The Importance of Business Models: a Closer Look at Disneyland

The Importance of Business Models: A Closer look at Disneyland

Written by: Course: Block: Lecturers:

Rik Spitters International Master in Media Innovation BM-­‐01 Hans de Nie, John van den Elst

Introduction This essay is based upon the article “Why Business Models Matter” written by Magretta (2002). In this article Magretta explains why business models still matter. She does this by first give the reader a closer look of how the origins of business models. She gives examples of businesses that applied business models in a good way and examples of bad implementations. One of these examples of bad implementations Magretta gave was EuroDisney, or as it is called nowadays: Disneyland Paris. With this essay I want to go deeper into the business model of Disneyland Paris and why it has failed in so many ways back in 1992 when the park opened. I will follow the same structure as Magretta did in her article, therefore this article will mainly refer to her article. However to understand why Disneyland Paris’ business model failed in so many ways we will explain the origins of the park, origins that lay in America, with the first two parks in Anaheim and Florida.

“To all who come to this happy place: Welcome. Disneyland is your land. Here age relives fond memories of the past, and here youth may savor the challenge and promise of the future. Disneyland is dedicated to the ideals, the dreams, and the hard facts that have created America, with the hope that it will be a source of joy and inspiration to all the world.” Walter E. Disney, 17 July 1955

One Man’s Dream “Here you leave today and enter the world of yesterday, tomorrow, and fantasy.” These are the famous words that can be read at every entrance of a Disneyland Park. This sentence came from one man, Walt Disney. Before Disneyland Walt successfully created an empire that all started with a cartoon mouse called, Mickey. However after dozens of animated and live action movies Walt wanted something else. After seeing his two daughters riding the Merry-­‐Go-­‐Round in a park called Griffith Park he stumbled upon the idea to create a place where children and their parents could have fun together. Before Disneyland, every amusement park in America was only focused on children. At the same time he noticed the fans growing interest to visit the Disney Studio’s. It was only then that Walt connected the dots; the people are in need of a park that recreates the magic of film in real life. When the plans finally came into realization it took the Americans only one year to build Disneyland from the ground up. The first park opened its doors on July the 17th 1955 via a life television broadcast. This opening for special guest went far from smoothly. Bad press releases were the result. However that didn’t stop the crowd to go to Disneyland the next

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day. When the park opened for the public. Approximately 50.000 people attended the opening, and from that point on the park kept growing and growing. Within a few years a second park opened in Florida. Both areas in Florida and California transformed in resorts so that guest could stay longer. Both resorts were quite similar. In their business model nothing changed. And why should they, the model worked, because as with the first park Disneyland Florida was a great success as well. So when the idea came to mind to go abroad with Disneyland the executives were confident that nothing had to change. Their first continent to they set their eyes on was Europe. However it was Asia that was the second continent with its own Disneyland. Tokyo Disneyland proved to be a success, without changing the business model. Therefore the Disney executives were even more confident that a European park would be successful. During the eighties they looked for a central area in Europe. After a few years it was decided, next to Paris a land was bought up, Marne-­‐La-­‐Valleé. Confident that this park would be a gigantic success, Euro Disney SCA, the company that owns the park, started building Euro Disneyland based on the three other successful parks.

“To all who come to this happy place, welcome. Once upon a time... A master storyteller, Walt Disney, inspired by Europe’s best loved tales, used his own special gifts to share them with the world. He envisioned a Magic Kingdom where these stories would come to life, and called it Disneyland. Now his dream returns to the lands that inspired it. Euro Disneyland is dedicated to the young, and the young at heart... with a hope that it will be a source of joy and inspiration for all the world.” Michael D. Eisner, 12 April 1992

Euro Disaster Openings day arrived for Euro Disneyland on March 12th in 1992. Great traffic jams were foreseen and everyone was warned that it could be overcrowded. Around 90.000 cars were expected. A government survey indicated that a half million people would visit the park. However, on openings day, by midday half of the parking lot was full. Only 25.000 cars arrived, it was nearly as crowed as expected. Was it because people were advised not to come to the park by car, was it because of the strike that the RER Railway was dealing with or was there another reason people didn’t visit the parks openings day? There is much speculation about why the openings day of Euro Disneyland failed. Some say it was because of the broadcasts for people not to come and some say it was because

