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Disney has been talking about its upcoming Star Wars lands in California and Florida for years now. But when the time comes to actually pay to get the word out, the entertainment giant doesn’t expect to break the bank.
“On the marketing expense side, don’t expect much,” CEO Bob Iger told analysts Tuesday during an earnings call. “I’m thinking that maybe I should just tweet, ‘It’s opening,’ and that will be enough.”
Iger said he expects both lands — officially called Star Wars: Galaxy’s Edge — to be “incredibly popular and in-demand.” Both will cover 14 acres; executives have called them the “largest single themed land expansion in our history.” The first opens at Disneyland in California this summer, with the Florida version coming online in the fall at Disney’s Hollywood Studios. An immersive themed hotel is also opening in Florida.
“I think that we’re going to have absolutely no problem gaining attention for them or to them, and it’s not going to take much marketing to do that,” Iger said. “That’s a signal that I just sent to our parks and resorts people to keep that budget really low.”
Based on Tuesday’s results, it’s not a bad idea to keep expenses in check. Revenue was about flat at $15.3 billion for the quarter that ended Dec. 29, while profit fell 8 percent to $3.65 billion. Studio and direct-to-consumer segments both saw operating income plummet year-over-year.
The parks, experiences, and consumer products segment was a bright spot, however, with revenue up 5 percent to $6.82 billion. Operating income jumped 7 percent to $1.3 billion.
Attendance at domestic parks was similar to a year ago, but per-person spending was up 7 percent as visitors spend more on admission, food, drinks, and merchandise. Per-room spending at hotels was up 5 percent domestically, Chief Financial Officer Christine McCarthy said.
Iger told analysts the company is weighing how to manage the anticipated increase in attendance as its new investments come online, not only with the Star Wars additions but also with upgrades in Hong Kong, Paris, Shanghai, and elsewhere.
“We’re leveraging the popularity to obviously increase pricing and to spread demand, to get much more strategic about how we’re pricing,” he said. “So the parks are still accessible, but in the highest peak periods, we’re trying basically to manage the attendance so that the guest experience isn’t diminished by the popularity.”
He added: “That popularity is going to continue, and with that’s going to come the, I guess, enviable task of balancing that popularity with guest experience and price elasticity.”
For the first fiscal quarter, however, Shanghai Disney Resort saw its popularity fall.
Iger also singled out Shanghai as a problem area in November, saying that the company had to resort to discounting to drive attendance. Still, executives announced last month that the Shanghai park is adding a Zootopia-themed land in its second expansion since opening in June 2016.
“We’re still running a profitable business, and we’re still investing to grow it,” Iger said Tuesday. “But some of the issues that China has been facing, a decrease in consumer confidence which has resulted in fewer Chinese people traveling within China, has had an impact on our business. That has made it less profitable than we hoped it would be at this point. But still a very successful business and one that we believe in long-term.”