Disney has amazing first year in Shanghai

Visitors at an event marking the first anniversary of the opening of Shanghai Disneyland.
Visitors at an event marking the first anniversary of the opening of Shanghai Disneyland.PHOTO: AGENCE FRANCE-PRESSE

SHANGHAI • It has been the year of the "mouse" for Walt Disney in China and a successful year at that.

The company's ambitious US$5.5 billion (S$7.6 billion) Shanghai theme park is close to breaking even after its first full year of operations - a mark none of its resorts has been able to hit in the last 30 years, said chief executive officer Bob Iger.

"That's an extraordinary achievement. I'm not sure we've ever done that," he added in an interview with Bloomberg Television over the weekend as the Shanghai Disney Resort celebrated its first anniversary.

"After the first year, I'm pleased to say that prospects are really strong for continued success and continued growth."

Get The Straits Times
newsletters in your inbox

The park logged more than 11 million visitors earlier last week, he said.

The Shanghai development, Disney's first in mainland China and its largest foreign investment, throws the California-based giant into the race to dominate the country's US$204-billion media and entertainment industry.

In China, there is potential for Disney to build a second park in the long run, Mr Iger said, adding it would focus on the Shanghai resort first.

A Toy Story-themed land opening is planned for next year.

"Before we really look to the horizon geographically, we will focus on expanding this park," he noted.

"Might we build in another city over time? Yes. There's a great likelihood that we will. But it's way too early."

Half the resort's visitors are from Shanghai and the adjacent areas, with the remaining coming from other Chinese cities, he noted.

Park attendance is higher than expected, with "extremely high" occupancy rates at its hotel.

But the food and beverage business, as well as merchandising, has faced some challenges, he said.

The resort's attendance for the 12 months after its opening puts it in the top seven theme parks worldwide, ahead of Disney's Hong Kong and Paris parks, but behind its most popular parks in Florida, California and Japan.

Tokyo Disneyland logged 16.5 million visitors last year.

The company's most popular park, Magic Kingdom in Florida, boasted more than 20 million visitors, according to data from the Themed Entertainment Association and consulting firm Aecom.

The Shanghai attraction is also China's most-visited park, ahead of rival Chimelong Ocean Kingdom in Hengqin, which had 7.5 million visitors last year, according to the data.

Disney's international parks, with the exception of the Tokyo resorts, which it does not own or operate, have struggled with attendance.

The Hong Kong park clocked 6.1 million visitors in fiscal year 2016, an 11 per cent decline from a year earlier, and it reported a second consecutive year of net loss.

Disney said last week that it would delist Euro Disney after 27 years as an independent company.

Still, profit for its parks and resorts segment grew 9 per cent to US$3.3 billion for fiscal year 2016.

Mr Iger said the company's priorities in China are its theme park and expanding the footprint of its movie business in China.

"The movie market is important. This is the second largest market in the world," he noted.

He said an online-only version of the company's sports offerings will be introduced towards the end of this year.

Disney's largest business, television programming, last month reported lower-than-expected sales revenue and slipping profits as more viewers watch video online while sports leagues keep demanding more money.

Ratings and subscribers have dropped for its ESPN and ABC networks.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 19, 2017, with the headline 'Disney has amazing first year in Shanghai'. Print Edition | Subscribe