How Theme Parks Are Fueling Disney’s Revenue
Disney has been generating substantial revenues from its theme parks, which have remained the driving force of the company’s top line growth.
Disney’s investment in theme parks
The Walt Disney Company (DIS) has been generating substantial revenues from its theme parks, which have remained the driving force of the company’s top line growth. In the first quarter of fiscal 2019, theme parks contributed revenue of $6.8 billion to Disney’s Parks, Experiences and Consumer Products segment, whose revenue rose 5% YoY (year-over-year). The segment’s operating income also rose 10% YoY to $2.2 billion in the quarter.
Parks and entertainment peers Comcast (CMCSA) and SeaWorld Entertainment (SEAS) have also been investing in theme parks to attract bigger crowds.
Domestic theme parks are driving the segment
Disney invested substantially in US-based theme parks in the first quarter of 2019 led by increased guest spending and a higher number of occupied room nights. However, its licensing activities fell in the quarter, which negatively affected the segment’s operating profits.
While its domestic theme parks gained strength, the company saw a modest decline in operating income at its international parks and resorts due to decreases at Disneyland Paris and its Shanghai Disney Resort partially offset by improved growth at its Hong Kong Disneyland Resort.
Disney also generated lower income from licensing activities due to a decrease in revenue from Star Wars and Cars products along with higher third-party royalty expenses. Meanwhile, the company earned higher revenues from the sales of Spider-Man–based products and an increase in licensee settlements.
Disney has plans to open a Star Wars: Galaxy’s Edge ride in both Disneyland and Disney World by the end of 2019. Disney is also planning enormous investments in new hotels, cruise ships, and much more in many of the markets in which it operates across the world.