The Not-So-Wonderful-World of Eurodisney - Things Are Better Now at Paris Disneyland

CASE 2-1

Ali Zein Kazmi

February 1, 1999

THE NOT-SO-WONDERFUL-WORLD OF EURODISNEY

-THINGS ARE BETTER NOW AT PARIS DISNEYLAND-

1. What are the factors contributed to EuroDisney’s poor performance during its first year of operation?

Walt Disney overestimated the magic that was to be in introducing Europe's most lavish and extravagant theme park in April of 1992. The fiscal year 1992-1993 brought EuroDisney a loss of nearly $1 billion.

Mickey, a major promotion tool of Disney management did not create reason or attraction enough for the European community, unlike at the sister theme park Tokyo Disneyland. European families found EuroDisney to be an “over-rated” promotion of American culture and lifestyle, contrary to what was seen by Disney's management as a family affair. In the initial years of operation this led to an overestimation of expected revenue and audience figures. Advertising messages had been miscommunicated, “emphasizing glitz and size…not the rides or attractions”. Disney remained unsuccessful in attracting customers just by vigorous brand name promotion communicated through Mickey and his friends. Moreover, families were reluctant to pay hefty price tags on accommodation and entertainment needed to enjoy the attractions of the park. Disney failed to manage a healthy relationship with partner organizations in the host country, which most importantly alienated them from their number one ally, the French government.

Regional affairs in Eastern Europe and economic recession in the western half of Europe and Scandinavia contributed much to the poor performance of EuroDisney. Airfare wars during the period of time and disproportionate changes in exchange rate made spending for holidays in “Disneyland, Orlando…cheaper than a trip to Paris”. Of greater consequence was the Gulf War, which statistically reduced travel to and around Europe. The next major even inline was the birth of new democracies in Eastern Europe. The 1992 Olympics in Spain marked another landmark event that shadowed fascination towards EuroDisney. The macro-environmental scanning of namely, the political, the cultural, and the economic aspects of Europe had been grossly miscalculated.

Disney had to reinvent itself, “European style”.

2. To what degree do you think that these factors were (a) foreseeable and (b) controllable by either Euro Disney or the parent company Disney?

A company the reputation and size of Disney is allowed no room for mistakes. The stakes involved are in the billions of dollars. Complementary businesses like that