Disney Cruise Line Update

There has been a lot of news lately about the extra fuel costs that Disney is expecting to incur this year.  For instance, the Orlando Sentinel says that Disney recently disclosed that their fuel bill will be about $20 million more this year than last.

At first that sounds like a lot of money and bad news for profitability at the same time.  But you may recall back in June I blogged about what Disney was doing to offset the higher fuel costs. 

For some months now Disney, like the airlines and all the other cruise lines, has been attaching a fuel surcharge to the each cabin based on the number of people per night in each cabin.  So that jump in fuel shouldn't be a big deal unless Disney's finance folks did a bad job of setting the fuel surcharge price (which is unlikely in my opinion).

The only major issue here would be if some group in finance at DCL headquarters made the wrong assumption about projected occupancy for the forward looking cruise schedule.  If the occupancy was lower than expected, then the amount they estimated for the fuel surcharge would also be consistently too small. 

Ideally it would be just right for ever cruise, but more likely some cruises make a little more (higher occupancy) and some other make a little less (lower occupancy).  Overtime the average should hopefully be dead even or slightly positive.  Slightly positive might actually even be a good thing since it would allow Disney to buy larger quantities of fuel on price dips, which would help offset the occupancy worries as well. 

So there are a lot of variables here to find the right fuel surcharge balance:  usage rate, current fuel price, occupancy rate, etc.  All of these play into the base price plus the surcharge price.  You can bet that finance at DCL has a pretty accurate model that they've built over time based on past performance to help them make these decisions.  It doesn't mean they are perfect, but I'd bet they are unlikely to let anything just sneak up on them.

There has also been a lot of talk about slowing down the ships, changing routes to save gas, etc.  I don't find any of the arguements given particularly compelling so far.  After all, the riders are paying for the difference in the fuel charge (and I think it's probably right on that Disney did a good job of estimating the fuel surcharge).

Likewise Disney isn't wasteful just because they can be, ever dollar saved flows straight to the bottom line after all.  People get bonuses for saving money, not for picking obtuse routes because one patch of water in the Caribbean looks different than another (it doesn't right?).

As for cutting fuel consumption, of course there is the new slick coating that the Disney Magic is going to get.  Those of you who have been on a Disney cruise might realize that the Magic is the cruise ship that goes on the longer 7 days cruises and is the ship that just recently returned to Florida from the west coast.  I think that kind of coating is probably standard practice on cruise ships these days, and no doubt others have tested it out and shown a positive response or Disney wouldn't be bothering now.  It will give them maybe a knot or two more speed for the same output power, which over time of course adds up.

As for the engines, both of the ships have 5 main diesel engines which are probably diesel/generator combos.  To that end, the motors typically would turn at a constant RPM that maximizes both fuel efficiency and electric generation capacity, and they are engineered to do just that.  The references I find are that the ships have Sulzer diesels, which might be true, but Sulzer diesel engines today is part of the Finnish company Wärtsilä. 

The genpacks in question are probably something like this, which if you open the PDF on that page you'll notice they turn at a pretty lazy 600 RPM CONSTANT drive shaft speed.  They are rated at 96% efficiency.  Each one puts out about 11,200 kW, which is pretty close to the 15,445 horsepower that Disney claims each of their models puts out.  Oh, and they are BIG.  The model I'm showing here is 43 FOOT long, 12.5 foot wide and almost 17 foot tall and they weigh about 200 tonnes a piece. 

But remember, these boats are driven with ELECTRIC motors.  Those 5 engines drive big electric generators, which in turn power everything on the boat, including the actual propulsion.  To that end they feed a large engine drive unit which in turn powers the large electric motors that hang under the ship. 

Each Disney ship has 2 GE 4160V LCI's, which GE takes great pride in since they are on the timeline of GE electrical's history as well as a picture and note on on their Automation page!  An LCI is a Load Commutated Inverter, which allows the operator to adjust output voltage, amperage and frequency from a given input voltage, amperage and frequency to run electric motors over a wide range of speeds.  In this case think of it as electronic speed control.  If you want to see what one of the insides of these things looks like, check out this PDF file.  I'm not sure if one can drive all the electric motors, but from a marine safety perspective I would assume so for redundancy purposes.

What's great is that unless Disney has upgraded their LCI's from the original units, they are most likely running on Intel 80286 technology (the latest updates and retrofits apparently use a VME mounted 300Mhz Celron)!  And just like the panels on Midway Mania, the operator workstations run on Windows Embedded, the same thing more or less that's in that nice Windows based cell phone your carrying. 

So are they going to save money running slower?  Well, fuel consumption for big diesels like these are usually rated in fuel consumption per kWh produced, or you can convert the given units to that in easy fashion.  So if you need to go slower, you use less fuel, down to whatever the engine needs as a minimum to idle at 600 RPM with no to little load.  At that point if you need to save more fuel, you have to shut an engine down.

Former Disney 'Partner' MGM in Financial Trouble

I don't think it was ever disclosed exactly how much Michael Eisner agreed to pay MGM to license the use of the historic film companies name for Disney's MGM Studios. 

