Wall Street has shown its instant approval today for the moves The Walt Disney Company made on Sunday night — replacing Disney CEO Bob Chapek with former CEO Bob Iger. Disney stock jumped up in the early morning, pre-trading hours. Disney fans on social media are also speaking loudly in approval of the change.
©Reuters Everything old is new again … Disney CEO Bob Iger
But with all of the “huzzahs!” and stock purchases and general warmth around this move, fans are commenting about all the “changes” they are expecting to “bring the magic back” to Disney Parks. But should we really expect any significant change in the parks with Iger back in charge?
First, if you haven’t heard the news, the Board of Directors of The Walt Disney Company announced late Sunday night that Chapek is out, and Bob Iger has returned to the company as its CEO, effective immediately. Iger, who is 71 years old, is on a 2-year contract with the company, with one of his major jobs being to set a new plan in motion for who should succeed him as CEO.
Bob Iger ©New York Post
Disney stock prices hit a 40-year-low after an earnings call on Nov. 8 that many described as “disastrous.” In the call, Disney reported losses in its streaming division of $1.5 billion — more than double the quarter before. Some powerful, activist investors have been vocal about their disappointment in the earnings report and the direction the company is headed. Since investors are the ultimate “boss” at any publicly traded company, they have gotten the board’s attention.
But what about those changes that some Disney Parks fans don’t like — such as Genie+, Park Pass Reservations, and rising prices?
Remember, This Is About Streaming
Disney is in a tough spot financially, largely because of the launch of Disney+. Streaming businesses are definitely the wave of the future for media companies, but they are expensive to start. While Disney had a large catalog of content to add when it started Disney+, consumers also expect original content when they pay for streaming services, and Disney has been spending billions on producing it to compete with arguably the oldest and most profitable streaming service — Netflix.
©Disney
During that earnings call earlier this month, Chapek and CFO Christine McCarthy attributed some of the streaming division’s losses to more people bundling Disney’s Disney+, Hulu, and ESPN+ for a discount, as well as some losses in international revenue due to the weakening of the U.S. dollar. They touted a Disney+ price increase — its regular tier is going to $10.99 per month on Dec. 8th — and the introduction of an ad-supported tier on the same date as drivers of additional revenue. Chapek also told investors the company does not expect much “churn” (many subscriber cancellations), and that there is probably room for further price increases.
But McCarthy also warned investors that the first quarter of fiscal year 2023 would not see big jumps in its streaming division revenue — pointing out that the price increases are coming toward the end of the quarter, and ad revenue will not make an impact until later in the year. She also said subscribers to Disney+ Hotstar — the largest streaming service in India — are expected to decline in the first quarter.
©Disney || Bob Chapek
The mounting losses at Disney’s streaming division are the chief concern of investors and the board, despite Disney fans who feel the chief concern is changes at the company’s parks.
The Parks Are Wildly Profitable
Despite the mounting losses that have investors shaking their heads, overall, The Walt Disney Company is NOT losing money, and that is thanks in large part to Walt Disney World, Disneyland Resort, and other Disney theme parks. The division that includes Disney’s theme parks and cruise ships reported $7.4 billion in the 4th quarter of 2022, up 26% from the fourth quarter of 2021.
Despite rising prices, crowds keep coming.
Disney’s success in the parks has been bankrolling its streaming service losses, as it has bankrolled big projects in the past. Currently, Disney’s Parks, Experiences, and Products division provides 62% of the operating income for the company. Disney’s operations are working well at the parks as far as investors are concerned. And that is probably enough evidence to assume that some of the biggest sticking points for many old-school Disney fans will not be going away.
Disney Genie+
The Disney Genie+ service, and its Lightning Lanes, are something many Disney fans say they would like to see go away. Genie+ and individual Lightning Lanes are paid services that allow guests to wait in shorter lines — much the same way the former Fastpass+ system (which was FREE) did. Fans expecting Genie+ to go away should keep in mind that the development of this service — and many other changes introduced in Disney Parks in the past couple of years — took years to build and were conceptualized while Iger was CEO previously.
