Bob Iger tells us about Disney World's most ambitious new attraction in years

Nicole Sinclair
Markets Correspondent

Disney’s (DIS) Pandora World of Avatar launch on May 27 is the company’s biggest expansion of a US park in over a decade.

“When you see this land, you immediately conclude just because of its size and all the scale and detail and technology that goes into it, that it’s significant in nature,” Disney Chairman and CEO Bob Iger told Yahoo Finance.

He added that these investments are an important part of growing traffic and spending for the company’s parks business. Analysts estimate the cost of this attraction was around $500 million to $1 billion.

“We believe that creating new experiences for guests increases their satisfaction and also increases their desire either to come or to come back,” he said. “We feel great about how it’s turned out, we’re convinced that the public will agree with us.”

Iger added that using characters and stories that people are familiar with has been especially effective.

“When you use known intellectual property…it increases people’s interest even more and increases their enjoyment even more,” he said.

Landscaping consisting of real Earth plant species mixed with sculpted Pandora artificial flora is surrounded by ponds and gentle waterfalls. (AP Photo/John Raoux)

Disney reached a licensing agreement in 2011 for James Cameron’s “Avatar,” which claims the spot of highest grossing film of all time. Twentieth Century Fox distributed the first film along with the four planned sequels.

While much of Disney’s magic comes from building up franchises across its business, Iger said he’s not worried about not having control of the film side of “Avatar.”

“We have a very good partnership and license agreement both with Twentieth Century Fox and with Jim Cameron’s company Lightstorm.”

And as for the fact that it’s been over seven years since “Avatar” was released? Iger’s not worried.

“Avatar didn’t do the business that it did because it had low impact on people. It’s the opposite,” he said. “People love the storytelling, love going to Pandora in their minds or in the movie and kept on coming back to it. So I think it’s the kind of movie that sticks with people for a long time. I’m one of them.”

Na’vi River Journey ride at Pandora-World of Avatar land attraction in Disney’s Animal Kingdom theme park at Walt Disney World (AP Photo/John Raoux)

Disney said the Pandora opening is an effort to turn Animal Kingdom, one of the four parks at Disney World, from a half-day park to a full-day park.

The park features a “flight of passage” ride where guests ride a mountain banshee in a 3D ride along with a river journey ride down the Na’vi River.  A new restaurant, with healthy food of the Na’vi people and bar, is also featured.

Disney is betting big on parks

The Avatar opening is just one part of Disney’s plans to build out parks. Disney will introduce “Star Wars” lands in Orlando and Anaheim in 2019, “Toy Story” land, and “Marvel” and “Frozen lands” in Hong Kong.

And investments in the parks experience have paid off. In its most recent quarter, parks earnings grew 20% year-over-year.

Competitors have stepped up investments, including Universal Studio’s Wizarding World of Harry Potter, but Iger said he remains confident in Disney’s positioning within the parks space.

A Na’vi in a science lab is shown and will be seen while guests are in the queue for the Avatar Flight of Passage ride. (AP Photo/John Raoux)

“We are very well positioned in this business globally. We are not all that mindful of what the competition is doing,” he said. “We stick to our own properties, our own worlds, our own means of doing business.”

Disney’s Shanghai park, which is approaching its one-year anniversary of opening, has welcomed over 10 million visitors and was profitable last quarter. This comes at a time when many companies, particularly technology companies, have had trouble making inroads in China.

Iger said the key to success for Disney in the region has been authenticity.

“I think that we have struck a nerve in China…We spent a lot of time entering this market and this business under extraordinarily sensitive, from a cultural perspective, circumstances,” Iger said. “We wanted to create a park that was authentically Disney, distinctly Chinese, which the Chinese could call their own, where they could feel it’s China’s Disney. We’ve done that”

Park growth amid cable challenges

Parks, though, represent just 25% of profits for the sprawling entertainment conglomerate that is Disney. As such, Disney investors have been much more focused on concerns around the cable business, where there has been pressure on subscriber growth.

 

Disney operating income breakdown. Source: Company data, Macquarie Capital (USA), May 2017

 

Iger said that growth in parks — along with studios which has been driven by growth of his acquisitions of Marvel in 2009, Pixar in 2006 and Lucas films in 2012 — are key drivers for the company and that media networks (including ESPN) will weather the storm of changes.

“We’ve grown our parks and resorts and our studio business and our consumer products business at very compelling business in the last ten years,” Iger said, adding that margins have also improved.

“Media networks, particularly ESPN, are going through an interesting time, a changing world,” he said. “Thanks to technology where people are watching TV in different ways—mobile is certainly growing in nature and programs versus networks. We feel that our eyes are wide open to all the changes and all the disruptions going on and we feel confident that we are going to sail through these turbulent waters.”

Nicole Sinclair is markets correspondent at Yahoo Finance.

More from Yahoo Finance’s interview with Bob Iger:
Finding Disney’s next CEO is Bob Iger’s “number one priority
Disney CEO: ‘We were not hacked’

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