As some of you might know, I was a numbers geek even before I was a Theme Park Insider. So my wife sent me a demographic chart the other day that, frankly, at first glance made me cringe. But then I got really, really interested in it what it meant for theme parks.
Here it is — the current age distribution of the United States population. Why is this interesting for theme park fans? Because it explains a lot of what has happened in this industry over the past couple of decades.
No one is born at age 5, so, absent a huge wave of immigration, a distribution chart such as this would be widest at the bottom, assuming a uniform birth rate in the country. The chart would taper very slowly as it moves up, due to deaths from accidents and unusual illnesses, until you get to the bars for people in their 60s and above, when they would begin to narrow more severely, as people die from more common causes.
But that's not what this chart shows. You can see a couple of prominent bumps here. The top one, for people in their 50s, shows the Baby Boom, representing people born between 1946 and 1964. The second bump, for people between 20-34, represents their children, the Gen Y "echo boom." My "baby bust" Generation X — people born from the mid-1960s through the 1970s — is sandwiched between.
Look below Gen Y, though, at the bottom four bars on the chart. That illustrates another baby bust — one that's be going on for almost 20 years now. The cohort percentages are getting smaller for each of the bottom three age groups. That means the current baby bust is accelerating.
What is the core market for the theme parks — the traditional foundation upon which the industry rests? Families with young children. And, for a variety of reasons, those have been getting more scarce over the past decade.
[FWIW, I would suggest the reasons are crippling student loan debt, the rise of the second housing bubble in many metro areas, and a decline in availability of full-time, benefitted employment. In other words: People don't want to get start families when they can't make end meet themselves. But that's another column for my other website.]
What does an industry do when its core market declines? Well, you adapt and either expand or change that focus, or you don't, and watch your sales decline. Over the past decade, we have seen two companies at the top of the industry excel at adapting to the changing American audience, and one company, especially, fail.
A change in population distribution isn't the only demographic change confronting the theme park industry. Income inequality also has swollen over the past several decades, leading to an increase of wealthy (and poorer) Americans at the expense of the size of the middle class. Theme parks long were the middle class' vacation destination, so a decline in middle-class households along with a decline in families with young children has created a dangerous double whammy for the industry.
Parks that want to thrive in this changing environment need to do two things:
1) They must find a way to appeal to older audiences, including empty-nesters and other adults without children.
The best way to do that in the theme park business is to develop attractions that focus more on entertainment elements rather than physical thrills. In addition, the entertainment elements should appeal across multiple generations. Rather than invest in creating new, unproven narratives, risk-averse parks instead turn to established franchises to theme these new attractions, such as Harry Potter, Pixar, Transformers, etc.
2) They must create plausibly exclusive and luxury experiences at higher price points to serve wealthier visitors.
That means new on-site hotels with concierge levels and premium transportation options, as well as extra park access and exclusive events for high-paying customers.
Who's done that well over the past decade? Disney and Universal. Which two theme park companies have pulled away from the rest of the industry in annual attendance over the past decade? Disney and Universal. This is not a coincidence. It is causal.
Ten years ago, Disney still had a big lead on the industry, but the SeaWorld/Busch Gardens parks stood next to the Universal parks in the industry's second tier in the United States. But while Universal has ridden its mastery of the two needs above to grow its attendance even faster than Disney, SeaWorld and Busch Gardens have fallen behind, watching their attendance slump as they have failed to connect with aging audiences with compelling IP or non-thrill attractions, and failed to develop compelling luxury experiences across their parks on any significant scale.
SeaWorld/Busch Gardens now rank with Cedar Point and Six Flags as regional amusement parks, content with getting by with drifting attendance as Disney and Universal ride the changing demographics in the United States to growing success.
Look, there are still millions of thrill-seeking teenagers in this country. And millions of middle-class families looking for a more affordable theme park experience than they can find at Disney or Universal. So there's plenty of money to be made running a thrill-based, regionally-targeted family amusement park. But if you want to see big attendance growth from one of these parks, it's probably going to come at the expense of another. The real growth in this industry overall is coming from parks that are expanding the market by appealing to older, wealthier and child-free households. (Or by avoiding America's demographic changes by expanding their business overseas.)
So the next time you see a news report about another dessert party or upcharge event at a Disney theme park, or a fancy new hotel rising at Universal Orlando, this chart above is what is driving that. You want to make money in this, or any other business? Then you gotta go where the money is. And these days in the United States, that no longer is with middle-class families with young children.
Tweet
So true food and wine festival at EPCOT is the most popular event there , last night very few children there .
Great piece, Robert. This trend is happening in all forms of entertainment. Companies are going for more money per head from fewer heads because working and middle class families are not getting the job done for the bottom line.
