Disney in 2012

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You really have to come with me the next time I fire up my time machine. I've been making treks to see what a few of today's most popular companies are up to in 2012. Today? I'm going to Disneyland!

You probably didn't know that investors could step three years into the future, take a look around, and then come back to trade on the news, did you? Busted! I guess this is all hypothetical. Still, as a shareholder, you should be making educated guesses about all your stocks' futures. Let's see where Disney (NYSE: DIS  ) might be in three years.

It's a small world
I'll kick things off with great news for your ears. No one cares about The Jonas Brothers anymore. Hannah Montana is a syndicated afterthought. Even the whole Selena Gomez & Demi Lovato craze that defined the summer of 2009 faded into obscurity by 2010.

Don't feel sorry for Disney. Its incubator is still cranking out tween magnets. The combination of theme parks, location-based entertainment centers, Disney Channel on demand, and multimedia-download kiosks remains an effective launching pad for wave after wave of teen idols.

I lost you after theme parks, didn't I? OK, let's begin to cover some of the new ways that the family entertainment giant is turning heads in 2012.

We'll start with the parks. There are a few additions on the way to the Disney global family of theme parks. You already know about Shanghai, where construction continues at a feverish pace. Recent groundbreakings include a park in Dubai and a waterpark in Disneyland (yes, they found room for it). There are rumblings about a fifth theme park in Florida, but what else is new?

The biggest changes have actually been taking place inside the parks, as technological advances generate more efficient load times and customized experiences. For instance, your kid's favorite character actually comes looking for you, instead of the other way around. Interactive in-line diversions on moving walkways make queuing more enjoyable. Only disoriented foreigners wait in line for the counter-service eateries, given the ease of ordering food and snacks through Disney's wireless devices. There is a lot more social interaction between park guests, electronically, too. That's how my eldest son met his fiancee. I'll introduce you next time, but that would require a trip even further out into the future.

Pirates of the Caribbean
I mentioned smaller, regional attractions. That really got off to a running start when Disney acquired a cash-hungry Great Wolf Resorts (Nasdaq: WOLF  ) in the fall of 2009. A few Disney tweaks in the already upscale indoor waterpark resort concept paid off nicely, especially with Disney's capital available to scale the chain quickly. Disney also hit metropolitan markets with in-park concepts like its DisneyQuest arcade (again) and theme restaurants like its Sci-Fi Dine-In Theater. It has even fared well in turning around some poorly performing Disney Store locations, earmarking half of the space for a throwback soda-fountain concept that's a hit in the suburbs.

Disney media properties like Disney Channel, ESPN, and ABC are still big draws, but consumers watch on their own time. I'm not just talking about TiVo (Nasdaq: TIVO  ) here. More and more people are shedding their cable subscriptions in favor of simply streaming shows on demand. Audience numbers may not be as strong as they used to be, but sponsors are paying more for ads that can be more effectively targeted in this space, thanks to Google (Nasdaq: GOOG  ) . (You may want to read up on my Google 2012 field trip to learn more about that).

In short, family programming giants like Disney and Nickelodeon parent Viacom (NYSE: VIA  ) are more profitable than ever in delivering content on demand, especially since most hit shows are tied to social-networking destinations, where fans congregate and drive even more ad revenue home.

Cruise ships? Disney didn't bother to wait until it added just two more ships to its fleet. It snapped up Royal Caribbean (NYSE: RCL  ) in 2010, and it now rivals Carnival (NYSE: CCL  ) for sea supremacy.

Disney also didn't just expand its Disney Vacation Club timeshare concept and nascent adventure-travel interests. The company dove into the high end of the market by upselling some of its DVC members into its classy destination club concept. That may seem like an untimely move to you back in early 2009, but it will all make sense when real estate prices stabilize by year's end, and well-to-do members tire of cluttered resort experiences.

Mr. Toad's wild ride
This doesn't mean that the next three years will be easy. CEO Bob Iger had to get the company back on track after a bumpy 2009. He had beaten Wall Street expectations consistently before coming up short in the final quarter of fiscal 2008. Disney had its hiccups in fiscal 2009, but like Tigger, it eventually bounced back into favor.

From your early-2009 perspective, nearly everyone will have it wrong. The ad market doesn't just bounce back. It bounces back stronger, because it's smarter. Entertainment destinations don't just win back discretionary income. They earn a bigger chunk of it by tailoring themselves more to customers' preferences. Creating content isn't a worthless craft in a digitally-delivered future. It's the tasty hunk of cheese that lures you deeper into a monetization mousetrap.

