Orlando, Fla. - Pull down your lap bars: Universal Studios, the theme park chain now controlled by Comcast, is rolling out new weapons in its battle against Walt Disney Parks and Resorts - and Disney is fortifying its defenses.
Universal's parks have always languished in the shadow of mouse ears, and that will not change anytime soon. Disney has eight parks in California and Florida that attract over 73 million visitors each year, with summer the busiest season. Universal operates three parks, with annual attendance totaling about 18 million.
But Universal is starting to look a lot less puny. A $265 million Harry Potter-themed addition to its resort here sent 2010 attendance soaring 30 percent over the year before, draining attention from Walt Disney World in the process. Universal is now racing to replicate the attraction at its parks in California and Japan while expanding the boy wizard's presence in Orlando.
To maintain momentum, Universal, with more Comcast money, is introducing a swarm of offerings. A major 3-D ride themed to Michael Bay's "Transformers" movies opened last week at Universal Studios Hollywood, at an estimated cost of $100 million. New draws at Universal Orlando include a refurbished Spider-Man ride, a lavish parade, a high-tech fountain and pyrotechnics show, and a ride based on "Despicable Me."
"There is an incredible sense of energy and forward motion around here, no doubt about it," said Thomas L. Williams, chief executive of Universal Parks & Resorts.
Disney is watching all of this with a clenched jaw. Although it has publicly dismissed a Potter-enhanced Universal as being even a remote threat, arguing (accurately, analysts say) that a rising tide in Orlando lifts all boats, Disney is privately concerned about preventing market share erosion on both coasts.
Competition with Universal, for instance, factored into Disney's decision to beef up a previously planned expansion to its Magic Kingdom park in Orlando and spend an estimated $500 million on an "Avatar"-themed addition to its nearby Animal Kingdom park. The $425 million Magic Kingdom expansion opens in phases starting this year. "Avatar" construction is set to begin next year and open in 2015. Design details are secret, but James Cameron, who directed "Avatar" and is working on two sequels, has said part of the project will include a ride that simulates flight.
Disney declined to comment for this article.
Theme parks represent one of the few areas of stable growth outside of cable television for media and entertainment conglomerates like Comcast and Disney. Parks can be vulnerable to swings in the economy and require costly and continuous investments in new rides; escalating labor costs threaten margins. But for a media industry challenged by piracy, a fading DVD business and broadcast networks that continue to struggle, parks have emerged as a bright spot. For reasons that economists can't quite pin down, Americans have not cut back on expensive theme park vacations the same way they have pared retail spending and other discretionary purchases.
The rivalry between the two parks operators, which dates to the late 1980s, when Disney scrambled to open its Hollywood Studios park here to beat Universal's planned arrival, next moves to California. Universal will soon open its "Transformers" ride; Disney will unveil a $450 million "Cars"-themed addition to its nearby California Adventure park on June 15.
(Disney bid for the Harry Potter rights but balked at the degree of creative control sought by the author J.K. Rowling; cost was also an issue.)
Comcast gained control of the Universal parks last year when it paid $13.75 billion to General Electric for 51 percent of NBCUniversal. Comcast quickly doubled down on the business, spending $1 billion to buy a stake in Universal Orlando owned by the Blackstone Group. GE and Blackstone were both more interested in wringing cash from the parks than expanding them; selling them entirely was regularly on the table.
But Comcast is different. "We're really feeling the love," said Williams, Universal's chief.
Comcast has increased spending on the parksand is betting on strong international growth. Universal announced a deal in April to open a park in Moscow by the end of the decade. Stephen B. Burke, a Comcast executive vice president and chief executive of the NBCUniversal unit, spent over a decade at Disney, working for part of that time as a senior parks manager. Burke, who was recently in Orlando to discuss plans to promote Universal across the Comcast empire, told analysts in a recent conference call that he was "very bullish" on the theme park business.
"Comcast is pretty excited about spending money there because they see a lot of potential growth," said Doug Mitchelson, a media analyst at Deutsche Bank. Mitchelson estimates that Comcast will spend $150 million a year on improvements for at least the next five years. Universal's previous owners in many recent years kept spending at the basic maintenance level, estimated at about $50 million annually.
At the moment, Universal is particularly hopeful that "Transformers" will continue an upswing at Universal Studios Hollywood, which is still best known for its tram tour of the Universal Pictures back lot, a feature that first opened in 1964. The Hollywood property in 2010 opened a new "King Kong" attraction and attendance jumped 26 percent over the year before.
The 3-D "Transformers" ride, which ThemeParkInsider.com called "among the very top rides in the world" in a review, could move the needle again. The attraction, which replaced an antiquated one built around the 1991 film "Backdraft," was designed in conjunction with Bay and takes riders on a (perceived) high-speed adventure through the streets of Chicago, where good alien robots are engaged in a ferocious battle with evil ones. "We're the best, we think, at creating the world's greatest theme park attractions," Russell said as he hopped out of the ride vehicle.
Those sure sound like fighting words.