For an example, I'm a big wrestling fan, and the WWE is the king of wrestling (or as they like to call it in part of their appeal to a wider audience, sports entertainment). WrestleMania is their annual big event, akin to the Super Bowl. WrestleMania sells out 80,000 seat football stadiums every year, and WWE knows they have a large enough committed fanbase that they can charge outrageous ticket prices and still fill the building. As such, the last three years have seen by far the largest WrestleMania live gate revenues ever, despite the fact that overall cultural interest in the product is way down from its highs in the mid-80s and late-90s.
TL;DR, milking huge amounts of money from your hardcore fanbase is more lucrative than appealing specifically to middle class families with kids in 2017.
Why do they keep doing this dessert parties? Because people will pay for them!
Robert, how do you think the aim to attract foreign tourists is seen by the major players as a revenue stream? We head to Disney from Canada once or twice per year, and it's no secret that many other Canadians choose central Florida as a vacation destination. Britons are always there in huge numbers, and there seem to be more and more South American groups. Do you think that Disney and Uni see it worth investing in marketing and offering promos to we international visitors as a viable option?
The proftit margin is certainly higher for overpriced events like dessert parties. The problem is that there are so many upcharge events that they are encroaching on the regular theme park experience. I just hope a lot of that extra cash will go back into the parks, and not just in the pockets of execs and shareholders!
Disney is upselling because it can. I bought a few that might make sense. Disneyland offers the Fantasmic dinner package that is great. The dessert parties are a poor value so I don’t bother. The Halloween events are increasingly a poor value. It still sells out so good for them.
Why does Walt Disney World keep creating upcharge dessert parties?
Because fat, sugar, salt and labour is cheap for Disney and the company create shortage in viewing areas to sell them.
I don't think Disney is that risky with their offerings as Robert is suggesting with his grand demographic theory. They "experimented" with giving guests reserved seating for their evening shows over a decade ago, and it worked. Since restaurants have limited capacity, and they didn't want to completely sell them out for hours on end for guests wanting to book these packages, they "experimented" with a few of these dessert parties. They ended up being so popular, that Disney had no trouble selling them out within minutes. So, Disney continues to offer them and will continue to expand the offerings and raising the prices until they can't sell them out anymore.
It's convenient to think Disney is performing some level of advanced market analysis, but I think Robert is looking way too far into this. It's a simple supply and demand issue. People hate standing around for hours waiting for mediocre views of parades and fireworks, and are willing to pay for reserved (i.e. not shoulder to shoulder) seating to watch the evening spectacles in prime locations. Disney charges an exorbitant cost by throwing in some sweets, and people still gobble them up. It has nothing to do with the shrinking middle class or Disney's and Universal's prescient business moves catering to upper class guests (Sea World's failure is much more complicated than not catering to more discerning audiences, Discovery Cove anyone???). It's that Disney can't stop selling these things out, so they come up with more and more of them to try to meet demand. Until they reach critical mass or people start coming to the realization that there's little value in these parties, Disney will keep feeding the drones.
We're starting to some of that with a few of the EPCOT F&W Festival Events that are no longer selling out as prices have soared out of control and offerings continued to shrink. For instance, daily cooking and beverage demonstrations used to be free (including samples) 10 years ago. You used to see guests lining up way in advance to attend, but now with a $17/session charge, reduction in portion sizes, and elimination of a pairing with the highlighted dish/beverage, it's common to see the demo area half filled and guests able to walk up minutes before a session starts to get a seat. Other EPCOT F&W events have also reached critical mass as well. A recent $200 F&W Festival signature dinner at Tiffins was universally panned, causing Disney to reach out to individual guests confirmed for a similar event at the restaurant later in the Festival. I think until guests speak up and let Disney know they're unhappy, Disney will continue to push the envelope with their offerings in terms of stinginess and price. It really has little to do with Disney reacting to overall market trends or guest demographics, it comes down to what guests will buy, what they will pay for it, and how happy they are with their purchase.
I think that the answer is more simple than Robert has suggested. I'm not convinced that the widening gap between Disney / Universal and the rest of the Orlando parks is based on the upscale events that are added. I am from the UK, have attended Orlando regularly over the last few years and do not have children. I would never attend one of the additional events because I view them as a waste of money, when considering the already high entrance fees, car parking costs, food and beverage costs etc. Despite that I will always attend Disney and Universal Parks. I am less inclined to visit parks like SW or Busch Gardens because they have failed to invest to the same level as the other parks and so the draw to attend year on year is significantly reduced (setting aside other issues that SW has relating to animal rights issues which also play on my mind). Continued expansion and investment has to be the key, particularly with successful franchises that remain popular outside of the parks (minions, WWoHP, etc). And if punters will pay for additional events on top, then that's just a bonus.
This article has been archived and is no longer accepting comments.
This same age trend is affecting colleges. There are fewer college age students, hence enrollment is down. Throw in the fact there are more for-profit colleges it’s really hurting state institutions or those that didn’t catch the initial wave of distance education.