Disney Parks Are Facing a Major Crisis: For the First Time, They’re Not the Company’s Primary Source of Revenue

Overall, Disney is doing well. When announcing its financial results for the second quarter, the company expressed optimism, citing the success of blockbusters like Inside Out 2 and Deadpool & Wolverine. These movies have breathed new life into Pixar and Marvel, respectively. However, there’s one area of the business that is still struggling to gain traction.

Limited growth. In the previous quarter, Disney’s Experiences business segment, which includes its parks and cruises, generated $8.4 billion in revenue, reflecting a modest 2% growth compared to the same period last year. Despite this, profits declined by 3% to $2.2 billion.

Causes. In its executive commentary, Disney attributes the decline in numbers to a “moderation of consumer demand” that “exceeded our previous expectations.” The company also mentioned that this profit slowdown would impact their domestic parks for “the next few quarters.” The figures for 2024 are particularly stark compared to 2023, as Disney Experiences contributed to 70% of the company’s revenue that year, but is projected to account for only 40% in 2024.

A declining sector. The whole parks industry has been experiencing a downturn for several months, so it’s not only affecting Disney. According to a Variety report, Comcast (owner of Universal Destinations & Experiences) reported a 10.6% decline in park revenues in the second quarter, while Six Flags (the largest amusement park operator in the U.S.) reported negative second-quarter numbers in revenues (-1%), attendance (-2%), and park spending (-5%).

It’s not all bad news. Despite the overall decline in revenues, there’s been a slight growth in visitor numbers for some parks, while others have experienced more pronounced growth. Nonetheless, a few parks have reported negative results.

These are the five most visited parks in the world and their attendance figures:

The only Disney park experiencing negative numbers is Disney’s Hollywood Studios, which is the tenth most visited park. Its attendance dropped slightly from 11 million to 10.3 million, a decrease of 5.5%.

The issue is that while the industry is growing, it’s doing so at a limited pace and still hasn’t reached pre-pandemic attendance levels. It’s also worth noting that the top two parks are in the U.S., but the next three, which have seen significant growth, are in Japan and China. These countries have been experiencing a post-pandemic boom due to the removal of restrictions, unlike the U.S. and Europe.

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Benefiting from the crisis. Disney parks saw a surge in visitors in the year following the pandemic, as people were eager to travel and the parks offered a destination already prepared for post-crisis health constraints. However, the current global economic recession clashes with the rebound effect after the surge in travel (and spending), as well as with the steady rise in ticket prices that Disney has been implementing since 2014. According to parks trade media outlet AllEars, ticket prices have doubled in the last 20 years, with increases almost every year.

The need for a change. It’s clear that Disney needs to make a substantial change in this situation, given that the parks, cruises, and merchandising are its main source of revenue, far above its more publicized streaming content. Disney’s success in movies like Deadpool & Wolverine or Inside Out 2 can’t be achieved every year, so a strong restructuring of its strategies for the experiential branch of the business is necessary.

Image | Barry Mulling (via Flickr)

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