About the Episode:
Today I dive deep into the rollercoaster of the CEO position at Disney. Over the past few years, the position has had some substantial ups and downs that have had massive ripple effects that in turn hit their customers hard, both within their streaming service and Disney’s Parks.
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- Record profits and lowest profits, in the same company
- The Death of the CEO Role…
- Raising prices, and reducing capacity at Disney Parks
- Why You need to be all about your customers
- Enhancing your Customer Experience
- Becoming more efficient, by lowering costs, but yet giving better value
What’s shakin’! I’m glad you’re here today because we’re going all in today. We’re talking about Disney and a recent shakeup, and I’ve got my thoughts on this and opinions. If you’re in business, this is something to look at because I’m gonna relate it back to you actually, even if you’re working for somebody, that’s all good too, because this is gonna relate back to you. Disney, at the beginning of the pandemic, like right before then, like two, three months before the, they had a CEO shift. Bob ier, who was the CEO o for 15 years had chosen a successor. Bob Chap, who was the head, I think he was the, the president is what his official title was, o of Disney Parks. Okay. So he understood that Disney Parks. Now, Bob Iger, the previous CEO was actually like a huge mogul in the entertainment industry, highly respected, right?
Even to the point where he even had thoughts about presidential runs at one point in time, but he did 15 years, achieved a lot with Disney. I mean, just look at the freaking Avengers and everything. He prioritized creativity over everything else in the company. And we saw an amazing 15 years for a lot of different things, especially in the media. Especially in media with, with, with Pixar blowing up with Disney animation, with the Marvel series, the, you know, all the way through to the Avengers end games and all that. Just an incredible cause. That was like 2008 to 2020. That was amazing. You know, all of these crazy awesome things throughout those years. And then he chooses his successor and then the pandemic hits Bob Chap and he starts making a lot of changes. A lot of changes.
Well, all those changes ended up costing him his job because just a few weeks ago, the board fired chap and brought back in Iger for another two years to pick a different successor. And all throughout this rumor has it that Bob Iger, the previous CEO, now CEO again, was talking about Chap at lunches and everything all throughout Hollywood, within the media industry, that he wasn’t agreeing with what Chap was doing. And we’re gonna talk about some of those things. The real reason on paper, why Chap was dismissed was because the quarterly earnings, the last quarterly earnings, which were just reported a few weeks ago for Disney, Disney had lost like one and a half billion dollars in their streaming departments, right? Huge, huge, huge losses. Now, on the flip side, the parks, Disney parks, were having record profits, which was so intriguing, and we’re gonna break some of this down today very, very quickly because there’s a lot to grasp.
But at the same time, there’s some very basic principles about how all this ended up spiraling down to, to the death of the c e o role for Bob Chap at the beginning of the pandemic, obviously everything’s shut down, all of that, but then there, there were certain restrictions on park capacity when they opened back up. Now, DisneyLand in California opened up way later than Disney World in c in Florida because of political stances on the pandemic, because Florida’s obviously a very red state, and California’s a very blue state, so they waited a while longer, but still both had to deal with one of the same things to where they, the park capacity was limited at first, but as this progressed, what took place was, was really, really insane in my opinion too, which Bob Iger apparently agrees with me because continuously the parks raised prices, but limited the capacity.
Now, there’s a couple reasons for this because if you’re looking at the bottom line, strictly the bottom line and only the bottom line and literally ignoring your customers, which is the lesson here, which is the one that ultimately screwed Bob Chap in his role of c e o, is he started looking at, at the balance sheet only, rather than what customers actually wanted. The money will always come to you in business when you’re actually fulfilling what your customers actually want. I just had another episode about this too, as far as why reach out is doing what we’re doing, which is something you need to listen to by the way, go back to that one because we are all about our customers. That’s why we’re seeing the success that we are. Prior to Bob Chap, during Bob ER’s tenure and Michael Eisner’s tenure before him as CEO of Disney, it was all about the customers, all about magic, all about the soul of the company, how Walt Disney actually created it to be, to begin with.
And then during the, the pandemic, it became the, about the numbers, what they realized is that they can make more money with having less people in the parks by cutting jobs. I’m talking about maintenance and everything else, because what happened, there’s been reports that because of what they did, they have less people in the parks over the last two years. But yet in the last year, from the end of 2021 to now in 2022 wait times with the same amount of people in the parks, a reduced capacity wait times have increased about 20% because he cuts staff, because maintenance has been an issue. Rides have been breaking down a lot more at both Disney World and Disneyland. There hasn’t been a focus on the experience. There’s been a focus on the numbers. And that will always be, no matter what it is that you’re doing, whatever it is you’re involved in, when you’re only focused on the numbers and you’re raising prices for right now to try to cover what’s going on and hear this, because there’s inflation right now, never raise your prices just because of inflation.
You have to add value. So if he would’ve added value and raised prices and enhanced the experience, we might be looking at something different today. Same with the streaming side. Disney Plus is raising its prices here, or they did raise their prices this month in December pretty substantially. And that was also to curb some of these losses that they experienced, right? What if they added value along with that? There’s nothing added, come on now. There’s nothing added. All they’re doing is raising the price. And it was significant too. It was well into the, to the double digits percentages that they raised the price. This has happened several times, and they also cut out annual passes too. Some of the most loyal people to Disney World and Disneyland have been unable. I’ve been a victim of this, right? Unable to renew passes to purchase new passes to enjoy the parks, how they’ve always been able to enjoy them.
