Shanghai Disneyland poised to transform global theme park industry for the better
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Foreign VIEWS
Shanghai’s Disneyland will begin the transformation of Disney and the global theme park industry for the better.
Recently, the Walt Disney Co, a part-owner in Disney’s first theme park on China’s mainland, released details on two Shanghai Disneyland hotels, which hope to combine Chinese culture and Disney characters. A few weeks ago, as the construction of the US$5.4 billion Shanghai Disney theme park entered its last mile, the company opened its largest-in-the-world flagship store in Shanghai’s Pudong New Area.
Excitement is increasing with the theme park’s anticipated opening of in spring 2016. In the coming decade, theme parks will spread into large emerging economies. In this quest, Shanghai Disneyland will play a pivotal role.
Walt Disney’s Mickey Mouse pioneered American theme park business in 1955 in Anaheim, California. But the industry’s roots originate from medieval church-sponsored fairs, 17th-century France and European pleasure gardens. Mechanical rides and fun houses came into the picture in the 1873 Vienna’s World Fair. By the 1920s, New York’s Coney Island thrived along with some 1,500 such parks in the US alone. What Walt Disney pioneered in the 1950s was a more family-oriented version of theme parks, which he first glimpsed in Copenhagen’s Tivoli Gardens.
As Anaheim’s Disneyland was coupled with the ambitious Disney World in Orlando, Florida, large public companies began to invest in the industry. Mickey Mouse and Donald Duck became big business. In the postwar era, the theme park industry was still mainly American. Since the 1980s, it has expanded in major advanced economies.
Today, there are some 30 major theme parks in the US and a slate of smaller ones, which generate more than US$15 billion a year from over 150 million visitors. Even before the global financial crisis, the industry generated US$25 billion in revenues from more than 550 million people across the world.
Today, the leading 25 parks globally attract some 225 million attendants annually. Among the major amusement/theme parks worldwide, Disney parks dominate nine spots on the top-10 list. Magic Kingdom in Florida, Tokyo Disneyland and Disney’s park in California are still at the top of the list.
Two of five of the world’s largest amusement/theme parks are already in Asia. The same goes for the largest water parks globally. But in emerging Asia, theme parks are relatively rare and the market is far from the saturation point.
Why Shanghai matters
In the US the annual growth rate of the leading Disney parks is about 2-4 percent, but half of the top-20 parks barely grow or are still contracting. In Asia Pacific that figure was 5 percent.
The early growth of the pioneering Chinese parks is in a class of its own, as shown by Songcheng Park Hangzhou (38 percent), Window of the World in Shenzhen (11 percent), Happy Valley in Beijing (8 percent) and Shanghai (4 percent).
Last year, Disney’s revenues soared to US$48.8 billion. Of the total, parks and resorts accounted for over US$15.1 billion. And yet, almost all of the increase stemmed from domestic operations.
With the Shanghai Disneyland, that is about to change. It will raise the bar for quality and guest experience. It will set a leading price point in the market.
In the past, Disney has been regarded in the advanced economies as a global company with universal characters. In reality, it is still a very American company. Even today, international markets represent barely a fourth of Disney revenues. Asia’s role is about 8 percent for this total. However, these figures do not yet involve the large emerging economies in Asia.
Shanghai Disneyland has potential to boost emerging Asia’s role in Disney’s revenue flow, while it could spawn a new generation of competitive Chinese theme parks. Now that’s a true win-win.
Dan Steinbock is research director of international business at the India, China and America Institute (US) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore). See http://www.differencegroup.net
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