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Is Disney’s Shanghai Theme Park a Case of Perfect Timing or Nearly Too Late?

It is unclear if this week’s opening of the $5.5 billion Shanghai Disneyland represents a case of perfect timing, or years of missed opportunity.

Disney chairman, Bob Iger has called the park the company’s “greatest opportunity since buying land in Florida.” At a pre-opening presentation Wednesday he called the finished park “extraordinarily great.”

Tom Staggs, the recently deposed Disney COO, who was closely connected with the park, called SDR: “a very long-term proposition.”

The positive view would be to look at the million or so people who attempted to visit the park in the first four weeks of its pre-opening phase. The park, on reclaimed land in Shanghai’s Pudong district, was only open to some 600,000 friends and family in that period, so most of the other would-be visitors had to be content with spending their Yuan in the nearby Disney Town retail nexus. Some got a little rowdy, according to local media accounts, and Disney even readied a guide to park etiquette. Tickets went on sale on March 28 and many days were sold out in a matter of hours.

For the first full year of operation forecasts are for some 15 million visitors. That total compares with 40 million for Disney’s mature twin parks in Florida.

A more nuanced view would factor in SDR’s delayed opening, the park’s pricing strategy, growing competition both from international rivals and invigorated local conglomerates — and China’s slowing economy.

Getting to the point in November 2009 when the park was given the green light, was a protracted, 25-year piece of political negotiation and economic calculation. Disney chairman Bob Iger says that he personally scouted the Pudong site as far back as 1999.

In any less authoritarian country than the Middle Kingdom, Disney might have expected to build up and support its brands through its TV channels. But China has long maintained strict controls on foreign media and still has not granted ‘landing rights’ to the Disney Channel, ESPN or the group’s other flagship networks.

The calculation to go ahead with the park having lost out on that hugely significant deal point was seemingly eased by a combination of galloping technological change and Disney’s developing alternate strategy.

The Web and new media have exploded in China via a rapid rollout of digital cable and Internet backbone and by Chinese consumers leaping generations of technology to video-enabled smart phones that are amped by powerhouse social media platforms. That meant that Disney can to some extent bypass the channels business. (Officially Disney operates five business segments in China: Media Networks, Disney Interactive, Studio Entertainment, Disney Consumer Products, and Parks and Resorts.)

It has increasingly been able to sell its content to local Chinese channels and to the developing streaming platforms. Mickey Mouse first had a 30-minute weekly strip on state-controlled CCTV as far back as 1986.

At the same time Disney has painstakingly focused on localization and the development of its consumer businesses. These have stretched from Disney Princesses, through to co-branded dairy products and even, for a while, to telephone handsets. In 2006, its “Lion King” stage show opened in Shanghai. In 2008 its language school network was complemented by ‘Disney English’ educational programming.

Staff have been progressively relocated from Disney’s Asian corporate headquarters in Hong Kong to mainland China. (That dispersion also reflects the coming of age of other sub-regions, notably South East Asia and India.) And by 2009 Disney had reached a headcount of 3,000 in China. The new park and resort add 10,000 further ‘cast members.’

Disney has been careful to be a good corporate citizen in a country where foreign businesses are both admired and kept at arm’s length. Nationalistic protectionism and technology transfer are the People’s Republic’s modus operandi.

In 2012 Disney China partnered with the Ministry of Culture’s China Animation Group, and social media giant Tencent, to establish the National Animation Creative Research and Development Cooperation. The idea is to train China’s future animation talent – essentially, Disney’s future competitors.

Disney’s own efforts to build a Chinese film business have been sporadic, and on a far smaller scale than its market-leading, local-language movie operations in India. Chinese-language titles including “The Magic Gourd” (2007) and “High School Musical China” (2010) showed corporate willing, but did not reap box office gold. Still the company is persisting and now has top director Lu Chuan making animal drama “Born in China” under the Disneynature banner. This week it announced a Chinese remake of Sandra Bullock’s “The Proposal” to be co-produced with China firm Linmon Pictures.

With park construction under way, development of other businesses accelerated. In 2015 it opened the biggest Disney Store in the world — in Lujiazui, Shanghai.

Millions of newly affluent Chinese are now making their presence felt in overseas destinations such as Hong Kong, London, Paris and Thailand’s Chiang Mai. But tens of millions more are fueling China’s internal travel and tourism boom. And the park has been built with expansion in mind.

That much was again confirmed by Iger at the pre-opening press event on Wednesday. “We are already thinking of what we will do next,” he said. And with 7 square kilometers of land to play with there is certainly room. In case anyone missed the message Iger said that expansion will happen “sooner rather than later.”

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