Following Disney’s Q3 FY22 earnings report, Disney CEO Bob Chapek spoke with CNBC about Disney+, price increases, and consumer demand. Chapek was specifically asked about whether or not Disney will increase prices at its parks while crowds remain high.
Chapek said they don’t have any announcements to make about price increases at the parks at this time. But, he said increases are ultimately up to the consumer.
“We read demand. We have no plans right now in terms of what we’re going to do, but we operate with a surgical knife here. It’’ all up to the consumer. If consumer demand keeps up, we’ll act accordingly. If we see a softening, which we don’t think we’re going to see, then we can act accordingly as well.”
Disney continues to point at the popularity of the parks as a justification for increasing prices. Disney is also well aware that guests tend to spend less when they’re having a bad experience, such as in enormous crowds, which is why they’re retaining the park reservation system. That means Disney is counting on more spending per guest rather than trying to bring in more guests. They want fewer guests who pay more, as evidenced in their comments about Disneyland’s “unfavorable attendance mix.”
Genie+ is a perfect reflection of the modern Disney strategy. The paid system that allows guests to bypass standby lines replaced the old FastPass+ system that was included in the price of a ticket. Chapek notes “about 50%” of guests now buy Genie+, giving Disney more revenue per guest than they had before.
Meanwhile, Disney guests aren’t surprised Disney is increasing prices given the high demand. However, the disappointment lies in the fact many feel the experience at Disney parks has gotten worse while the price has simultaneously gone up. The value has decreased and the overall product has weakened. That’s evident in the removal of certain perks (Disney Magical Express, FastPass+) and the lack of investment in park capacity.
Disney’s current inability to meet demand, which allows them to increase prices, is a problem of their own design. Disney has elected to replace old attractions at their theme parks instead of bolstering their attraction lineup with new additions. These short-sighted decisions provide immediate financial gain as guests pay more, but the frustrations are boiling up and will likely have long-term impacts.