Talk to me about Galaxy's Edge, the largest expansion at Disney's Theme Parks. What was the pressure of getting it just right for Star Wars fans because they're particular?
They are particular and I think we started by wanting to please them the most because we knew that if we pleased them, then we'd please everyone. By pleasing them, what we meant by that is one, it has to be big and bold because that's what Star Wars is, and it's what Star Wars was. It has to be artistic in nature meaning there has to be a lot about it that has elements of art in it. It also has to be technologically advanced. Of course, lastly it had to be from a detail perspective, as Star Wars as it gets. What I mean by that is right down to the droid footprints on the turf on the floor.
Do you have a favorite element? Is it Millenium Falcon: Smuggler's Run? Is there something that's your favorite part of it?
Well, for me it's the fact that you can step into this place and actually feel like you are in Star Wars. We're on the planet Batuu, if you didn't know. Batuu. [...] on the outer edge of the galaxy. There's a plaque when you walk into Disneyland that says, "Here you leave today, and enter the world of yesterday, tomorrow, and fantasy." It was Walt's way of saying leave everything behind. You're coming into a new place, whether it's yesterday, or tomorrow, or fantasy, it's not where you're from.
That's what this is in many respects. You're leaving your reality and entering the reality of Star Wars.
What does this do to, I guess expand the story of Star Wars, a story that's 40 years old, that keeps finding new angles, and new directions?
That was something that we asked ourselves too. We wanted this to be both an homage to the past, we're big believers in respecting legacy. Also, a strong eye, a directional sign into the future. For instance, there are elements in here that will appear in The Mandalorian, which is a Star Wars series that will be on Disney+. There are elements in here that will be in the next film that comes out at the end of the year, J.J. Abrams' film. There are elements in here that probably will appear in future Star Wars films yet conceived. This is a great blend of the past, present, and future that is Star Wars.
Can you tell me anything about the Rise of Skywalker? Any little tiny nugget? My son, my nine year old is obsessed with what does the title mean, the rise of Skywalker.
That's purposeful. So thank you. We wanted people to ask themselves, "What does that mean?" I think if I were to tell you, well I'd probably have to go to Star Wars jail. I'm not going to do that. No, I can't say much about it except that J.J. [Abrams] designed it in a way to bring closure to what we call the Skywalker saga, which really did begin with George's first film in 1977, when we first met Luke and Leia, and the Star Wars band.
Peel back the curtain for me: What was the toughest part, or the challenge of creating this land, especially when you're under the eyes of Star Wars fans who really, really love this story?
There was never too much detail. We did sweat all of the details right down to their finest points. I think the biggest challenge was, at some point, we had to stop and actually open the place.
Although Walt said, "Disneyland will never be finished as long as there's imagination in the world." I think our Imagineers are never going to stop tinkering with this from a detail perspective. I think the biggest challenge here was just making sure that this place, and every aspect of it is true to what Star Wars is, which is, in many respects, a magical world or worlds with the most diverse set of characters and creatures you've ever seen.
You talk about never stop tinkering. Analysts predict you're going to spend $25 billion in your theme parks over the next five years. Look forward for me: What can we expect in the years ahead?
The good news is that we are building from a strong foundation. Over the last decade we've improved the returns on invested capital in our parks, and [...] business significantly.
Whether you look at Cars Land, and what we did with California Adventure, from the Toy Story Lands that we built, or Shanghai Disneyland, or Pandora: The World of Avatar, or Star Wars: Galaxy's Edge, this has become not only a good business, but a better business for us. As we look to the future we're opening another Star Wars land in Florida [...] this summer. We're building three new cruise ships. We're just about to open Soarin' and a Beauty and the Beast attraction in Japan. We're expanding Disneyland Paris, and Hong Kong Disneyland. We're building Zootopia Land in Shanghai. There's a lot going on. It's great because it's a good business.
If you look at the returns not only on our invested capital, but of the segment overall, this has become one of our most profitable businesses as we've expanded around the world. That has justified greater investment.
Attendance globally was up like 5% last year. If you look just through the prism of what people spend at your US theme parks, and their tickets, the American consumer looks really solid.
Are you concerned at all about the consumer faltering 10 years into the economic recovery because of a trade war? Maybe Chinese consumers visiting parks less often? Or even a trade war hurting the US economy?
