Market demand, government support help growth: experts
The Shanghai Disney Resort reaped positive results during its first full fiscal year of operation, contradicting Dalian Wanda Group Chairman Wang Jianlin's prediction before the U.S. entertainment conglomerate's theme park opening that he would make Disney lose money in the next 10 to 20 years in China.
Experts attributed the sound performance of the Shanghai Disney Resort to large market demand and the local government's support, saying that it was beyond expectations that Shanghai Disney generated positive results in such a short period of time.
Revenues of the U.S. entertainment conglomerate Walt Disney Co stood at $12.78 billion for the fourth quarter and $55.14 billion for the fiscal year, the Walt Disney Co said on Saturday as it reported earnings for its fourth quarter and fiscal year ended September 30, 2017.
Disney Parks and Resorts' revenues for the quarter increased 6 percent to $4.7 billion, and "internationally, we benefited from a full year of operations at Shanghai Disney Resort and higher attendance," the Walt Disney Co said.
The outcome at the Shanghai Disney Resort was due to attendance growth and lower marketing costs, partially offset by lower average ticket prices, the company said. The decrease in marketing costs reflected the costs associated with the grand opening of the resort in 2016, said the company.
Walt Disney CFO Christine McCarthy said: "I'm pleased to note that Shanghai Disney Resort generated positive operating income during its first full fiscal year of operations, which comfortably surpassed our expectations of breakeven from its first year," U.S.-based industry news site skift.com reported on Saturday.
The resort opened on June 16, 2016 as the first Disney destination in the Chinese mainland and the sixth worldwide. It welcomed its 10 millionth guest on May 19 this year, 11 months since its opening.
In May 2016, Wang said that he would "make Disney unprofitable in the next 10 to 20 years in China."
Experts said that Disney's sound performance proved Wang wrong, thanks to Chinese people's recognition of the Disney culture and strong support from the local government.
Yan Yuejin, a research director at the Shanghai-based E-house China R&D Institute, told the Global Times on Sunday that Disney's global reputation has helped it prosper in China.
Disney has enjoyed strong popularity in the Chinese mainland because the young generation in China has become familiar with U.S. culture, said Song Ding, an expert at the Shenzhen-based China Development Institute.
Song told the Global Times on Sunday that Disney's progress in other overseas markets had not been as smooth as that in Shanghai. For example, Disneyland encountered a chilly reception in Paris due to cultural barriers, he said.
"The Shanghai municipal government's support, including the research and development of the theme park as well as the supply of land, plays a very important role in driving the growth of the resort," Song said, adding that Shanghai Disney's earnings could also contribute to the development of the local economy as the project is being operated in cooperation by a Chinese company and Walt Disney.
Yan forecast that Shanghai Disney Resort will post sound growth in the future, but competition from its Chinese rivals will intensify.
Chinese rivals may try hard to attract visitors from Shanghai Disney by using "strategies" such as lower ticket prices, Song said. "There are many entertainment parks in provinces around Shanghai and they won't let Shanghai Disney dominate the market," he said.
"Disney should be on the alert because after the resort loses its novelty, the number of visitors may drop," Song said.
New entertainment projects are also expected to be unveiled at the theme park, said Yan.
Construction of Toy Story Land has begun, and it will become the seventh major attraction at the theme park. It is set to open in 2018.