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The Importance of Business Models: a Closer Look at Disneyland

By RSpitters May 17, 2012 1876 Words
 
 
 
 
 
 
 
 
  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
 

 

2
 

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
 

 

3
 

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
 

 

4
 

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.
 
 
 

 

5
 

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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