|
|
 |
 |
May 2004 Walt's Revolution! By the Numbersby Harrison "Buzz" Price, MBA '51 Before they build theme parks, developers still turn to consultant Buzz Price to run the numbers.On a hot day in July 1955, I was mired in sticky asphalt with a throng of people on a bridge to a castle. A short man jammed up against me was cursing under his breath. "Hello, Mr. Sinatra," I said weakly. Opening day at Disneyland did not feel like the beginning of a revolution in the entertainment industry. But the next day Walt Disney began fixing his mistakes and the rest is history. I was then a mechanical engineer with a Stanford business degree. I wound up riding shotgun on Walt's train because I liked numbers. Walt hired SRI, where I worked, in 1953 to write the location and feasibility studies for Disneyland. He was about to create an amusement park that would eventually be called a "theme" park. His ideas, which spread widely and created the basis for my 50-year consulting career, included custom stage-set design, clean, safe landscaped park environments, seven to eight hour stays, the concept of a visitor as a guest, the 50-25-25 formula for revenues: half from novel attractions with a story-telling theme, and a quarter each from food service and retail sales. For me, this entrepreneurial adventure was exposure to what I came to call "yes if" consulting. Walt liked "yes if" better than "no because." Yes if is the language of an enabler. If necessary to make a project work, yes if can consider a partial or complete change in direction. Since my first study for Walt, I have been involved mostly in "yes if" consulting on some 5,000 attraction projects on five continents. So far, I count seven waves to Walt's revolution. After his huge success with Disneyland, other developers also became involved in building regional theme attractions. World fairs became labs for trying out new themes. Then the revolution moved abroad, first to Europe. It also caught on with nonprofit, educationally oriented attractions such as aquariums and museums. Next, it moved indoors with projects like Camp Snoopy in the Mall of America. Finally, we have seen attractions as a catalyst for the explosion of the gaming industry, which is now an accepted part of the social fabric of the country. Some of what Disney did, admittedly, did not work abroad in the beginning. The French preferred line cutting to polite waiting, picnics to expensive park food, and long lunches with wine, all at the same hour rather than American-style fast food spread out over the whole day. Mutual accommodation came slowly but surely. In Asia, the flow of the wave was tidal and steady. Tokyo Disneyland instantly shattered all records for market penetration and per capita expenditures. Asians in general love to visit theme parks. For example, Seoul, Korea, with a regional population of about 20 million and little recreational tourism, generates per capita expenditures of U.S.$17 or more at three theme parks. Somewhere between 60 and 80 percent of the population of mainland China does not have sufficient income to visit a modern theme park with any regularity, but the potential for growth is large: 17 of 22 provinces have a population exceeding that of California, the most populous U.S. state. It is probably prudent for all but the movie studio companies to start with a small and relatively inexpensive park and grow it quickly in both attendance and per capita spending. Ticket pricing is extremely important. The all-inclusive, single-price ticket is not a good idea in Asia, although it should be an option. Asian parks must have good access by public transportation also. Our work in each country involved blending new ideas with local sensitivities. The principles of economic and physical master planning that emerged from Walt's revolution had to be honored. The latest wave in this industry is one of the most profitable: the marriage of theme park attractions with gambling. Casinos have become the dominant R&D frontier for themed entertainment. With gross revenues 7 or 8 times those of attraction parks, gaming has the resources to develop concepts and devices that add to the product mix offered to the customer. Who else would build a hotel as a giant visual icon in the less economic shape of a pyramid, the New York skyline, or the Eiffel Tower? Freestanding, these attraction ventures might have been uneconomic, but on the Las Vegas strip, they functioned as marketing ploys that draw people into casino and hotel doors. It is a forgiving environment: If you build a $150 million outdoor park in a blazing sun and it doesn't work, you can tear it down and try again. The attraction business is a fueling element of the gaming industry's growth, along with the destination resort concept. Another driver is the massive deployment of riverboat and Indian-owned facilities. From 1982 to 2000, U.S. gross gaming revenues expanded at a compounded rate of 10.5 percent per year, reaching $62.5 billion in 2000. That includes lotteries, horse and dog racing, charitable games and bingo, which generally don't drive associated recreation. As greater size was achieved, the rate tailed off to 6.8 percent during the last five years of that period, but it remains one of our nation's fastest growing large industries. Casino operations, the portion that drives attraction development, took in 57.3 percent of the industry's revenues by 2001. The casino-attraction trend began in earnest early in the eighties with the Circus Circus Midway in Las Vegas. It showed that a 50,000-square-foot hyperactive games area could generate $20 million annual revenue and make a high profit. As everybody joined the fray, a critical mass of entertainment broadened the city's appeal. By 2000, the average Las Vegas visitor stay was 4.6 days, up from 3.2 days in 1990. We worked with this industry's early protagonists, then its regulatory agencies, the casinos, the riverboats, and finally Native American tribes. Our study for the state of New Jersey supported the legalization of gaming there and our study for Nevada measured the industry impact as a guide to public policy. Even the combined effects of the 2001 recession and the 9/11 disaster only slowed Las Vegas slightly. As to saturation, it is pertinent that in 1993, working in Australia, I computed Australian per capita gaming at $251—almost twice the U.S. per capita figure. The gaming industry's success suggests taking a chance is an important part of human nature. The tense of the gaming environment is written in the conditional, "yes if," not in the indicative, "no because." |
|
Adapted from Walt's Revolution! By the Numbers, a book by Harrison "Buzz" Price, published by one of his repeat customers, Ripley Entertainment Inc. (www.ripleys.com). RELATED STORIES Alumni Bookshelf: The Latest Alumni Authors Preparing Heirs to Run Family Fortunes, by Victor Preisser, MBA '64
|
|
|
 |
|
|
|
