Industry & Competitive Analysis of Amusement & Theme Parks Desiree Gapasin Valerie Russell Janice Carlos Katie Miner AGENDA Dominant Economic Characteristics Driving Forces Competition Analysis Competitive Position of Major Companies Competitor Analysis Key Success Factors Industry Prospects and Overall Attractiveness DOMINANT ECONOMIC CHARACTERISTICS Stage in Life Cycle – Mature Companies in the Industry – 450 amusement parks in the U.S. – Top 5 Corporations= 65% of Market Scope of Rivalry – Parks compete against each other on an international level DOMINANT ECONOMIC CHARACTERISTICS Market Size – $9.6 Billion in Revenues – 319 Million Park Attendance Market Growth Rate – 2001= 1% Increase – Projected Decrease in Attendance and Revenues for 2002 DOMINANT ECONOMIC CHARACTERISTICS Industry Structure – Destination Parks • Disneyland • Universal Studios – Regional Parks • Six Flags • Cedar Points Customers – 75% Attend as Families – 54% Under the Age of 18 – 46% Adults DOMINANT ECONOMIC CHARACTERISTICS Entry Barriers – Excessive Start-up Costs – Expensive Equipment – Competition from Dominating Corporations Exit Barriers – Costly Liquidation of Equipment DOMINANT ECONOMIC CHARACTERISTICS Product/Service Characteristics – Parks Strive to Differentiate Scale Economies – Manufacturing Costs Differentiate Per Park Capacity Utilization – Improvements in Capacity • Ride Reservations • Competitive Discounting DOMINANT ECONOMIC CHARACTERISTICS Technology/Innovation – Tests For Safety – Improvements of Attractions • New Development for Rides • Scenery • Shops DRIVING FORCES Rivalry Between Firms (medium) - about 450 parks in the US - different types of parks - revenues constantly climbing Supplier’s Bargaining Power (low) - about 375 manufacturers & distributors in the US - low switching costs - not easy for suppliers to integrate forward to directly compete DRIVING FORCES Buyer’s Bargaining Power (high) - alternative suppliers available - quality & price is important - big account Potential New Entrants (low) - capital requirements - government policy - reputation/established DRIVING FORCES Threat of Substitutes (low) - Amusement & Theme Park incorporates fairs, carnivals, water parks, etc. Other Stakeholders - Government - IAAPA - NAPHA - TEA COMPETITON ANALYSIS Market Share 30 39.6 5 4.7 5.5 Disney Anheuser Busch Other 5.2 10 Six Flags Viacom/Paramount Universal Cedar COMPETITIVE POSITION OF MAJOR COMPANIES Revenue (billions) 5 4 3 2 1 0 0 10 20 30 40 Number of Parks Disney Viacom Six Flags Cedar Anhueser Busch Universal COMPETITIVE POSITION OF MAJOR COMPANIES #1—Walt Disney Parks #2—Six Flags, Inc. Industry Leader in Sales & Visitors Owns the most parks— 37, domestically Disney Image, “Mickey Mouse” Leader in Ride Innovations Warner Brothers Characters International Appeal COMPETITIVE POSITION OF MAJOR COMPANIES #3—Anheuser Busch Unique Appeal: Animals, Beer, Water Rides, Gardens, Naturalistic themes Entertaining & Educational World’s Most Popular marine-life park: Sea World, Orlando COMPETITOR ANALYSIS Primary Characteristics of Theme Parks: Family Appeal Contain Themed Environments “Ambient Entertainment” High Investment Level per unit of ride or show capacity High Standards of service, maintenance, & cleanliness Ability to entertain visitor for 5 to 7 hrs Pay-one-price admission policy (usually) KEY SUCCESS FACTORS Customer Appeal – Disney: Fairytale – Six Flags: Extreme Trills – Busch: Educational/Naturalistic Strategic Alliance – Licensing Agreements – Joint Ventures Technology Safety Standards INDUSTRY PROSPECTS & OVERALL ATTRACTIVENESS Industry Profitability Instability – Seasonal Operations, Weather, Economic Conditions, Terrorism U.S. Market Saturation International Market Prospects – Asia, Europe, Latin America Technology – Renovation & Innovation INDUSTRY PROSPECTS & OVERALL ATTRACTIVENESS Lifecycle – US—mature – International—growth Developing Trends – – – – – Themes Visitor Participation Simulation & Virtual Reality Water Attractions All-weather Operation INDUSTRY PROSPECTS & OVERALL ATTRACTIVENESS “ Rather than being viewed as a stand alone attraction theme parks will become part of a balanced leisure product and tourism system that contributes to the economic development, employment, and resource preservation of an entire region.” The End! Thanks! Any Questions?