Assignment :Disney vs. Universal
This data was taken from the two companies' 2017 annual reports but includes some fictional data.
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(in millions) Universal Disney
|
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Theme Parks Revenue
|
5,443
|
18,415
|
|
Operating costs and expenses
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(3,059)
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(12,617)
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|
Operating Income Before Dep and Amort
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2,384
|
5,798
|
|
Dep and Amort
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(648)
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(1,999)
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Operating Income
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1,736
|
3,799
|
|
CapEx
|
960
|
3,191
|
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Theme Park Assets net of Depreciation
|
18,493
|
28,406
|
1. Given this small sample of information, how do the companies compare in terms of performance? Which company is more profitable? Which company is more efficient? Which company has a higher return on assets? Which company has higher Fixed Asset Turnover? Which company is investing in infrastructure at a higher rate?
2. Background:Universal came to the Central Florida Region (CFR) market in 1990 when it opened Universal Studios Florida, about one year after The Walt Disney Company had opened its own movie studio-themed Disney-MGM Studios, the third gate at Walt Disney World resort.
Despite Disney's broad appeal, Universal was able to capture significant market share by appealing to the teen and young adult market with thrilling and technologically enhanced rides that were less likely to appeal to families with younger children, Disney's mainstay target segment.
Families began to see Disney and Universal as complements instead of substitutes, and began visiting both resorts while in Florida to satisfy all family members. Universal built on this segment advantage with the introduction of a second gate, Islands of Adventure, in 1999, doubling down on thrills and advanced ride technology that appealed to teens and young adults.
Question: Disney has opened Pandora: The World of Pandora and will, in the near future, open Star Wars Land, while Universal has recently openened Volcano Bay waterpark and plans to open new attractions based on Fast and Furious, Harry Potter, and Mario Bros.
Walt Disney World Resort is far bigger than Universal Studios Resort in Orlando.
Can Disney ignore Universal? Can Universal ever catch up? Who has a competitive advantage?