Disney's risks and opportunities in China
Disney faces the risk from local rivals like Wanda and Shimao, but the theme park giant has the advantage in global brands and products.
Shanghai Disney Resort hit 11 million visitors in its first year. The resort's Hong Kong sibling suffered a 10% drop in attendance last year to 6.1 million people, according to the Themed Entertainment Association.
But data from the industry group indicate the problem may be less about brand and more about location, considering visitors to Hong Kong's Ocean Park dropped 18.8% over the same period.
Some analysts have questioned whether China is building too many theme parks. It's not an unreasonable concern given the sector's boom and bust in the 1990s. A look at Japan, where the economy has been treading water for two decades, should serve as a positive sign both for Disney and Comcast Corp., which expects to open Universal Studios Beijing in 2020.
Tokyo Disneyland, Universal Studios Japan (in Osaka) and Tokyo DisneySea not only remain the top three parks in Asia, but were topped by just two globally last year: Disney's Magic Kingdom in Florida and Disneyland in California. If an aging population and floundering economy can continue to support three huge parks in Japan, then there's reason to believe China's appetite will be larger.
Movies instead will increasingly become a marketing tool for where the real money lies: theme parks and product licensing. Disney already makes more revenue and profit from its parks and resorts than from studio entertainment.
The risk for Disney and Comcast will come from Chinese entrants. Dalian Wanda Group is planning 15 parks by 2020 and Shimao Property Holdings Ltd. wants to open eight by 2019, according to real estate firm Colliers International Group Inc. Wanda is now the largest operator of movie theaters globally and also owns Hollywood studio Legendary Entertainment.
This home ground advantage helps the locals, but the Chinese still don't have Mickey Mouse, Buzz Lightyear, Captain Jack Sparrow or Luke Skywalker.
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