Niles: Will theme parks help Disney and Universal win the streaming wars?

Will theme parks turn out to be the winning weapon in the streaming wars?

Hollywood studios are racing to become the king of online streaming services as more customers “cut the cord” with cable TV. Disney, NBCUniversal, Warner Bros. Discovery and Paramount all offer their own streaming services, with Apple also joining the battle to carve up the market that Netflix once pretty much enjoyed for itself.

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Companies are spending billions of dollars to create new movies and series to drive subscribers to their streaming services. Those investments are sinking corporate bottom lines deep into the red throughout Hollywood. Yet strong performance from their theme parks is helping to stanch the bleeding at Disney and NBCUniversal. Both companies reported massive gains in their theme park businesses in their most recent earnings calls.

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With the most visitors and revenue in the industry, Disney’s theme parks are giving the company an even bigger financial edge over Disney’s Hollywood competition. Disney reported operating income of $2.2 billion from its theme park resorts and cruise line in the most recent quarter, while NBCUniversal owner Comcast reported $782 million in adjusted earnings for its Universal Parks & Resorts segment during the same period.

That money helped cover some of the losses that both companies incurred launching their Disney+ and Peacock streaming services, respectively. The two companies also share ownership of Hulu.

Meanwhile, Warner Bros. Discovery and Paramount continued to struggle under the expenses of their HBO Max and Paramount+ streaming services. While both companies license their brands for attractions to other operators, neither owns and runs their own theme parks like Disney and Universal do. Paramount once was in the business but sold its parks to Knott’s Berry Farm owner Cedar Fair years ago. Warner Bros. offers studio tour attractions around the world, including the Warner Bros. Studio Tour Hollywood in Burbank, but those welcome only a tiny fraction of the number of visitors that Disneyland or Universal Studios Hollywood draw.

Theme parks are giving Disney and NBCUniversal a billion-dollar head start in the race to capture the online entertainment streaming market. But is that fair?

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I’m not talking about whether that’s fair to Warner Bros. and Paramount. Both companies had plenty of opportunities over the years to invest more heavily in theme parks and attractions — investments that could be paying off for them today. They didn’t, and now they are suffering as a result.

What I question is whether spending this financial windfall on streaming services is fair to the cast and team members whose hard work has made Disney’s and Universal’s theme parks so wildly popular and profitable. Walt Disney World’s cast members recently rejected a proposed $1 an hour raise from the company, with their union saying that they need more to keep up with rising housing costs.

Streaming might be the future of the entertainment business, but theme parks will continue to be part of that future, too. Investing in the people who make the magic in real life is as important as investing in those who put it on the screen.


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