We do know that the original agreement was for a little over 20 years and that MGM sued Disney back in the late 80's over the use of their name in association with a real working studio in Florida built before the MGM Studios Park opened in 1989.

Now it appears that MGM is in financial trouble.  According to a Wall Street Journal article, MGM is eyeing a $500 million dollar line of credit that they helped secure for United Artists.  UA is 2/3 owned by MGM and with the recent departure of the MGM CEO, apparently there is some question about who the company belongs too.  Even Tom Cruise is messed up in this one if you can believe that!

Apparently MGM has about $3.7 billion to repay in 2012, but they have lost money in the last two fiscal years and have a pretty large interest payment on that mountain of debt.

Wonder if they would like to put their name back on a little theme park in Florida for a contract price again? 

I doubt it, but the company that brought us Gone With the Wind and a few of the memorable scenes in the great movie ride is in for a rough ride apparently.

Disney Updates Corporate Officer Bios

Sometime in the last month or so the Disney Corporate site has been updated with new information about the Corporate Management Team.  You can see the main page here.

So if you are interested in who's who at the top of Disney, how long they've been with the company, where they came from, etc.  This should be your first stop.

For instance, there are some web sites that don't like Jay Rasulo much (they call him an Eisner era suit).  Well, it might be true that Jay came to the company during the Eisner era, if you check Jay's bio you'll find that it was pretty early in Eisner's reign as Jay has been with the company over 20 years (that puts him in the mid-80's for those who are math challenged)!  Likewise, he is widely credited with being instrumental in the work of 'saving' Disneyland Paris, since he was the Chairman and CEO of that little holding company we talked about some weeks back that controls DLP.

You'll find that Bob Iger has 4 kids, the head of corporate finance has a BS in Biology, the corporate strategy guy has a BS in Mechanical Engineering from MIT, the head security guy used to for 'the Arnold' (that's the Governator to you and me), and that the head of the Internet Group was formerly director of business planning for Consumer Products.

So it just goes to show you that you can get anywhere in life with just about anything if you put your mind to it!

And to which I say, 'Amen!'.

No Way That Disney is Using GPS for a Ride System

Okay you guys, I've been reading all the hype and hoopla about the new rides at DLP.  All of them seem pretty cool and pretty reasonable until you start reading about how the ride system for the new proposed Ratatouille ride will supposedly use GPS like a ride in Tokyo (Pooh's Hunny Hunt).

First let me say, as an Engineer and as a guy who works for the US Government, there is no way a ride system like this uses GPS.  Right off the bat, it just doesn't pass the smell test. 

First, if a ride system used it, it would presume GPS is incredibly accurate, which by itself IT'S NOT (for lots of complicated reasons related to not only receiver error, but also the way the satellite system is designed).  Secondly, the ride is in a building and any of you who own a portable GPS will know that it doesn't work inside without a lot of work.  Thirdly, most GPS receivers under $1,000 have typical error rates of something like not greater than 15 meters 95% of the time.  That means 5% of the time, you could be anywhere in the world and still meet the accuracy requirement.

You can get fairly accurate with Differential GPS, but even that requires an alternate radio with a position established by other means (usually surveying) that feeds a radio signal to a receiver to augment the satellite.  But even with a good receiver, this is still usually only 1 meter or so accuracy ON AVERAGE.  That means the ride system would have plus or minus 6.5 FEET of slack, which is just bad!

Lastly, you could also check Wikipedia, older Laughing Place articles, etc. to find out that it uses a highly customized, and very secret local positioning system. 

My guess would be that it uses a combination of radio triangulation, markers on the floor/walls, and maybe even a laser range finder type system, which are very accurate.  However, given that one Laughing Place article noted that cell phones interfered with the system, and therefore were banned from the ride, my bet (if that is true) would  be based on a variety of radio based transmitters using a local datum doing something LIKE GPS using differential time signals to establish the cars location. 

If you own an iPhone or a phone were Google Maps uses the radio transmitter to show you location use something very similar using cell phone towers.  It takes at least 2, and preferably 3, to get a decent CEP (circular error of probability, which means how big a circle has to be to make sure you are INSIDE it). 

If you have a highly accurate clock (which you CAN use GPS for BTW) and one highly precise physical location to use as a datum, with enough antennas in the building and a fast enough computer on the vehicle, you can find yourself with pretty darn good accuracy.

But it is NOT GPS.  

If you want to see some fantastic survey pictures of DisneyWorld, go check out this web site!

Disney.com Update Announcement

This showed up in my e-mail today announcing the new updates to the Disney.com web site that we talked about the other day. 

Many of you probably should have gotten a copy of this too if you are signed up to get e-mails from the Mouse.  If you are a true Disney fan and you aren't signed up for announcements, ask yourself 'Why not?'!  If they can't find you, they can't send you special deal love.

Click the banner below to go to a web rendition of the e-mail.

 

Great news — there are new features at Disney.com!