Lightning Lane
They are a huge driver of revenue for Disney Parks — as McCarthy stated during the 4th quarter earnings call when she announced the increase in spending per person in the parks, saying it reflected “the continued popularity of premium offerings, including Genie+ and Lightning Lane.” It’s very likely that Genie+ is here to stay, despite the change in CEO.
Park Reservation System
Likewise, the park reservation system — which requires Disney World and Disneyland Resort guests with park tickets to make a reservation (“get a park pass”) for the first park they visit each day — is also probably here to stay. The system was started following the COVID-19 park closures to limit the number of guests in the parks each day, keeping them in line with the CDC’s recommendations for 6-ft social distancing. But now that parks are getting back to operating at full capacity, Disney is still realizing all kinds of savings and control from requiring the reservations.
Magic Kingdom
Knowing exactly how many people intend to enter a given park during the day allows Disney to gather reams of data, spread out visitors, and plan much more accurately for adequate staffing, food, and merchandise in each park each day.
The system also allows Disney to control who, exactly, gets into the park. In earnings calls, Disney has noted that certain guests are more profitable for the parks than others. And by separating park pass calendar availability into Annual Passholders, Hotel Guests, and Regular Ticket Holders, Disney can ensure park availability is higher for the more profitable guests if needed.
The park passes allow Disney to operate its parks much more efficiently and profitably, and that equals more money to help support Disney+ and Hulu.
Price Increases
It is NO secret that a Disney Parks vacation is very expensive — more expensive than visits to even many international destinations. But again, revenue keeps going up. The crowds keep coming. Park passes keep selling out most days, as do Disney’s hotel rooms.
And, in truth, price increases at Disney World specifically are following the same rate that they have for the last 20 years. So while Disney pricing is rising at a much higher rate than inflation, this rate of increase has stayed steady since at least 2003.
As long as the demand for Disney World vacations continues, prices won’t go down.
Surge Pricing
What IS different right now, however, is the introduction of surge pricing. In 2018, Disney switched to a date-based ticketing system that made it more expensive to visit the parks on more popular days.
In the last few months, Disney has introduced the same type of surge pricing…everywhere. Disney Genie+ will cost more on higher-demand days, park hopper ticket add-ons — which allow guests to visit more than one park each day — will be more expensive on more crowded days, and Individual Lightning Lanes — which allow guests to buy their way onto Disney’s most popular rides with a lower wait — also vary based on demand.
These less obvious budget-busters are, again, potentially huge revenue drivers for the Disney parks. And while some are still brand new and others haven’t yet gone into effect, it’s hard to see how Disney execs would make sense of pulling them back.
Hollywood Studios
Changes We Might See
More Magic Making Among Staff
While many of the things Disney fans say are taking away the “magic” of a Disney Parks vacation are related to finances, there has been some concern about the happiness of Disney Cast Members and how it could affect your vacation experience. Chapek was sometimes at odds with Disney Cast Members, especially at the height of the controversy surrounding Florida’s Parental Rights in Education Act (called the “Don’t Say Gay Law” by its opponents). After protests by Cast Members about the company not taking an official stance on the bill, Chapek had to reverse course, take a stance, and apologize to employees.
We spotted some Cast Members greeting the crowds…
If the rift between Chapek and Cast Members was affecting their ability to do their jobs in the parks, that tension could lessen with Iger back in charge.
A Big “Look Over Here!” Announcement
What IS possible is a…distraction. Fans are expecting something. Something big. So there may be some sort of a “check this out” or “look over here” announcement about something that is flashy, but has already been in the works. A new attraction. An opening date. The opening of a restaurant that’s been on the horizon for years. Anything to take the focus off of changes that aren’t going to happen. Stay tuned.
Tree of Life
Disney Dining Plan
The long-awaited return of the dining plan, which allowed Disney World guests to purchase a package for meals and snacks along with the rest of their vacation, is still on the horizon. Disney confirmed last year that it would be coming back, and with nearly all of its dining locations back open, we have no reason to believe it won’t be coming back. This is especially true since many menus — even menus that have been updated and changed since the park re-openings in 2020 — still contain Disney Dining Plan logos.