We take a long-term view on almost everything that we do. As a forinstance, the decision to invest in Disney's California Adventure and Cars Land, and to build two new cruise ships, it was made in the 2008, 2009 period when we were looking at the worst economic downturn we'd seen in our lives. But we knew that we were building things, and businesses to last a long time. That's how we look at it. We have short term concerns, sure. We don't see signs that a trade war is hurting us at this point.
I was just in Shanghai, and didn't detect any anti-Americanism, or any slow down in terms of the Chinese tourists. Visitation to the United States from Chinese we hear is down. It's small to our parks. We draw from much larger markets outside the United States in terms of visitation than China. So if there's in fact a slow down in Chinese tourism to the US, we haven't felt it yet.
Again, we're long-term players, and we know there'll be cycles. We certainly hope that a trade agreement is reached, because that will obviously be better for our business. If it gets worse, more acrimonious, it's possible it'd be harmful to us. But I think our countries eventually will figure out a way to coexist as the number one and number two economies in the world. I think there's a necessity of that happening.
I know a couple years ago you were on the President's business advisory council, and clearly the people who were advising then were saying, "Look, a trade war's not good long term." That appears to be the strategy that we're holding out on here.
I don't want to speak to the administration. Obviously it's a very complex issue. I think there are issues the United States has to grapple with in terms of doing business in China, and with China, that are important to the US economy. That said, I think we have to recognize the importance to China, and its economy, to the world. I think we have to create balance there and figure out how to balance what's good for the US, but with the reality that China is not just a flash in the pan.
This is a big country. If you're a global company based in the United States, and you're not doing business in China, or your business in China is not successful, then you're limiting yourself significantly. Just from a Disney perspective, it's an important market to us.
Let's talk about another important market. The streaming market. We're talking about Star Wars here, and the Star Wars franchise. That's going to be really important for Disney+ when you guys roll that out. Talk to me a little bit about what that's going to look like. I've heard you say it's going to be about choice. You've got Hulu, you've got ESPN+, you've got Disney+. What is this going to look like for consumers who want choice from Disney content?
We believe that all three will offer consumers different kinds of programming. Sports obviously, ESPN. Disney, which is Disney Pixar, Marvel, National Geographic, and Star Wars will be more geared to family. And Hulu will stick to what it is doing, which is essentially an adult-like fare. More general audience. It'll all be available individually, and eventually we'll figure out ways, particularly the fact that we control Hulu, to package them for the consumers. If the consumer wants two or three it'll be available at a discount, and we'll make it seamless in terms of username, password, credit card, etc.
Tell me, what inning are we in in the streaming evolution? I'm not sure if this is the second inning, or we're halfway through this ballgame. There's Netflix, Apple, Amazon, WarnerMedia — the parent company of CNN. There's so many different players. Is it going to continue to evolve?
Yes. I think we're in the early innings.
I think that you're going to see a lot of change in media due to technological disruption. That will create change in the consumer behavior. I think it's likely that direct-to-consumer, over-the-top platforms that are focused more on 'program consumption' versus 'channel consumption' are likely to grow significantly over time. I think you're going to see consolidation on a linear channel front.
When I say later innings I don't want to suggest that it's not going to be an extra inning game when it comes to the channel business, but I think that's a mature business, and consolidation is ahead and necessary as a consumer migrates to a different form of television consumption.
It's fascinating, because when you think about, especially kids coming out of college, they have a Hulu password, they've got a Netflix password, they've got an Amazon Prime account. Are we going to go from having one cable subscription to having seven or eight different passwords for seven or eight different subscription services? That doesn't seem sustainable to me.
That raises a whole other subject, and that's user friendliness, and the fact that at some point the technology platforms, mostly I think in that case hardware and software programs are going to have to figure out ways, because some are. Apple's for instance, does this where it's easier, where your device remembers your password, and your username. You don't have to constantly look up what it is for yet another service or another app. I think you're going to see a world that's going to continue to fragment until the creation and consumption.
$6.99 in the price of Disney+. Is that to get consumers in and to hook them? Are you going to grandfather people in on that price? How did you decide on $6.99?
We wanted to create a product that was really accessible, that had a great price-to-value relationship. That's what we're going out with. We don't have plans to increase the price in the foreseeable future. Actually, it will be discounted somewhat by people buying annual subscriptions instead of monthly. Right now, we're concentrating on launching. We're going to launch a product that will be incredibly diverse in terms of its programming for families. It will be very accessible as well, because of the price and user friendliness.