Disney Biz News Around the Web

Just like the Mom's Panel web site, which is a social site designed around helping people plan their vacation to the Disney Parks, Disney recently started another new social site.

This one is on their family.com web site here, and is called Disney Family Community. The site is designed around letting Mom and Dad share information about parenting. Disney Family Group’s Vice President, Emily Smith said this about the new service:

'Disney Family.com Community creates a new online forum that combines social networking and insightful content to bring moms and dads together to make important connections while having fun.'

Likewise, Forbes has a lengthy article up today with more about the Disney.com redesign, with a heavy focus on the upgraded mobile phone experience we touched on in earlier this week. Ostensibly giving you and I more of what we want: mouse house content. While giving Disney some more incremental revenues, a la iTunes movies, etc. Hold onto those data minutes Mom and Dad!

Lastly, in case you missed it, Jim Cramer of Mad Money fame interviewed Bob Iger live on the show the other night. You can see the video and article here. Mr. Iger and Mr. Cramer talk for a little bit about how Disney is more like Procter and Gamble in being a business focused around brands and brand leverage across all the platforms the company has.

Winnie the Pooh is a huge brand for the company for instance. And you see him in Parks & Resorts, Studio, Consumer Products, and online! Talk about leverage there ole' Pooh Boy!

PMI PMP

Okay, so this has very little to do with Disney directly, but since I noted the following at the bottom of my home page for this blog, I'm gonna post about it:

Likewise, in the interest of full disclosure, I'm highly interested in being employed by the Mouse . . . so take this as partly fun and partly my cathartic outlet along that journey.

Today I achieved another major personal milestone in that quest:  I passed the PMI PMP exam!

PMI is the Project Management Institute and the Project Management Professional (PMP) designation is fastly becoming the commercial gold standard for people who know something about project management (my current employer, the Department of Defense has also had a program management certification program for some time called DAWIA, for which I have been accredited by for quite some time now).

Disney does not yet require such a credential in general, but it does show up occasionally as a 'Desired Qualifications' requirement.  I also haven't yet been able to figure out if Disney employs any type of formal Project Management Office (PMO) organization.  From what I can tell I suspect not, at least not company wide anyhow.  I do know however that Universal Florida recently advertised for several positions in just such an office recently, so presumably they've chosen to go that route to some degree.

A PMO is a group of people who are responsible for sharing best practices, lessons learned, providing project management training and mentoring, etc. across an organization.  In the long run such an organizational construct should hopefully make projects more repeatable, less risky, and with higher quality than would be done otherwise.

Anyhow, it's a 4 hour, 200 question exam and I am glad I got it!

Disney and Free Gas?

Okay, so probably like most of you when I read this I thought "Huh?".

Disney just said not more than 3 weeks ago that things were going well, bookings were solid, not expecting more incentives than in the past, yada yada yada.  So what in the heck is going on?  Did the bottom finally fall out suddenly?

Well, it turns out not to be the case of course.  The free gas promo is being offered by the Swan and Dolphin (or the Swolphin if your a WDW Today Podcast listener, NOT Disney.  Of course like most things you have to read the fine print to find that out.

Of course most of you also know that these architecture award winning hotels were designed by the famous postmodernist architect Michael Graves (who also went on to at least lend his name (if he didn't design them himself) to a large line of kitchen accessories sold at Target several years ago.  Both hotels are 4 Diamond rated by AAA (and have been for and impressive 17 years!).  Both hotels are also part of the Starwood family (one being a Sheraton and the other a Westin).

Nothing like the press at large to muck things up.

Disney.com Update NOT So Small After All

Last Thursday Disney announced what many probably saw as a minor update to the Disney.com web site.  The press announcement somewhat downplayed the upgrades as well.  You can read it here.  Nothing could be further from the truth!  Let's see why.

The main online web portal still looks much the same at first glance, but lots of subtle and good changes have been made.  The biggest change you'll notice right off the bat is what used to be called Disney XD is gone.  Okay, not really gone per-say.  A better way to put it is probably more integrated.  All of the features that used to be in the XD web area are now 'sunk into' the main site experience (you'll catch notes in places that these new areas are called D-pages).

Things like Chat, your list of Favorites, etc. from XD are  now persistent across the first 4 areas of the new site and are kept in what's called your Backpack. 

The areas are called: Games, Videos, My Page and Characters.  Each of these used to be a semi-separate area on the XD page, but now are tightly integrated with the main portal and highlight as bluish-silver buttons on the toolbar (once you leave the main page, where for some reason they are all still dark blue), vice the darker blue of the other web areas.  As long as you stay on one of the silver button areas, your chat windows stays open as does access to your favorites. 

In the Games area, all of the games are now 'findable' in one area.  Playing the web based games also allows you to earn D-points, which can then be spent on exclusive content on the web portal, like videos of interviews, customizations for your own personal portal, new chat phrases, etc.  There are a variety of games to play both on the computer and on your mobile phone.  This area also includes links to Club Penguin, Toon Town, Pixie Hallow and the POTC MMORGs, though clicking on these will obviously have you leave your portal.

