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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.
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