million!
Please remember that this total doesn’t reflect inflation adjustment, either. So in 2021 dollars, we’re talking about nearly $500 million.
Now, I don’t entirely agree with those estimates, but you get the point.
You want new rides. Disney must pay for them.
Solving an Unsolvable Problem
By now, you know all about the upcoming changes to Disney’s digital queuing system. FastPass is dead, replaced by Disney Genie+ and Lightning Lane.
Disney hasn’t taken this approach randomly or out of any sense of greed.
Despite whatever perception you may hold, Disney executives care very much about park fans.
Unfortunately, that unsolvable problem remains. They must increase the profit at parks to prevent future catastrophes.
You may recall that Disney’s revenue just quadrupled from the same timeframe in 2020. That happened due to unexpected park closures.
Now, we all hope that’s one-off, but the truth is that history has just repeated itself.
During the 21st century alone, tourism has crashed after the events of 9/11, the housing market crash (arguably twice), and now the pandemic.
Executives must build the sort of infrastructure wherein the company can tolerate these unexpected tourism lulls.
Alas, Disney cannot increase crowd capacity for fear of unhappy guests. As such, the company used the pandemic as a hard reset for some practices.
One of them is sadly free FastPass, although we should be honest. The writing was already on the wall here.
Disneyland Resort had already dumped the system in favor of MaxPass. So then, when Disneyland Paris announced its new program, we knew Walt Disney World would be the next domino to fall.
Disney had to change the current system to make the parks (at least closer to) recession-proof.
Time vs. Money
You may not like to hear this statement, but it’s true. Disney has effectively turned Disney After Hours into an all-day event, hidden in plain sight.
I know that sounds crazy. So, please let me explain. Guests now hold the option to participate in the modern version of the old FastPass system.
If you don’t want to pay for this amenity, that’s fine.
You’ve just spent more than a year without using FastPasses. It’s status quo for you despite what anyone says.
More than half of guests will probably pass on the option, thereby turning Disney Genius+, formerly known as FastPass, into a MaxPass clone.
Let’s say that 40 percent of park guests utilize the service. During 2019, roughly 59 million visitors entered Walt Disney World’s four theme parks.
We’re talking about 23.6 million annual guests spending $15 per day. Walt Disney World alone has just increased revenue by $354 million.
Remarkably, Disney has done this without adding a single guest to the attendance numbers. Also, nobody has to purchase Disney Genie+.
On its own, Disney Genie will improve guest efficiency for everyone. So, you’ll have a better visit next time anyway. You don’t need to spend the money.
The only guests who will are the ones who prefer to skip more lines. In other words, they’re the people willing to spend extra for after-hours ticketed events.
The difference is that Disney can earn that extra revenue all day, every day, rather than when it’s operating Disney After Hours Boo Bash and the like.
The Myth That Pay-for-Play Is New at Disney
In other words, that choice has existed all along. Nobody made a big deal out of it since the option came after hours.
Now, Disney is turning it into something recurring daily. So those who want to pay more will get more.
Similarly, you could have purchased a VIP Tour at any point over the past decade. All you needed to do was pay an obscene amount of money for the privilege.
The same statement applies to guests at Disney Deluxe Tier resorts, who now receive Extended Evening Hours. Of course, I could say it for Club 33 members and Golden Oak owners, too.
Those examples aren’t nitpicking, either. Since the opening of Club 33 at Disneyland in 1967, membership has had its privilege at Disney. Nothing has changed there.
Instead, for all the outcries about Disney getting greedy, the company has decided to improve future guest experiences.
The Tourist Trap Themed Attraction Method
The other day, my wife and I went to SkyFly: Soar America in Pigeon Forge, Tennessee.
Disney fans would recognize it by a similar name, Soarin’. So that’s all this attraction is, a Soarin’ knockoff.
We paid $52 for one ride for two people. Anytime we visit Pigeon Forge, we expect that, as does Adam the Woo, who loves one of our faves.
That single ride on Not-Soarin’ probably had about 20 total guests. So that one ride earned the company $1,000, not counting the thematic steampunk hat and goggles my wife bought.
Ignoring ride photos and other upsells, that place earns about $5,000 per hour or $50,000 per day just for one ride.
With Lightning Lane, Disney just solved the Star Wars/E ticket ride problem with this approach, too.
You can now buy a single ride up to twice a day at Disney theme parks.
How Lightning Lane Pays for a Better Disney
I’ve previously used Disneyland Paris pricing for estimates, but let’s go with cleaner numbers here.
Let’s say that Lightning Lane costs $15 per ride on most days.
How many guests would happily pay $15 to ride Remy’s Ratatouille Adventure when it opens?
Would you have happily paid $15 to experience Star Wars: Rise of the Resistance?
Given how quickly Boarding Groups for that attraction sold out, we all know the answer to that one.
Let’s say that 12 million guests visit Disney’s Hollywood Studios next year.
We’ll estimate that one out of every 12 guests buys a Lightning Lane pass for this ride. I’m intentionally lowballing due to throughput constraints.
That one ride now earns $15 million for Disney next year! It’s just one million people paying $15 each.
Disney will offer Lightning Lane on other attractions as well, probably six to eight.
So, we can safely presume that Lightning Lane could earn the parks another $15-$45 million annually on top of the Rise of the Resistance revenue.
Friends, E-ticket attractions are now paying for themselves. That’s a good thing.
Back in the day, Disney couldn’t afford Pooh’s Honey Hunt at Magic Kingdom because it cost $200 million for Tokyo Disney Resort.
That situation changes now that rides are self-monetizing. Yes, the new Lightning Lane program incentivizes Disney to add more attractions.
Why wouldn’t Disney do that? If a ride will pay for its existence in a few years, it’s effectively free to build!
Right now, you may not like this announcement at all. Judging from social media reactions, it’s a safe bet that you don’t.
However, this move secures Disney’s future at the parks. The math checks out.