The video area is just what it says, a link to tons of videos.  These can be searched, watched and added to your Favorites list for easy access from your page.

Each user login also has it's own My Page, which allows for some themed customization (some of it free, some requiring d-points).  From the first page you can click on 'Create Your Own Page' which takes you back to what looks like the old XD desktop, but updated with the new backpack and toolbar.  The My Page area also lets you click to view other people's personal pages too.

Lastly is the character area.  This area contains the links to pages that have info about a whole host of popular Disney characters. 

The biggest structural change is the addition of an integrated mobile web portal to the main site.  The specific web link ends up being http://m.disney.go.com.  That's not particularly important, since the main disney.com domain will redirect you automatically if accessed from your phone however. 

From the phone you can access parts of the new online area just like at your desk.  Login on your phone for instance, and games you play earn d-points for your profile just like from your computer.  You can also watch videos and view parts of your own personal page through your 'backpack'.  No Chat from your phone though.

The mobile page also gives you links to the other areas outside of the new experience areas just like on the main page:  Movies, Television, Music, Live Events and Travel.  Not represented on the phone are the Parks and Shop portals.  The Travel point on the mobile side just gives general info about traveling around with Disney, but that might be different on different phones.

With only one phone (an older Palm Treo 700p) on Verizon to look at, I can only speculate from what I see that the portal has enough logic in it to determine some of the things about your phone browser and customize it slightly to your experience.  Those of you with an iPhone are going to have a much better experience than me with Safari vice Palm's pretty crappy browser called Blazer (which is also the default browser in the new Palm Centro as well.  Bleck.)  I can't watch any videos for instance, which I'm sure work fine on an iPhone.

Is it perfect?  Not quite.  It still has a few warts in my opinion.  For one, the way in which the new pages are integrated are almost so subtle as to be missed by the casual viewer.  I'm not sure the differences from the main page and the subsequent pages using different colored toolbars for an area to mark what replaced the XD experience is apparent enough for instance. 

Disney keeps a pretty tight lid on things like chat of course (this ain't a Skype or iChat replacement by any stretch), but the fact that you can go from the Games link to the Movies link and loose your Chat window and history with no warning is an interesting design move too.  If you surf right back, your chat window is gone and doesn't restore since you left the main area.

Likewise, I'm certain the phone experience is going to vary wildly by phone model.  This is less of Disney's fault than that of a lack of standards and capabilities on most phones with their small screens and embedded operating systems.  From what I can tell, they've done a respectable job of working around those fact as best they can.

Lastly all of the new areas on the web are still done largely in Flash, just like they have been done since the Disney.com got its major re-do.  If you hate Flash, block it, or your computer runs it slowly, your experience will still suffer.  Additionally if you are running Vista 64 with IE in 64 bit mode, their is no current Flash player so you'll be out of luck there too (it should work fine in 64 bit Vista with IE set to the stock configuration of running as a 32 bit app however). 

On my computer at home it seems to run just fine with our DSL connection and both in IE 7 as well as Firefox 3, but like most Flash apps it crashes on occasion and takes the whole browser with it.  This is something Microsoft has promised to fix in IE 8 (by crashing only a tab vice the whole browser) and it remains to be seen what if anything Firefox does similarly.  For Adobe's part, they've largely moved on from Flash to Air, but that makes little difference here.

Overall, it's a MASSIVE update when you look at it in detail.  Disney deserves a lot of credit for launching what is in essence a new portal with nary a burp or hiccup in service.  That's a big deal.  Bringing the connected experience to your phone is no small feat either. 

Good job guys!

Does the Closing of the NYC Disney Store Say Anything about Four Seasons Expansion?

Mainstreetmom made an interesting observation in the comments of my post yesterday about Disney Parks & Resorts closing the NYC store.

She noted this below:

Where the store is now it is amongst the highest of the high end designers about a block away from The Plaza Hotel. It is not necessarily where you would want a "tourist family" oriented store. I think that they hoped to attract a higher level clientele for this store but I think that they missed their mark.

Which got me to thinking more about all those high end rooms going in and around Disney World this evening.  Does the fact that Disney is closing this store to move someplace else more in line with their clientele say anything about how they are holding up with the more 'well to do' visitors?

You've got the Four Seasons hotel and associated properties going up on the now de-annexed property on the northeast section of the property.  And then in the mid-east part of the park you have Hilton company building a new Hilton and a Waldorf Astoria being built at the Bonnet Creek Resort.  None of these are particularly cheap stays (one night will probably make all but the most expensive rooms at Disney properties look like a moderate in terms of price).

Of course there has been a lot of speculation about the Four Seasons project given that the Four Seasons Hotel and Resorts is owned by Prince Prince Al-Walid bin Talal bin Abdul Aziz Al Saud (and Bill Gates), the same gentleman who owns 10% of Disneyland Paris's public stock.  He has been reported to have made the restructuring that saved Disneyland Paris from bankruptcy by making that stock purchase possible.