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people weren’t eager to visit the park. The latter reason seems a reasonable one since the days that followed the park didn’t meet the expectations. Visitors stayed away from the park, and the ones that came to the park were spending less little then expected. This didn’t changed for the next coming years, and Euro Disneyland was upon the brink to go bankrupt. Because of financial investors the park the park could go on. And finally in 1995 the park got its first quarterly profit. The attendance grew from over 8 million to over 10 million in one year and in the next coming years the park got a bit healthier. It even grew to become the fourth best-­‐visited park in the world, and the firs tin Europe. However all of this this came with the cost that the actually planned second park was delayed from 1996 until 2002 and that the park is still in great depth. But what was the reason Europeans did not visit the park and meet up to the expectations of Disney?

This is Europe, not America! After three years the smoke finally cleared from the disastrous opening of Euro Disneyland. What was the reason the park failed to attract us Europeans? It couldn’t be the central placing of the park. The park is strategically placed next to Paris so it reaches 68 million people that are a 4-­‐hour drive away from the park and another 300 million people that are a 2-­‐hour flight away. So that couldn’t be the problem. Is it that the characters of Disney aren’t that popular? Well, not exactly, Donald Duck is by far the most popular comic character in Europe. The Disney movies did a good job at the box offices, and merchandise was and is very popular. So perhaps was it the themes that the park had not attractive to Europeans? Well Disney actually changed a lot of names, like Tomorrowland became Discoveryland to meet a more European twist. The central castle changed, because we Europeans knew how real castles looked like so the castle needed to have higher standards. Some attractions got a Jules Verne theme because that guy was popular in France. All of that was deeply researched and couldn’t be the reason. So what was the reason that made Euro Disneyland so unpopular? The unpopularity of Euro Disneyland came mostly from the fact that we weren’t Americans. The way Americans visit a park is a lot different then Europeans do. For example when Americans visit a park they almost spend as much time in the restaurants as in the attractions, whereas Europeans bring their own lunch with them, and only eat at set times. Next to that, Europeans spend a lot less money on food then Americans do. In the beginning Euro Disneyland had the policy that guests couldn’t bring their own food with them. A

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widespread rule that people till this day still believe is active. This rule changed after 1995, own brought food is allowed in the parks now. Also food prices were too high and no alcohol was served inside the park, something Europeans weren’t used to. These “American” rules partly led to an average attendance of 25.000 instead of the predicted 60.000. Another reason was the name of Euro Disneyland. Michael Eisner, former CEO of The Disney Company stated, “In America the word “Euro” is believed to mean glamorous or exciting. For Europeans it turned out to be a term they associated with business, currency, and commerce.” Therefore in 1995 Disney decided to change the name of Euro Disneyland into Disneyland Paris. In 2002 the name changed again into Disneyland Park, this because of the opening of the second park “Walt Disney Studios Park”. The overall resort is now called Disneyland Paris. So the biggest flaw of Disney was that they didn’t understood their target audience. They just copied their business model from America and placed it in Europe. But little did they know that European people are used and lived to different standards. And because of that the park failed in the beginning years.

Conclusion It was only after the executives of Disney realized that they had to change their business model in order to turn the park profitable. And therefore Disneyland Paris is a very good example of why business models matter and why they always have to be looked over and over again. It is very clear from this story that you cannot simply copy another business model and place it in another company, even if it is in the same company. Business models makes people aware of what things are important, not only for the company and how to set it up, but more importantly of your customer. Disney learned this the very hard way. And you bet that they won’t let that happen again, they think twice before opening a new park, and will forever take a very close look on their business model and what customers are that they are dealing with.

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References Corliss, R. (1992, April). Voila! Disney Invades Europe. Will the French Resist? Time Magazine. Retrieved from http://www.time.com/time/magazine/article/0,9171,975357-­‐3,00.html Euro Disney Adding Alcohol. (1993).New York Times. Retrieved from http://www.nytimes.com/1993/06/12/business/euro-­‐disney-­‐adding-­‐alcohol.html Finch, C. (2011). The Art of Walt Disney (third., p. 504). Magretta, J. (2002). Why Business Models Matter. Harvard business review. Retrieved from http://info.psu.edu.sa/psu/fnm/asalleh/MargarettaWhyBusModelMatter.pdf

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References:  (1992,  April).  Alcohol.  (1993).New  C.  (2011).  (2002).  Why