There's something shiny and new coming soon to the neighborhood of Walt Disney's (DIS -0.61%) market-leading theme park resort in Florida: Comcast's (CMCSA 0.53%) Universal Studios will be opening Epic Universe next year. The new gated attraction is generating plenty of buzz, loaded with rich intellectual properties and bar-raising thrill rides and family experiences.
Should Disney be worried about its top rival's reinvigorated ambitions? The Wall Street Journal took a critical look at the challenge that the House of Mouse is facing in light of the coming of Epic Universe. There's no denying that Comcast's new theme park will turn heads in 2025. It looks incredible. But let's go over some of the reasons Disney and its shareholders don't need to worry.
1. The rising tide lifts all seaworthy ships
The narrative in the Journal article argues that folks coming to Orlando will divert a day or two that would've been spent at a Disney theme park to check out Epic Universe. Missing from the forecast is that more people will opt to travel to Central Florida in 2025 and beyond to check out Comcast's new park and, while there, also spend time at rival attractions.
It's been happening the other way for most of the past decade, with Universal Orlando riding Disney World's coattails. Try the resort's original gated attraction on for size. Since opening the Wizarding World of Harry Potter's Diagon Alley expansion in the summer of 2014, it's been a very uninspiring 10 years of new rides and shows at Universal Studios Florida. The attractions it shuttered in that time -- Shrek 4-D, Disaster, Terminator 2: 3-D, and Twister -- have been replaced by experiences that aren't necessarily improvements. Its latest ride is basically a high-tech shooting gallery on a conveyor belt.
Out of the nine major theme parks in Central Florida, this is the only one that isn't materially better than it was 10 summers ago. Its adjacent Islands of Adventure sister park has added two popular roller coasters in that time, but Universal Studios Florida has largely swung and missed.
However, that hasn't stopped the turnstiles from clicking. Universal Studios Florida saw its attendance soar 16% to entertain 9.6 million visitors in 2015, according to the annual industry report from the Themed Entertainment Association. It attracted 10.8 million guests in 2022, and that was with international travel restrictions suppressing demand. Disney's major investments at its parks resulted in a surge in tourists to Central Florida, and they didn't stay there exclusively. Epic Universe should have the same favorable impact next year for Disney, SeaWorld parent United Parks, and other attractions operators.
Image source: Disney.
2. Disney isn't phoning it in
Despite outspending all of its Central Florida theme park peers combined over the past few years, Disney is pushing even harder now on the accelerator. It recently announced that it will double its capital expenditures on theme parks and experiences to $60 billion companywide over the next 10 years.
A lot of that money is obviously going to Disneyland, its international resorts, and even its cruise ships. It still leaves Disney not resting on its laurels, as the company has already announced potential expansion opportunities at its Magic Kingdom and Animal Kingdom parks in Florida. It would be surprising if Disney doesn't make some more concrete announcements at its D23 enthusiast event in early August.
Disney World isn't likely to announce a fifth theme park -- or a seventh gated attraction, if you include its two water parks -- to take on Epic Universe. Unlike the landlocked Universal Orlando that can't open a new land or experience without shuttering an existing offering, some of Disney's proposed moves involve growing a park's footprint to increase capacity. Whether or not Disney World rolls out head-turning attractions next year, you can be sure the spigot will gushing beyond 2026, when it's going to need it the most.
3. The math is even better now
A lot has changed since the pandemic. Theme park operators and regional amusement park chains beefed up their monetization abilities. Between price increases and the rollout of premium add-ons, Disney has said it's generating 40% more in revenue per capita than it was before the COVID-19 crisis. Earlier this year, Six Flags (SIX 0.38%) revealed that it's also generating an average of 40% more in revenue from a visitor than it was in 2019.
Universal Orlando has also played along. Its priciest annual pass cost $510 five years ago. It's $790 now, a 55% increase. It has opened just one well-received new ride in that time, the Velocicoaster scream machine at Islands of Adventure. It's fair to say that prices will be even higher once Epic Universe comes online next year, especially if Universal decides to eventually offer an annual pass that includes the new theme park.
There's also more at stake now. Disney and Comcast are media stock giants. Beyond allowing guests to engage deeper with their movie and TV show franchises, they now have the keys to premium streaming services to enrich their ecosystems. Can you imagine how explosive revenue -- and bottom lines in these scalable theme park businesses -- will look for both companies when tourist levels spike and attendance levels set new records?
Epic Universe isn't a threat to Disney. It's an opportunity for all operators.