The Bonnet Creek Resort is that 482 acres of land tucked in between Reedy Creek Improvement District and I-4 behind Caribbean Beach.  That land is owned by a company named Bonnet Creek Venture, Ltd. which is a partnership between Brooksville Development Corporation of Orlando and the estate of the original owner, who I have seen referred to as Taiwanese investor Ling Kai Kung.  Mr. Kung apparently did not like Disney, though it's quite possible that he just didn't think selling out to Disney was the best use of his money/investment. 

Regardless, I guess the question is if Disney can't get traction for plush and other items at a store in the most swanky part of New York City, how does that bode for the swanky hotels in the Disney World area?  I'd say not very well, but that's just me.

At first I thought 'Hey, Disney doesn't really care at this point I reckon, since neither of these hotels will be their problem.  Likewise Disney continues to have high occupancy levels at their own hotels, with no current announced plans for expansion.'

But then I saw this on the Disneycareers.com web site this week within the Imagineering group (you might recall from the bottom of my home page that I want to work for Disney, so I watch this web site religiously to say the least):

---

 

Marketing Manager

---

City
Celebration

State
FL

Position Type
Full-time

Requisition ID
174323

---

RESPONSIBILITIES:

Manage the creation and implementation of marketing strategies for multiple residential resort communities including the Bonnet Creek/ Four Seasons project. Key responsibilities include developing a strategic marketing strategy using a variety of marketing channels including print advertising, promotional events, co-broker events, public relations strategies, and web site development to achieve sales and marketing objectives. In addition, the position will support sales activities through the development of sales collateral, sales center displays and other necessary sales center tools and applications. The individual will manage an external team consisting of a marketing consultant(s), research consultant(s), and a public relations consultant to achieve successful lead generation within a defined marketing budget. Strong coordination skills are required to interface with members of the project management team, development team, sales team, and concierge teams in addition to key internal stakeholders at Walt Disney World and Four Seasons.

REQUIRED QUALIFICATIONS: (These are the minimum qualifications you need to be considered for the job.)

• Bachelors Degree in Marketing or Business Administration or equivalent
• Minimum 5 years experience in marketing residential developments including luxury resort properties
• Demonstrated experience with international residential resort marketing preferred.
• Demonstrated ability to create strong relationships with brokerage community
• Demonstrated strong analytical skills and proficiency in evaluating research to inform the creation of actionable strategies
• Demonstrated strong verbal and written communication skills, including strong presentation skills
• Demonstrated interpersonal skills and ability to influence key stakeholders at all levels, influence others, and serve as a thought leader
• Ability to be comfortable working in an intense, dynamic environment
• Solid experiential base that includes business development and loyalty

---

 

So obviously Disney hasn't given up TOTAL ownership of that chunk of property on the NE side.   I'm not certain what that deal is entirely, and we may never know publicly. 

Which brings me back to wondering then if the shop in NYC was really maybe a trial balloon to see how Disney might do with these higher end customers?  If you think about it, it's pretty brilliant if that's the case on even just a small level.

Interesting Thoughts on Disney NYC Store Closing

You know, the interesting thing about this to me is that the NYC store was run by Parks and Resorts, vice the Disney Store arm recently re-acquired from Children's Place.  The Disney Store is run out of Consumer Products.

So domestically anyhow, Disney will be back to two World of Disney stores:  Florida's monster Downtown Disney (watch out for Stitch, he spits!) and California's smaller, but equally as nice, Downtown Disney store out west.

Surprisingly, Disneyland Paris does NOT have a store at The Disney Village.  In fact, there are NO shopping venues at this location, only entertainment ones. 

Tokyo Disney has a very highly themed shopping area, but no World of Disney/Disney Store that I can find.

And of course Hong Kong doesn't yet really have anything like Downtown Disney/Disney Village, etc.

Disney has HOW MANY Lawyers on Staff?

Okay, so I knew that the Disney Company had a few lawyers inside the company, but I had no idea they had THIS many.

According to this Law.com article, Peter Wiley, the head of the legal end of things for Europe, says that Disney has 350 INTERNAL lawyers company wide. 

Like HR and other key company wide groups, most of these lawyers according to Wiley are embedded in the specific lines of business.  Likewise, like Imagineering, IT and other parts of the organization, they keep the general knowledge and talent INSIDE the company and outsource only specialty work.

It would make Lou Mongello proud.

 

Disney and SeaWorld

There has been a lot of speculation over the weekend on the web and on the boards about Disney being interested in SeaWorld. 

So let's look at this a little more.  For this quick and dirty discussion we'll look at it from a strategic business perspective via a good ole' SWOT analysis (Strength, Weakness, Opportunities, Threats).

We'll start with Strengths if Disney were to buy SeaWorld from InBev.

Strengths:

1. Disney doesn't have a water based animal park per say, so this would clearly be a non-conflicting addition.
2. Takes out a competitor in the Orlando market 
3. In theory leaves Disney as the undisputed parks/resort destination in central Florida.
4. Has a strong brand
5. Gives Disney a boutique park without having to build it.

