The Pixar Pier special event allows guests to experience the attractions, sample food from the land, and shop in the many stores, all with short wait times. While this is an opportunity for fans to experience a new land with minimal crowd, the Wall Street Journal says this event is actually a test of a new pricing model. The Pixar Pier Premiere event shows that Disney is trying to level out crowds and increase customer satisfaction in the parks (because less crowds means higher guest satisfaction). They do not want to hurt revenue however, which explains the premium price point for the event. It works like this: 1000 people at $299 will generate the same revenue as 3000 people at $100, but because the $299 event will be much less crowded, guests will enjoy it much more. From a financial perspective, Disney doesn’t care either way because they are bringing in $300k in both scenarios. But guests will have higher praise for the less crowded event, which reflects well on the event, and on Disney.
Depending on the success of the Pixar Pier “Sneak Peek” up-charge event, we expect to see fewer (free) soft openings for new attractions and lands. Instead, paid preview events could likely take their place, as they provide more of a benefit for the customer (at least the customers who are willing to pay) by restricting crowds, and also benefit Disney (which generates revenue from an otherwise-free offering).
A prime example is Toy Story Land at Disney’s Hollywood Studios. Unlike past tradition, there haven’t been any Annual Passholder previews. There are AP-exclusive hours but these are months after the official opening of the land. Pixar Pier likewise hasn’t had and free AP previews, only this special event for guests to experience if they pay a handsome sum. It’s clear Disney is trying to get a feel for the backlash from Passholders if AP previews are a thing of the past.
All this comes roughly a year before Star Wars: Galaxy’s Edge opens at Disneyland and Walt Disney World. These Grand Openings are expected to max out the capacity of Disneyland and Disney’s Hollywood Studios for months. Would it make financial sense for Disney to offer free Passholder previews of the new lands? Not if they could instead offer a few days, or even weeks, of paid sneak previews for fans to enjoy the land with limited crowds. If you’ve got the disposable income, this is a win-win situation for you and for Disney. If not, expect to spend hours and hours waiting in line with the general public.
The extension of this scenario from previews of new attractions to regular park tickets is the next logical step in this dynamic pricing model. Ever since Walt Disney World and Disneyland adopted a tiered pricing model several years ago, Disney has realized that they can raise prices more than they have been. Not only can they keep raising prices, but they can do so without hurting attendance, which is key for Disney. But because they are raising prices at levels of more than double the rate of inflation, there is a risk that the price increases will make it seem as if Disney is gouging customers. The increasing crowds at the parks are evidence that the ticket prices have not yet reached market equilibrium. Essentially Disney is playing catch up after undercharging for years, and doesn’t want to look greedy now.
That’s why Disney executives are working on a dynamic pricing model, a more advanced version of the tiered ticket pricing model currently in place at the parks. Dynamic pricing is the same model that airlines use to fill all possible seats on a plane at the highest prices that the market will bear, thus generating the maximum possible revenue for each flight. Just like airlines, buying far in advance is usually cheapest, but prices can go up or down on a daily or even hourly basis depending on projected demand.
Currently, single-day, single-park tickets to Disneyland range from $97 to $135, and $102 to $129 at Walt Disney World, depending on whether the desired date falls into the Value, Regular, or Peak season. Under the dynamic pricing model, prices could go above or below that range as internal crowd level predictions are updated. In fact, Universal Studios in Orlando has been doing exactly this since the beginning of the year. The price of a one-day ticket to Universal Studios or Islands of Adventure is not fixed. It’s not even fixed for a particular date, as is the case at Disneyland and Walt Disney World. Tickets for a certain day start at a specific price, but three months before that day, the prices begin fluctuate on a daily basis depending on projected crowd levels. The higher the predicted crowds, the more Universal can charge for a ticket. If the ticket sales don’t match their projected demand, they can lower the price to attract more guests.
The ideal scenario is that they can sell exactly the number of tickets they want, and generate the maximum revenue for that day. Just like airline seats. The major difference is that airplanes have a defined number of seats, but theme parks can accommodate varying levels of crowds. Disney and Universal will need to make sure the number of tickets sold for a particular date doesn’t lead to overcrowding, or else those guests that paid a premium price for the ticket will be angry. If executed correctly, this dynamic pricing model will not affect revenue, but will lead to lower crowds in the parks. The alternative solutions to park overcrowding may not be so easy.