It is a profitable program for Disney, so they likely would not be cutting revenue with its return.
Maybe a Surge Price Slowdown?
Surge pricing is the revenue secret weapon right now. If different leadership results in more investor confidence (and in big moves toward profitability with Disney’s streaming services) it could reduce pressure on the parks division and maybe — just maybe — that train will slow down. But again, as long as there is so much demand — and so many people willing to pay higher prices to visit — there is no business case for Disney to curtail its price increases and surge pricing.
Hollywood Studios
This is all still VERY new. There will be lots of speculation about what will happen. But there’s a lot of game left to play until we find out how Iger will once again rule. But, overall, we don’t anticipate significant roll-backs of pricing and policy in the Disney parks for now.
As always, we’ll be following all the latest Disney company developments here at DFB. Stay tuned to us for the latest!
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Something to remember is that while Iger was at the helm if many of the Parks new programs initiation like Genie, park reservations and the like, Chapek was the Parks and Merch head who developed those programs and then Iger greenlit them.
Disney’s recent bad run of movies also isn’t helping to bottom line. They have parks/ merch, theatrical releases, and then ABC/ESPN networks and finally Disney+. They never spent a lot of time on how D+ was going to a consistent money maker, the most recent movies have been box office bombs or just shuttled to streaming, and broadcast networks are pretty much just barely covering their own costs. Leaving Park & Merch the only income stream that they can manipulate for quarterly income reporting. Nothing in Disney’s business units really are geared towards short-term planning and manipulating, but Parks is the “closest” to that with Park passes and the data information Chapek created for tweaking staffing based on reservations.
There’s no easy way out of the hole Disney has buried itself in, but any 1st step still has to be “when you’re in a hole, stop digging if you want to get out of it.” Stop trying to make a company that requires longer term planning into a quarterly earnings company. They’re burning intangible things like good will of customers, that can’t be replaced easily or quickly for short term quarterly stock dividends and share price.
what about the availability of Annual Passes. Will that come back for non-residents of Florida?
Any idea when the Dining plan could return? It would be great if it returns before we go next month. 😀😉
Hi Deeanna! Disney has not released any information in regards to the Dining Plan’s return. We are keeping an eye on it and will post as soon as we know anything.
Hi! Disney has not yet released any information on when annual passes for non-Florida residents will return, but we are keeping an eye on it every day and will definitely post as soon as we hear anything.
One thing that would help their bottom line is to stop making awful remakes of classic movies!!! That last live action Cinderella was the WORST movie!!!
Would love for the FREE Magical Express to return, alongside park to resort merchandise transfer to come back!
The damage done to Disney is primarily image, they used to represent the wonderful exception to the entertainment business model. They weren’t overly greedy and they made family friendly content for all families. They have left both of those behind, changing those perceptions is what would return them to their former glory. Both of those will be very hard to do in the present way the world works. A name change at the top is not going to help without actual changes in the way the company operates.
So based on the above article we can see no change to the parks reservation system, genie+ etc. I understand that the parks are fueling the business and my hope is that sooner the Parks will start to see less attendance once people who haven’t visited for years stop coming. This is the only way loyal Disney fans will see some relief. Honestly if things continue the way they are I will sell my DVC in a couple of years its not worth the trip anymore. We would visit from NJ a couple of times a year with our Annual Pass. Next year we are coming in May but will be going to Universal to check it out and not to Disney Parks. It’s just not worth the price and I refuse to pay for Genie + and get up 7am to try and get a reservation. Park reservation system is also ridiculous but you keep on building DVC’s and hotels and the parks will not be able to handle the people. Disney is no longer a place or middle class people. Honestly I have no interest in Disney+ and the loyal DIsney fans are footing the bill.
One high-profile change that would go a long way to assuage fans’ animosity would be restoring Magical Express bus service from the Orlando Airport to Disney Resorts.
Disney woke up to a huge revenue stream with Genie+ and surge pricing , which is what the airlines realized in charging a checked bag fee. Multi million dollar or more extra income.