Weaknesses:

1. Not part of Reedy Creek, so comes with additional baggage not seen inside RCID
2. Has no real character development/story to energize with the studios, a Disney must these days outside of Shamu
3. Nowhere close to existing Disney facilities, increased transit times and associated costs to ferry customers.  These could be especially bad in traffic.
4. Adds a 3rd probably unnecessary water park
5. No fire sale (InBev wants MAXIMUM money, not a cheap deal)
6. Significant capital investment to renovate parts of main parks to Disney standards, plus re-training costs for employees, etc.
7. Only Orlando is close to a Disney area, but deal would end up with parks in San Diego and San Antonio. 
8. Might also have to deal with Busch Gardens and other properties outside of SeaWorld franchise, which may not be desirable.
9. Contract already in place for additional expansion in Dubai.  MAJOR cost to either go through with it or even back out of it.

Opportunities:

1. Chance to add significant deal with InBev for promotion and distribution of their products through the Disney parks
2. Ability to add another line of profitable plush and marketing to Consumer Products
3. Potential way to reach additional families, especially the hard to get capture Tween market in both boys and girls.
4. Significant addition to Disney Envionrmentality goals created with Animal Kingdom
5. A stake in other markets for potential DVC or other Disney regional entertainment properties.

Threats:

1. If Blackstone group goes ahead, makes them a much larger force in Orlando.  Other markets may not be as much of an affect (ala Six Flags and Cedar Fair, whom Disney doesn't really see as true competitors)
2. Dubai World group would suddenly be a competitor.
3. Potential other competitor in Candover Group.
4. Some potential customer loss from ticket tie in with Universal if Blackstone wins, but probably minimal.

So if you read all this, frankly unless it's a VERY cheap price, I would expect Disney's strategic plan to be a feint. 

Just like Google in the recent FCC spectrum auction, if you are in this position you never exit the board early.  Instead you stay around to defend you position, even if you have no end intent in acquiring the property.  Your plan is to play the game as a defensive measure protect your turf. 

Here that might be a number of things from trying to affect the packaging of the deal, to bidding to keep the price from being too cheap and creating a false economy of scale for the new buyer.  Some of that you have some measure of control over, other parts you don't.  But if you leave early, you'll never know.

Plus, if you are Disney you probably would prefer that it go to someone else OTHER than Blackstone, but even that's not a deal breaker I think.  The 3 park setup hasn't particularly hurt any of them.  The inevitable tie-in with Universal might pose a slight issue, unless you can influence the price and the terms to be very onerous to the buyer, just as Disney most likely tried to do with Harry Potter a little. 

Would they have done a Harry Potter deal?  For the right price, I'm sure.  But if JK Rowling is truly as hard to work with as the web leaked and the price was as high as it was, then you play the game to make sure the other guy doesn't get TOO good a deal. 

I don't think Disney has much to loose here though, even if Blackstone does end up with it.  At best it's addative to what they have already, so it's certainly not going to sink Disney World overnight and only in Florida.  It would take several years to shift the balance more away from Disney.

So that's my bet for Disney and SeaWorld.  At first blush it sounds cool, but when you look at it, it really only affects Florida . . .  and comes with a lot of expensive baggage to boot. 

If you have other thoughts to add to the SWOT above, drop me a line.

Ever Wonder About Disney and Their Web Hosting?

I was out poking around the Internet the other day for some random statistics on web usage and came across an interesting link in another technology blog (though now I can't find which one).  It just so happened that particular blog was actually talking about the OS and systems that Apple is using for hosting .mac and now Mobile Me.  Specifically that blog talked about using a web site called Netcraft to figure this out.

So being the techno-geek and Disney wanna be that I am, I typed in disney.com just to take a peek.  So it appears that Disney has most of their web site destinations registered through Disney Worldwide Service, Inc. and the company they acquired back in the late 90's when Michael Eisner was headed into the heady Internet days and that spawned 'go.com' called Starwave Corporation.  

You can read more about Starwave in this Wikipedia entry.  What was Starwave is now a main hub for the Disney Internet Group in Seattle, Washington.  You can go to the Disney careers web site and search by Washington state to see 36 jobs open there at the moment.

Both registrations hold a broad mixture of Disney web sites.  I'm sure there is some order to them if I took long enough to think about it, but I'm not really up to it at the moment.

The other interesting thing that Netcraft tells us is that Disney uses a variety of server types.  Many are Microsoft (IIS 5 or 6 which means Win 2k or 2003 server respectively).  Just as many if not more are Apache, which would presumably mean some version of Linux.  In the enterprise space their aren't that many serious Linux distro players, so it's probably 1 of just a hand full like Redhat or SUSE. 

Almost ALL of them are being run behind a F5 Big IP setup.  One of the greatest advantages to something like Big IP is load balancing, especially across a cluster of servers running the same thing. 

According to domaintools.com, Disney Enterprises holds 'about 6,507 domains' and the primary name server for 'ORNS01.DIG.COM' holds 8,457 domains.  For $32 bucks you can get a listing of all of them too, just in case you had free spare time.