The acquisition of 21st Century Fox, that was a $71 Billion deal, and you're just two months into it now. Talk to me about the challenge of absorbing this studio, and tell me what have been the challenges, and what are your hopes here?
We had a long lead up time, because between the time that it took to close the deal, and the time that it took to gain regulatory approval, we had an opportunity to think long and hard about not just what the structure of the company would look like, obviously what the strategy was, but then how it'd be integrated. We had very, very detailed plans that went into place when we finally closed. Anytime you combine companies of this size they're bound to be challenges. Mostly they're people challenges because consolidation will create some reduction in terms of jobs. That's probably the hardest part of it. We're just really in the middle of that right now.
But the plans, in terms of how to consolidate, what we ultimately want the company to look like, were all in place once the deal closed.
Avengers: Endgame blew away expectations. Aladdin had a strong weekend at the box office, the live action film. Still to come this year Disney is releasing Toy Story 4, Lion King, Frozen 2, and Star Wars: The Rise of Skywalker. How do you top your 2019 line-up in 2020?
I like that challenge. As is the case with a lot of our businesses, we keep raising the bar. That's a good place to be. That's, I think where Disney has always been. Let's not only do better than we did before from a bottom line perspective, but let's deliver experiences that are better than people have ever seen before. That's what Galaxy's Edge is all about really. We want people to come in here and say, "Only Disney could do this. What will they think of next?"
Or, "We've never seen anything like this." I think the same thing is true for just the way the businesses are managed.
Is that an element to beating 'franchise fatigue'? Making sure that you space out the offerings, and you incorporate it with the theme park experience?
I think the first thing you have to recognize is that these franchises are only as good as the quality of the storyteller, the stories that you tell. If you don't have a good story to tell, you shouldn't tell it. Quantity is not what we're about. It's quality. The more often you tell a story, at times, the less quality you have. We have to be careful of that across the board. What we've done as a company is instruct the creative side, particularly our studio, to say, "Don't make a movie before you're ready." Not just to make a movie, or just to serve as a franchise. Make it when you have a great story to tell. Release it when it's done, not rush it to market.
We have the luxury because of the size of our company, and the successes that we've had that we can do that. It's not about when something comes out, or how many we make. It's about how good they are.
Last time we talked there were those who wanted you to get into politics, remember politics, and you decided to stay-
That was in a galaxy far, far away.
That was a galaxy far, far away. You said you had the best job in the world.
Still true. Still true.
More recently there's been some criticism about how much you've been compensated for this 'best job in the world.' Is that unfair, do you think?
It's not an issue I want to address.
I've tried, over the time that I've been on this job to balance a number of interests. Interests of our employees, cast members, interest of shareholders, interest in our customers. It's a delicate balance how we price things, what we pay people, how much we deliver to shareholders in terms of value. It's something that we're mindful of and believe that over this period of time, certainly during my tenure, that we've managed to serve the interests of all three very well.
Can I ask you about the responsibility for being the curator of all that is Pixar, the curator of all of these amazing integrations that you've done from Lucasfilm, to Marvel, to the original Disney ideas all under one roof? What is the responsibility of that do you think? How do you create new things to go with it?
It's a lot of responsibility, which is something that we're mindful of when we make these acquisitions. First of all, you've got a fan base that cares a lot, and there are also brand values that are viewed in the brand and the franchises sometimes over decades that you have to be mindful of. Even though the world is changing, which it is, it's a very dynamic marketplace, there's a tendency to adjust to the marketplace conditions and stray from core brand values. That's the worst thing you could do when you manage a brand.
What we try to do is adhere to the core values, and if anything, enhance them, strengthen them as opposed to distancing ourselves from them. I have a great team of people that does that with me, whether it's Marvel Studios President Kevin Feige, or Pixar Chief Creative Officer Pete Docter ... I could go across the board, our Imagineers and what the legacy of Walt Disney was to the parks and resorts, what it means to walk onto a Disney theme park property. What's the first statement that you make when someone does that?
Again, that's a great challenge to have. I think about it all the time. I think about it when I walk down Main Street, U.S.A here at Disneyland. What would Walt be looking at? What would he be thinking? He certainly would be looking at the people. He would probably be deeply energized and moved by the fact that they were having a good time.
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