It would be great if our messages could get to the Board and to Bob Iger.
Bob Iger has to right the ship and get back to deliver what Walt envisioned.
Under Bob Chapek, Disney lost its way.
Bob Chapek got hooked into a political storm Disney should have never engaged in. In the course of 5 months Bob Chapek killed morale at the “Happiest Place on Earth” and forgot what Disney stands for.
Bob Chapek alienated the cast members and turned the majority against him and Disney.
Bob Chapek, cut CM benefits, “punished” the third party contractors.
Bob Chapek priced Disney out of the reach of millions and squeezed the “regulars” for more.
Everything Disney taught and teaches its employees (and Disney Institute clients) turned the Disney brand against itself.
As a former annual pass holder (only because Disney went against their promise that we could renew when we cancelled our passes in 2020) Disney took away 60% of my annual Disney spend.
As a DVC owner, Disney took away the benefits and watered down the advertised ownership potential.
Disney took away Magical Express, Magic Bands, Annual Passes, Tables in Wonderland and Fastpass – and up charged and increased prices on almost everything.
Disney added time to wait in the “Stand-By” lines.
Disney added Genie + to further strangle guests for cash.
Disney increased all ticket media prices significantly.
Disney has become just another amusement park system and not a theme park experience – not a “magical” place.
Disney has caused its guests to seek comparable entertainment from its competitors. Universal, Busch Gardens, Sea World – now provide better bang for the cost.
What has transpired at Disney under Bob Chapek should be a case study in all MBA schools of what not to do – how to mismanage 101.
Many times in the past Disney has found itself in this position. My wife worked backstage at Disneyland over 30 years ago and it was the park that was keeping the studio going. There was discontent about all the money that was being drained from Disneyland profit to fund studio projects that were less than successful. Disney has passed the threshold of family ownership and new management, over the years, is less invested in the original vision. This happens will all companies. Don’t look for changes to benefit customers to come to the parks. Cash is still king.
I hope some consideration is given to the return of the Magical Express service. It truly did mark the start of a Magical vacation!
I would love to know if there is a possibility of not charging pass holders $25 per day for parking at the theme parks. We are locals and we will not be renewing our passes unless they lift this charge. I don’t mind the genie plus and the lightning lane, I can even deal with the park reservation system, but paying hundreds per year for an annual pass and then having to justify an extra $25 just to walk into the park — no way.
Thank you for pointing out some of the items that Iger will likely not want to touch despite the hue and outcry.
“Surge Pricing” is the more granular version of what used to be known as “High,” “Moderate,” and “Low” Seasons. As the word season implies, the pricing was based upon 2-3 or even 4 months at a time. Disney has drilled-down to pricing based upon daily attendance rates, that, surprise, Disney controls.
The Dining Plan may be waiting until the supply chain issue is more stable. I hope it does come back, because we used the heck out of it!
Previously, Disney was using D+ for the lion’s share of their revenue. I guess now it has flip-flopped back to Parks & Experiences? If that is the case, you would think Iger would start listening to customers again.
Well it’s just like I blogged and said it’s w waiting game well wait no more cause it will b the same so we r done with disney world they want us to b the sheep they lead which my family WILL NOT B THEIR SHEEP just b cause they want the park guest to pay for their losses n disney + and others that have losses n so iger does not care
Either so don’t put out the welcome mat for iger it’s more of the same nothing but greed the magic is gone and him and others don’t care
Have noticed that the term ‘Global Dream’ hasn’t been used lately
From an economic viewpoint, surge pricing makes a lot of sense. It brings in maximum revenue on the days of highest demand, while encouraging people who are more flexible to go on other days, thus spreading crowds better throughout the year. This, together with park reservations, relieves overcrowding at peak times while making better use of the park at other times. Restaurants and movie theaters use a similar strategy with “bargain Tuesdays” and early bird specials. As long as the tickets keep selling, Disney has no incentive to stop these practices. If a recession comes along and fewer people can travel, then you might see different strategies.
The free fast pass system was better than the new and expensive genie system. This has ruined Disney for me.