Last is alexa.com and their web site usage information.  Alexa says that Disney.com has a current web ranking of 196 (that is, it is the 196th most important destination on all the web), and 53rd in the United States where almost 72% of their traffic comes from.   Of course ESPN.com outranks Disney.com by a wide margin.

Oh, and that little patch of land up in Emeryville, CA?  Their still using Akamai (the preferred digital distribution company for most of that fruit related company run by Disney's largest share holder) and running on Redhat. 

Calvin and Jobs?

Many of you are probably familiar with the great and popular cartoon strip by Bill Watterson named Calvin and Hobbes. 

Well, it seems someone with a bit of a creative bent has penned a few funny take offs on the little boy and his pet tiger.  The title of the strip is 'Calvin and Jobs' where the little boy still looks like Calvin, but instead of a stuffed tiger names Hobbes, he carries around a stuffed man-doll named Jobs.

Here is a clip of one of the strips in which they discuss this summers Pixar animated movie WALL-E. You can see more at this link (thanks to the folks at Gizmodo for the link, but this being a 'family blog' their title was a little sketchy).  The others aren't much Disney related other than the fact that Jobs is off course the largest individual shareholder.

I sure hope Steve has a good sense of humor. 

Disney Adds to Its Growing List of Websites

Both Disney Corporate and the ESPN subsidiary today announced separate online deals to add to the burgeoning trove of Disney owned and backed websites according to the LA Business Journal.

Disney added to their social network by picking up RasingKids.co.uk.  This site adds some foreign entries to Disney's already growing domestic family oriented websites like Family.com.  The article says they acquired a database of almost 100,000 families, presumably all in the UK, a prime area for Disney World travelers.

Likewise, ESPN today announced the purchase of Racing-Live.com, a popular French based portal for the European market to Formula 1, Moto GP, and other popular racing formats like enduro and and rallies (but no NASCAR, which is really an American phenomenon still). 

No details were disclosed on the purchase prices, but it looks like cool stuff.

More Siemens Technology in the Parks

You might recall the rather lengthy article that I wrote last month on the design of the Toy Story Mania attractions.  In that article I dissected the attraction from some operator screens and in the end we found out that much of the ride was built on Siemens integrated Programmable Logic Controller (PLC) technology. 

Siemens has been in the PLC space for some time, along with the likes of GE and Allen Bradley to name a couple of other big players. 

A PLC is basically a small, special built computer that reads a variety of sensors (speed, temperature, humidity, etc.) and then makes 'logical' decisions based on those inputs in real time.  They are used throughout the manufacturing, building control and now even in cars. 

A programmer programs boundary conditions, control conditions, exception handling (what to do when a process can't be kept in control),etc. to control a process, or a set of processes.  Then the PLC's are usually connected on a larger bus network to a set of master control systems that display, log and allow remote control of those processes.

For instance, when I was in college I worked for our campus power plant which used PLC's in two very typical arrangements.  One was in the power plant itself: controlling everything you could think of from the scale the trucks drove over coming and leaving the plant to the high pressure steam coming out of the boilers and going into the turbines, just to name a few. 

Likewise, when I worked there we were in the process of converting all of our campus buildings to use an integrated PLC based system from Johnson Controls to control the building environment:  temp, humidity, air flow, set back, etc.  Which we could bring up on a set of computers in our office to ensure a buildings HVAC plant was running at efficiency.

So why bring all this up again?  Well, it's a very important area for people in Imagineering that's why!  All of the rides you and I love are really all real time systems, many of them based on manufacturing techniques that were invented at the height of the industrial revolution and then re-purposed.  Think of all the rides that are somehow inspired by Henry Ford's production line for instance.

In those days of course, there were no computers, so the logic in the system was human.  But we humans are notoriously slow and not always the most sequential thinkers, especially when it comes to high speed processes. 

We tend to get distracted, emotional, etc. when things start to happen.  Just think of Lucy and Ethel in that famous chocolate assembly line skit!

 

Of course Disney is not only in the entertainment business: first and foremost (like us in the military) they are in the safety business.  Safety always comes first (and security usually a very close second).  If people aren't safe, the entertainment factor doesn't matter.

So that's a long lead up to say that this short blurb at Design News shares what Imagineering has been up to from a safety perspective on their new ride control systems.

It seems according to the article and Imagineer Jody Gerstner that for years Disney has been building their own custom (and now probably expensive) safety control system, but doing it in hardware.  That system has been standalone, but I bet it's been in use in a general sense for sometime. 

With Toy Story Mania and Imagineering's partnership with Siemens they apparently had the opportunity to do some experimenting.  It appears they were able to do all that custom hardware function now in one tiny, little software controlled PLC controller from Siemens.

That little box has only 1.4 megs of RAM, but it can monitor and control 1024 digital inputs/outputs (i.e. on/off logic) and 256 analog channels.  The truly amazing thing is that it can do all that monitoring AND make a decision in SUB-MICRO-SECOND time, like really tiny fractions of a micro-second.