After all, if there's one thing Disney knows all about, it's being a mouse.

Some other articles to M-I-See:

Walt Disney is a Motley Fool Inside Value recommendation. Google is a Motley Fool Rule Breakers selection. Royal Caribbean Cruises and Walt Disney are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz spends plenty of time on Disney's properties regardless of the year, but he owns exactly two shares of Disney. He also owns shares in TiVo. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (7) | Recommend This Article (22)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 16, 2009, at 3:41 PM, lovestogo2000 wrote:

    your comment about Disney shows total lack of knowledge. They have not snapped up Royal Carib and are nowhere close to carnival corp which owns 85 ships with more than 20 on order

  • Report this Comment On January 16, 2009, at 4:16 PM, TMFBreakerRick wrote:

    lovestogo, you do realize that the RCL comment refers to taking place in 2010, right? You may have just jumped to the cruise industry ticker symbols without reading the introductory paragraphs about the "Disney in 2012" premise. It's cool. RCL is half the size of CCL in terms of revenue, but tack on the four Disney ships (two now, the two that will be added before 2012) and the avg. revenue per Disney cruise ship vs. CCL and it's still not close, but enough to "rival" it.

  • Report this Comment On January 16, 2009, at 4:33 PM, lovestogo2000 wrote:

    That's like calling anyone who has ever been in a swimming pool a rival to Michael Phelps.The comment that they snapped up RCL in2010 makes no sense at all. There may be some valid points in the article, but the comments about the cruise business are way off base. Disney has been successful in their small niche, but they are not really any competition to ccl.

  • Report this Comment On January 16, 2009, at 6:22 PM, TMFBreakerRick wrote:

    lovestogo, I appreciate the feedback, but I don't think we're looking at this the same way. This is a HYPOTHETICAL case of where Disney MAY be in three years. So I have it buying Great Wolf Resorts later this year and Royal Caribbean a year later. I see a park going up in Dubai. I see greater in-park connectivity. I'm not sure if your point is simply that Disney with RCL wouldn't rival CCL or that you still don't understand why I paired Disney up with RCL in the first place. Disney is spending plenty on the two new ships being built in the shipyards, buying a more teen-centric cruise line like RCL would be a tactical fit.

    Disney bought Capital Cities/ABC because it wanted to be bigger in network programming. It bought It bought Infoseek because it wanted a bigger play online, and then Club Penguin when it wanted more skin in virtual communities. It bought Pixar to breathe new life into its animation business. Disney has no problem with acquiring companies in areas it wants to grow into. Is Disney telegraphing bigger intentions in cruising? Of course. What is so outlandish about snapping up the "lust for life" rockwall rival RCL?

  • Report this Comment On January 16, 2009, at 9:20 PM, webstir wrote:

    Disney want to do the following:

    1. Buy the rest of Lifetime from Hearst

    2. Buy the rest of A&E from NBC and Hearst

    3. Buy the rest of ESPN from Hearst

    4. Build more Disney theme parks

    5. Expand the Disney brand world wide

    6. Divest its TV stations

    7. If at all possible get its hands on LucasArts

    Most of these goals are already in the works and the writer mentioned none of them.

    Buying Wolf, RCL and does not accomplish ANY of those goals. Iger is so anti-non Disney brands that he is turning his back on the Touchstone movie division. Please read this to really learn about Disney:

    This writer has no clue about what he's talking about.

  • Report this Comment On January 19, 2009, at 1:56 PM, dashark44 wrote:

    This writer is blurring the line between Disney diversifying and taking over. Disney has historically taken steps to expand their brand not take over what they might see as competition. Though I am a holder in Great Wolf I don’t see them scooping that up. If the vision was for regional parks they would have been doing that all along. Regional parks will hurt the big parks and in turn hurt the brand. Making a run at a cruiseline might make some sense, but the value is limited. Do they need to own a cruiseline to in the cruise business? Overseas expansion on a large scale makes good sense, the rest seems unlikely to me.

  • Report this Comment On November 20, 2013, at 12:29 PM, BetzabethT wrote:

    There is a lot of misinformation flying around about timeshare that can get you into a lot of financial trouble if you believe it. Most of it comes from timeshare salespeople overstating the truth that get repeated when people explain why they purchased a timeshare. But just because something has been repeated many times doesn’t make it the truth. The following timeshare myths may help you avoid running into timeshare trouble in the future. Consider each one carefully before putting your hard earned money down to purchase a vacation property:

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