I live in California, but I booked a big 3 week Disney World Vacation next summer (2023) with a four night stay at Grand Floridian, 10-night Southern Caribbean Cruise and 6-night Disney Vero Beach stay in Florida.
I was going to do the Parks for 2 days, but the tickets are prohibitively expensive for 4-people. We just decided to do one day at the park and hang at the resort pool for the other 2-days, maybe walk around downtown Disney Springs area and ride the monorail for free, take ride or hike around the lake one day. There is a lot to do at Disney World, unfortunately the parks are not becoming one of those things for a family of 4. The parks have become a rationed commodity, that are too complicated to attend. One needs an applications user training course, multiple smart phones, a second mortgage on the house, and a lot of patience to have a carefree family vacation at Disney World.
I’m spending more time looking at my phone than smelling the roses, it’s lost some of its carefree, impromptu magic and it is a little stressful to do a park now. I’m beginning to think I should have gone hiking in Yosemite instead and baked beans around the campfire — lol.
What about the Magical Express? It was a huge mistake getting rid of it.
Johnny Depp apology and return of Priates of the Carribean franchise!!!
Magical Express WILL NOT be coming back. From what I heard, Disney was strangling Mears; MEars was taking a loss running the DME. Now the bus service from/to MCO is competitive between Mears and The Sunshine Express. Competition is actually good for consumers, as it keeps the competitor somewhat honest.
For MrsSunflowers: Annual Passes include free parking at the parks. If you do the math on APs, you find that APs are less expensive than paying retail prices for tickets, parking, etc. and you still get discounts on merchandise and dining. I am a Veteran and can buy discount tickets at Shades of Green. We bought discount tickets for three people for 4 day Parkhopper tickets. Those tickets cost about $400. So even with a discount, the APs are a lot “cheaper” as long as you use the APs more than 4 times per year.
Just remember that Iger is the one who instituted the changes that Bob “Paycheck” had to take the heat for. I am in no way a Chapek fan, but Iger won’t change everything that is wrong with Disney right now, since it was all his plan. Buckle up, the road gets bumpier.
If the middle class would quit going to Disney then maybe they would c that without us they will have more problems cause n the this country we the middle class support this country without us it would fold the poor can’t pay and the rich won’t and to get to at 7 n the morning to make reservations is ridiculous and trying to sleep and no way would we stay n the resort and then oh u didn’t make a park reservation and told we can’t go n the parks and pay to fly out of state and be denied they r out if their minds we will vacation some where else and it won’t b Disney again we have had enough !!!!!!!!!!!!!!!!!!!!
To terry give me a break people do not have the money to do that good lord people r try ing to survive and have some sense of a happy time to enjoy a trip to Disney and escape this harsh times that we r n and the money that Disney has made n the parks from the greed they have done and all the people that loss their lives with covid and now Disney is being heartless when do they stop and they do not care about us only the well to do can afford that Disney world so what about the every day people and I stand for and with them
I am always stunned when I read all the overwrought, over dramatic complaints about how “difficult” it is to plan a Disney vacation. IT’S NOT HARD. What is possibly so challenging about making a reservation — just like you would make for a restaurant, a hotel, or timed entry to an experience like a museum? Have people really become so lazy that they aren’t capable of putting even the tiniest amount of effort into organizing something?
And here’s the thing — you are under no obligation to use Genie+ or Individual Lightning Lanes. You can just make a park reservation, go into the park, and have absolutely no other set plans. You don’t have to make ADRs. You don’t have to book experiences. You don’t have to do ANYTHING. It’s just like any other park. If you want the faster lines, you pay for them and you put the effort into reserving rides. If you don’t want to put in the effort or the money, don’t, but don’t expect the perk. It would be like someone saying — well, I don’t WANT to have to pay for a ticket, but I want to go to the park. That’s not how that works. It’s not favoring people spending money, it’s people spending money in order to access the amenities.
Stop being so dramatic and entitled. You aren’t more important than everyone else going to the parks and they are doing just fine.