Same with the reservation system. The the, what chap did was so stupid because he put up so many entrance barriers to having the good time that Disney was known for in fulfilling that magical experience in the happiest place on earth. So many different barriers to that in place now and regulations and rules that you have to follow in order to even get into ’em. People that were paying cash for the parks that were going there and staying on resorts were unable to get reservations to the parks, and they were stuck in the rooms. He prioritized the balance sheets over the customer’s experience and what they wanted.
So when I tell you that if you are doing that now, quickly reassess your direction. If you’re considering that because of inflation, quickly reassess your direction. It’s okay to raise prices, but you have to add value, you have to enhance the experience. If that’s truly what you need to do is to raise prices right now. Maybe there’s a way to become more efficient so that you can maintain your profit margins while maintaining your experience at the same price. Also possible. I’m not saying cut out certain things from delivering that experience, because that’s another thing that Chap did. He cut things out. I’m saying become more efficient to lower your costs while still being able to keep the core components of your offering, of your product and still delivering the same experience, still delivering what your customers want, maybe at the same price. So maybe you can avoid a price increase, but if you have to raise prices, you have to increase the value.
You have to enhance the experience that your customers are receiving. That’s the only way to do it. So when I tell you, if you’re doing anything other than those, you’re like Bob Chap, and it’s just a short period of time until it comes and bites you in the ass. You could go out of business, you could lose a substantial amount of your customers, or maybe like Bob Chap, you just get booted out. His tenure was only two years when the previous CEO was 15. The previous c e o was also double digits. Michael Eiser, I think it was even more than 15. Well, I think it was in the twenties as far as the amount of years that he spent in the company. So you, you have these two individuals that are well respected that run the company. Well, chape comes in, he’s gone after two years because he forgot about the importance of his customers.
Now you can look at some lists because there’s also surveys going back. Well, we’ll just run through these real quick here. There’s a, there’s a whole survey as far as things that, that Disney fans, longtime Disney fans, including me, wanna see back and, and Bob Iger put things back in place. They wanna see the prices lowered again because now it’s like a huge payroll that a new Star Wars resort comes on now. It’s like almost six grand to stay there for two days, two nights, three days for just two people. That’s crazy, right? Disney, Walt Disney wanted this to be enjoyable for all walks of life, all income classes, literally everybody on the planet to come and have a good time. So number one is lowering prices. Number two is stop requiring reservations to visit the theme parks. That’s what I was saying, you shouldn’t have to book a reservation when you used to be able to just walk up and be like, Hey, I’m here today.
Right? There’s other ways to control crowds that way. Allow park hopping earlier, you used to be able to go to one park for an hour, right? If you had like a fast pass for something back in the days of fast pass and then jump over to the, to another park right away for the rest of the day, chap eliminated that completely at the beginning and then brought it back saying, oh, well you can do it at 2:00 PM now why not? What does that do? Right? I get he was trying to control crowds, but the reason he was trying to control the crowds and the numbers was to keep the capacity low so they could make more money off of each individual, right? Make annual passes available for sale. Again, fricking universal is crushing it. A love Universal had an annual pass there for years.
They never suspended annual passes and they’re doing just fine. They’re doing absolutely just fine. Reinstate the free airport shuttle to Florida’s Walt Disney World. There used to be something called Disney’s Magical Express, and this was one of the biggest things that they implemented decades ago. That was incredible. I’ve used it several times. You arrive at the airports and they have a shuttle right there that’s Disney owned, so they’re controlling the experience from day one, providing you value from the moment you step off the airplane. In Florida’s international airport in Orlando, they take care of your luggage, they drop you off, and you even schedule it to go back there. You can actually even keep your bags, you, or you could keep your bags with luggage services and they’ll make sure it gets on the shuttle for you. It was amazing, absolutely amazing.
That might have been one way to actually justify the increase in prices as if they brought that back. I don’t think that saved a ton of money. Just eliminating that thing, right? They bring back the option of prepay for meals at the Florida Parks. They used to have dining plants, which was pretty incredible. And anybody that’s in a recurring revenue business or a flat fee business, it’s pretty amazing because you can do, I mean, even look at car washes right there, there’s car washes around. You pay monthly and you get technically unlimited car washes, but yet they still make money because they understand that people are not gonna go to the most expensive things every single time, like get a steak every time or whatever. But pre-paying those things took a lot of the stress off of your trip. It enhanced the experience where you could pay X amount of dollars per day per person and have meals included. And one of the last big ones, there were some more ones too, if they’re looking for a less political company. Disney got into a lot of trouble with the Florida law, and Bob Chap handled it super poorly.
Customers are not looking for Disney to get involved in politics. They just want to have a place that’s actually separate from that to where their kids can enjoy good media, good programming like Pixar has been for years. Like Disney animation has been for years, like Marvel has been for years without all of these political agendas injected into them, Disney has been an entertainment source, but even more so a source of happy experience for years. And that’s what I think about myself and what most have missed the most. Bob Iger, I wish you the best of luck in the next two years. Let’s bring the magic back.
Go ALL IN.