So we can thank all those really smart Imagineers for keeping us safe for all these years with the custom built stuff.  Disney has a phenomenal safety record after all.

And with tomorrow's design, it just might be a small little box tucked in a dark corner that saves that teenager's butt next to you when he steps off the platform and in milliseconds the whole ride comes to a screeching halt. 

Walt would be amazed. . .

Disney Opens Fall Internship Positions

If you, someone you love, or just someone you know has ever wanted to fill an internship position at Disney World in Florida at least, now is the time to apply (honestly, I haven't searched in California, but it may be true there as well).  Most of these appear to be for a January start and application deadlines are in early October.

Disney World's number of open positions on the Disney Careers web site this week went from around 80 to over 240!  Many of them are internships for various parts of the resort in Florida.

Internships from what I've seen typically require you to be a college Junior or Senior in a area closely related to the internship in question (theater might be a  required area for a stage manager internship for example). 

I'm sure competition is stiff, but it could be fun!

Good luck to any of you if you apply, all the rest of us will be jealous later!

it's a small world after all!

A study conducted by Microsoft researchers using Instant Messenger messages in aggregate have proven that everybody in the world is only 6.6 degrees away from anybody else.

You can read the Washington Post article here.

So Walt and all those folks that worked on the it's a small world had no idea how right they were.

Hong Kong Disneyland

In the same vein as the blog I wrote about Euro Disney last week, let's take a brief look at Hong Kong Disney this week.

There are a few major difference between Hong Kong Disneyland and Euro Disney that make their financial situations different (irrespective of the age of the parks).  

For one, unlike the domestic parks and Euro Disney, Hong Kong Disneyland is NOT a publicly traded company.  So no convoluted relationships among limited liability companies, stock holders, management companies and property owners. 

Instead, it is a partnership between The Walt Disney Company and the Hong Kong government called Hong Kong International Theme Parks Limited.  The government of Hong Kong owns 57% and Disney owns the other 43%, so they aren't quite equal partners, but partners non-the-less.

The government of Hong Kong also put up most of the money for the construction:  $2.9 billion.  While Disney put up only about a reported $314 million.  Additionally the Hong Kong government chipped in an additional $13.6 billion in infrastructure to make the area usable and provide public transportation, etc. (which they presumably would have had to do anyhow, regardless of Disney).

Likewise, the Government and Disney apparently both hold the right to 'sell down' their equity in the project to outside investors once the resort area is operating to their satisfaction. 

That keeps the deal cleaner than the Euro Disney deal on the front end anyhow, and allows for each to make money in the long term if they sell their shares.  Though presumably each has the right of refusal over who it actually gets sold too.

Disney shows that the total current debt in the park is about $3.6 billion (they call it net borrowings on the press release), of which Disney has potential liability for about $1.2 billion according to the GAAP measures filed with the SEC. 

On the income side as part of the agreement Disney earns somewhere between 5-10% of gates receipts as royalties plus an annual management fee. 

I'm not certain if the Hong Kong Government gets anything directly out of the parks.  My guess is given the way the deal was announced that they have been banking on long term tax revenue and other area growth to pay back the investment on their side. 

Of course all the hulalaboo right now is over a small paragraph in Disney's SEC filing here about the current state of the loan agreements for the park, which as partners Disney and the Government presumably were they guarantors for (otherwise Disney would only have a liability of their initial investment on the books for GAAP measures). 

There are two loan types in use by the Hong Kong International Theme Parks Limited:  a commercial term loan and a revolving credit facility (kind of like a credit card).  The loan facility had specific performance metrics built into it that would have kept the credit line in effect originally until 2015.  The park didn't meet those goals in 2007, so the loan facility had to be renegotiated.

That renegotiation got rid of the performance goals, but it also made the entire loan due at the end of the 2008 fiscal year.  Currently the partnership owes about $300HK million (or $38 million US) on the credit facility due at the end of the year.

Disney has agreed to waive the management fee for 2008 and 2009 and defer the payments from the gate until a future date.  Unfortunately that just shows how little the gate has taken in recently.

Likewise, Disney has offered to payoff the closing credit line and issue back a loan from TWDC company as well as offer to invest more money in other expansions to the park.

If Disney and government can't come to an agreement, then the LLC will have to choice but to seek new commercial credit to replace the facility.  That would presumably cost more (partly due to the financial conditions).  Additionally the LLC would probably also have to pay fines and extra interest in the event they could not get such a loan in place in time.

That all sounds great.  However, the Hong Kong Government no doubt is weighing their options as the primary stakeholder carefully.  There is a lot of concern expressed in the press about Disney's overtures in Shanghai to build another resort there. 

People in HK are none to pleased about that prospect at the moment given that they aren't making back what they expected on their initial investment.

It just goes to show that investing overseas is always interesting, rarely dull and expected and sometimes makes for strange bedfellows.

Maybe HK will pay to keep Disney out of Shanghai like the Green Bay Packers are trying to do to keep Brett Favre from playing in the NFL next year?