I hope they open extra magic hours to everyone staying in the Disney bubble. That was a real slap in the face that guests staying at Deluxe resorts were the only ones able to enjoy them.
Changing Park Reservations is low hanging fruit for Bob Iger. We all want
1. Return Of The Free Fast Pass. Three Rides
2. Elimination Of Disney Genie
3. Elimination Of The Lightening Lane
Disney, stop treating guests in the parks restaurants and hotels as an ATM Machine to pay for the $1.5 Billion loss in the Disney Plus Streaming Division. Allow each Division to Stand or Sink on it’s own.
to reference to mark it’s very well said and u summed it all up u hit on everything that has happened my family r annual out of state holders and every time that we have been there which is a lot we spent a lot of money to do that and we grew up on Disney we always stay in property and started flying years a go instead of driving we wanted to get there as fast as we could so 2+ hour trip non stop was the way we went and always used the magical express
For many years, the PROFIT FROM THE DISNEY PARKS HAS PAID FOR OTHER PROJECTS THAT DISNEY NEEDED TO FUND. Disney Never had to raise prices in the parks to fund these other projects. THIS IS COMPLETELY DIFFERENT. Disney is using the parks as an ATM machine to fund Disney Plus Streaming. This Has Never Happened before. The prices in the parks may have gone up slightly over the years but NEVER TO THE DEGREE THAT DISNEY IS RAISING PRICES ON EVERYTHING ALMOST ON A DAILY BASIS. Disney be fair to the park guests that have always supported and paid for other Disney projects. THIS IS DIFFERENT. Stop our financial pain.
1. Bring back THE FRII FAST PASS, THREE RIDES
2. ELIMINATE THE GENIE PLUS AND THE LIGHTNING LANE. Bring the Magic Back To The parks, THE BACKBONE OF DISNEY WORLD. Please, give us a break.
We can whine all we want but Disney won’t do anything until attendance drops & spending per attendee drops. Used to love to eat at Liberty Tree Tavern; but won’t be eating there this trip after seeing the $60 price per person to eat.
So basically as long as the parks make money hand over fist who cares about details of how they do it. We loved Disney but the greed displayed over the past few years have turned us off. Honestly, Disney was never a cheap vacation but it was truly magical to escape reality so we went every year or two, less frequently when they grew up but still one of our favourites . That’s just not there anymore to me when so much is just blatant price gouging now . You can’t even pretend it’s a good value now in any area. Really a name change with the same greedy policies means nothing to me. My youngest granddaughter has never been there but not planning a trip anytime soon. Just not the same vibe , their mask has slipped , probably forever , for me.
We use to eat at the liberty tree tavern also and there is no way n the world that we will ever eat there again as long as people keep letting them selves go and pay those prices it will never stop and the magic is gone and that is a real heart break it really makes my family sad it was our favorite place to go on vacation and the only place we would go we would stay always n the resorts go to bed with smiles on our faces and wake with smiles cause we knew we were n the happiest place on earth and always hated to leave and couldn’t wait to go there again and planned the next trip immediately
We used to eat in the castle when it was King Stefan’s banquet hall. It was $35 for adults. And you could just walk up and get seated. Now, it’s $60 for adults and it’s really difficult to get a reservation. Not worth it.
Bob Iger is not going to be Savior people are hoping for. He just there to put out the fires and stop the bleeding that Chapek created. There is too much damage done, most of it cannot be saved or salvaged. Disney will rebuild, but it will never be the same and it will take years, if not decades to repair the irreprabile damage. Disney has evolved and survived through the decades for almost a century. But all it took was one guy less than 3 years to almost burn it to the ground and crucify the soul of Disney.
As a Veteran that has seen terrible things all over the world, I’ve said this before from experience. You can destroy a city in a matter of days, but it can take decades to rebuilt if ever, but it will never be the same.
We agree disney will never b the same again too much damage has been done it’s a shame that beautiful. dream Walt Disney created has been destroyed and the pixie dust that was there is done we grew up on disney and my family loved going there and stayed on the property and went to bed at night and woke up with smiles k owing that we were going to have another happy day there bob chapek did so much damage that he destroyed disney