In spite of everything I’m about to say, I think Disney is a wonderful company.
I think they’ll survive coronavirus, and I hope to be a shareholder some day.
But I think the markets and pundits are seriously underestimating the damage this could do to Disney’s brand. It has been ravaged. Movie production and theme parks are shut down. Theatre admissions have imploded.
And that’s only the beginning.
Because what is Disney really selling?
Disney is selling a fantasy
This is especially true of its hardest-hit assets: the theme parks.
When you go to Disneyland, you’re transported to another a world – a fairy tale land away from the problems and hassles of normal life.
I still remember Disneyland’s television ads from a decade or two ago.
They were sublime.
One of Disney’s best commercials didn’t even show the parks. It just showed parents breaking the good news to their kids: “We’re going to Disneyland.” The ads were mostly compiled of home videos showing the kids’ astonished reactions.
It was advertising at its very, very best.
Because Disney’s ad agency – whoever they were – understood something important.
The parks and rides were NOT the real benefits of going to Disneyland. The benefit was intangible. It had everything to do with how the parent feels.
What parent doesn’t want to be a hero? To see total delight in their child’s eyes? To give their child an early taste of magic?
If you’re a child, to visit Disneyland is to experience magic.
But magic has a caveat: there can be absolutely NOTHING that’s remotely recognisable from the outside world.
The moment you see anything humdrum, the spell is broken and the magic is lost.
Coronavirus has broken Disney’s spell in a big way
I had to laugh the other day when I saw its stock price shoot up.
Considering coronavirus has decimated most of Disney’s revenue, the stock price isn’t down that much.
Turns out Disney may be able to open certain parks over the year…
…by following certain “restrictions.”
Parks won’t be at full capacity.
Social distancing will be strictly enforced.
Temperatures will be taken at the gate.
Masks must be worn at all times.
Hugging Mickey Mouse is a capital offense.
In short, Disneyland is about to become the opposite of magic; it’s about to become a magnifying glass, held over the horrible authoritarian world you’re trying to escape.
Take away the magic and what is Disneyland?
It’s a world of tacky memorabilia, 2-hour line-ups, overpriced food and disgruntled staff in big fluffy suits.
Who the hell wants to spend several thousand dollars to see that?
Add to this, you have the image that’s built in the parent’s mind.
When planning a vacation, nobody imagines anything going wrong. The image you have in your head has to be completely perfect. Some vacations disappoint. They don’t always go as planned.
But you always plan with a perfect image in mind.
Now it’s impossible for would-be Disneyland visitors to plan with this perfect mental image.
They’re asking themselves: “What if my kid wants to hug Mickey Mouse and I have to tell them, ‘no’?”
“What if we get there, and my kid has a slight temperature, and we can’t go inside?”
“What if the whole experience is a total flop, and I go from hero to zero?”
To hell with all that.
Nobody wants that risk.
Wall Street never seems to get it. They just see a headline – “Parks Reopen!!!” – and the algo buying-machines kick into gear.
Wall Street only sees the world in terms of tangibles.
Consumers, meanwhile, are guided by feelings and emotion. These are all intangible. For a brand like Disney, this is what gives it a $multi-billion market cap.
This is what makes it sell.