Looks like the “magic kingdom” is losing some of its magic.
Disney’s Surprise Stumble at Star Wars Land Hammers Results
Walt Disney Co. opened the most highly anticipated theme-park attraction in the company’s history — and attendance fell.
Profit at the company’s domestic resorts slumped in the latest quarter, which was marked by the ballyhooed opening of Star Wars: Galaxy’s Edge, the largest addition ever to the Disneyland resort in Anaheim, California. A second version of the space-themed land opens in Florida this month.
The shortfall was a shock to investors who were counting on Disney’s market-dominating theme parks and films to shoulder the burden of growth as the company goes head to head with Netflix Inc. in streaming. Spending on movies and TV shows for new online services led to a $553 million loss in Disney’s direct-to-consumer division.
Disney shares fell as much as 5.8% in after-hours trading. They were up 29% this year through Tuesday’s close, compared with 15% for the S&P 500 Index, even though the Burbank, California-based company had warned of high costs in the years ahead as it presses into streaming.
As the Star Wars opening approached, Disney tried to manage an anticipated surge in crowds at its California resort. For example, the company allowed only those with reservations to enter the attraction for the first three weeks. But social media was aflutter with images of lightly walked streets and short waits for attractions. Sales of Star Wars merchandise slumped, the company said Tuesday.
Iger said he had no long-term concerns about the Star Wars attractions.
“There was tremendous concern in the marketplace that there was going to be huge crowding when we opened Galaxy’s Edge and so some people stayed away,” he said on a conference call. “All the local hotels in the region, expecting an influx of visitation, raised their prices. So it simply got more expensive to come stay in Anaheim.”
Disneyland’s own price increases also may have kept crowds at bay, he said.
“We feel great about the product,” Iger said. “It could just take some time for things to work themselves out.”
Remember one of the excuses for the Galaxy’s Edge Ghost Town which said that Disneyland was siphoning off visitors keeping them away from the Star Wars Land? Well, that narrative is now taking a hard 180.
Disneyland attendance drops despite launch of Star Wars: Galaxy’s Edge
The overall decline in attendance at Disneyland was due to lower annual passholder visitation.
Attendance fell 3 percent at Disney’s domestic theme parks despite the launch of the Star Wars: Galaxy’s Edge at Disneyland during the most recent quarter, according to the company’s latest earnings report.
Disney’s Parks, Experiences and Products revenue increased 7 percent to $6.6 billion in the latest quarter. Increased spending on food and merchandise, higher hotel occupancy and a hike in ticket prices at domestic theme parks helped boost revenue.
“The decline in attendance at Disneyland Resort was primarily driven by lower annual passholder visitation as we managed demand the first few weeks after opening Star Wars: Galaxy’s Edge in order to maintain a higher level of guest satisfaction,” Disney CFO Christine McCarthy said.
Visitors have indicated they are deferring trips to Disney World until after the Florida version of Galaxy’s Edge opens later this summer, contributing to a decline in attendance for the quarter, McCarthy said.
I wonder what excuse they’ll come up with if attendance continues to be down after the Florida version of Galaxy’s Edge opens later this summer.
Stock is still considerably up over the past year buoyed by the the merger, and the success of the MCU franchise.
In November Disney will launch a new subscription streaming bundle which could provide additional support.
The next Star Wars movie will be released Dec 20, 2019.
— Edwin Boyette J✝C (@Edwin_Boyette) August 7, 2019
Originally published here.