How Does Tokyo Disney Charge Less, but Make More?

Tokyo Disneyland Last week was a blur. I met up with the family, who had preceded me by two weeks, in Japan, and we made a quick visit through Tokyo for 6 days until we returned on the 4th of July.

A number of observations:

  • 1 week is the optimal trip length to Asia to maximize jet lag torture. I was finally over my outbound jet lag on the day we flew home. I’ll let you know when I’m done with the return.
  • Jet lag is best shared. Going it alone while entertaining your well-rested 8 and 4 y.o. boys who haven’t seen you in two weeks is not as highly recommended.
  • Hotel points are even more awesome in Japan. I hate paying for hotels in general, but especially in Japan because they often charge per person after 2. But somehow booking an award night with points sneaks through the system, so you save not only the base rate but also the extra charge for my 8 y.o. (my 4 y.o. apparently isn’t a person yet…).

We capped the week’s fun with a trip to Tokyo Disney. And that was perhaps the highlight, from a personal finance perspective: Tokyo Disney was way cheaper than its counterparts in the U.S.

Tokyo Disney is a lot cheaperTokyo Disney costs less than half. And it’s a very fair comparison – the layouts are very similar, and the Tokyo parks are as nice, if not nicer, than the ones in California. The staff & service are much better (this is always a safe assumption anywhere in Japan). The quality of the product is certainly not what’s driving the lower price. And I have a sneaking suspicion that most of the input costs – land, construction, labor – are a lot higher in Japan. So what gives?

Why Tokyo Disney is Cheap, But Doing Just Fine

First, the yen is getting beat up hard. Japanese exporters and Tokyo Disney-bound travelers rejoice.

But that isn’t nearly enough to explain the price differential – even at ¥100 / USD it’s a steal (relatively speaking…). As always, when confronted with good fortune, I couldn’t just accept it but had to understand WHY.

My first hint was from Wikipedia: turns out that Tokyo Disney is the only Disney location that is not owned by Disney. The owner, Oriental Land Company, pays a license fee on ticket sales and merchandise to Disney (per Forbes, 10% of admissions and 5% of food and souvenir revenues). But they own the site, and appear to be able to play with the business model with broad discretion. They’re clearly doing something right, because Tokyo Disneyland has regularly been the most profitable Disney location and is nipping the heels of Disney World as the most attended park in the galaxy.

Tokyo: Where You Look Like a Dork if You’re NOT Wearing Disney Gear

Then we entered the park, and it was quite a spectacle. Because the Japanese like Disney. A lot.

Sure, you expect to see little kids kitted out with all of their Disney gear. What’s a little surprising is to see troupes of high school girls and young ladies all wearing the same identical shirts, skirts, hats, and other gear. What’s really surprising is all of the dudes were decked out too. A complete Disney-inspired ensemble was the norm regardless of age, sex, or kid status. Coordinating outfits across your entire family or group is clearly smiled upon.

And for those of you less knowledgeable about Japanese: they’re not so inclined to buy things at a discount, or through a secondary channel. If Japanese folks want Disney gear, they’re going to buy it at the park.

Smoother Demand + Nonstop Merchandise Sales, a Winning Combination

Disneyland and Disney World seem to survive on “major event” vacations from inbound travelers, which makes spring break at one such an exciting treat. Disney Tokyo, however, is able to tap into its 30+ million person metro area, so probably doesn’t suffer the peaks and valleys of the U.S. parks.

To make it work, however, they seem to have decided to charge a lower ticket price. You don’t need to take out a mortgage on your house for a Tokyo Disney adventure, and it can be styled as a quick getaway for someone local. What they lose in ticket revenue is probably more than made up with merchandise sales. The gift shops were minting money, and if I were a weaker person I would have felt bad my little boys were limited to one souvenir <¥1,800 ($15) when all of the other kids – and adults – were backing up the truck.

The Best Type of Revenue: Being Paid for Nothing

Ticket and merchandise sales are really cool, but the drawback is you actually have to provide services and goods in return.

How much better, if you can get a bunch of money for (more or less) free? And maybe not even owe a license fee on it to Disney?

It took me about 10 seconds of looking at the park map to see something that jumped out at me. For an example, check out Tomorrowland from the Tokyo and California parks:

Disneyland - Tokyo and CaliforniaDo you see what I see? Corporate sponsorships. Sweet, juicy corporate sponsorships. Just about every Tokyo Disney ride has a corporate sponsor. It gets to the point of ridiculousness, but rain or shine, earthquakes or not, each one represents a steady stream of income for the park.

Tokyo Disneyland life insurance sponsor

Should I buy life insurance before I get on?

My personal favorite was The Journey to the Center of the Earth, which is one of the more scary rides, being sponsored by the Dai-ichi Life Insurance Company. What in God’s green earth is going on there? Is the ride so dangerous I need life insurance? Is it supposed to scare me so much that I’ll want some? What is Dai-ichi’s angle? Who knows? Who cares? I bet the park owners certainly don’t.

I don’t know why Disney doesn’t do this more at its own U.S. parks. Perhaps they’re worried about diluting the brand. But here’s a newsflash: the brand is doing just fine in Japan. Plus I imagine no one except a nerd like me even notices the corporate sponsors (shhhhhh).

 

So score wins for entrepreneurship and brilliant tailoring to a local market. I might score a big loss for Disney in not owning Tokyo Disney itself, but I wonder if they’d have been willing to tweak the business model as much as the locals. It’ll be interesting to compare Tokyo with the partially-owned Paris, Hong Kong, and (coming soon) Shanghai locations over time to see which model works best.

Tokyo Disney was a lot of fun. If you can overcome the small matter of getting to Tokyo, and a complete lack of chicken nuggets and hot dogs on the menus, I recommend it very highly. It’s nice to see how corporate sponsorships and boatloads of merchandise sales allow the park to charge way less for admission. With uncertain value for those corporate sponsors, and crazy prices for all of the Disney kit, I can’t say that everyone wins. But we certainly did.

 


I’m a newbie to Disney – my parents never took us as kids so my first experience was just last year. Do you have a favorite park? Is Disney a once / lifetime affair, an annual tradition, or a ripoff to be avoided? And most importantly for Dai-ichi, do you feel inclined to buy life insurance after a scary ride?

 

2 thoughts on “How Does Tokyo Disney Charge Less, but Make More?

  1. We knew a Disney expat while we were in Japan. Disney has a pretty sizeable team there consulting with the local operator. So yes, while they have some discretion to sell sponsorships of rides, I don’t think they can wander too far away from the “Disney” experience for the people walking through the gates.

    A couple other observations from said expat… first, they sell more season passes there than for any other property and many of those season pass holders come multiple times per year (more frequently on average than other season pass holders). For most people here in the US, it’s one and done (while spending a fortune) with your kids. As you mentioned, there are 30 million+ probably less than an hour train ride from the park and they’re coming more frequently, probably spending a night on-property, buying food, drinks, mouse-ear hats, etc. I have no idea how the season pass pricing compares though. It would be interesting to see revenue by attendee and how they spend their money… customer analytics anyone?

    Second, did you notice that the ride queues were exceptionally long – the longest in the Disney system actually. The Japanese have no issues standing in long lines (I remember seeing people stand in line for hours when H&M opened in Tokyo), so if you go for a day trip you may only ride 2-3 rides (my wife’s experience). Not a problem with your season pass since you can always come back.

    In general, we found that comparable attractions were normally cheaper than here in US, even in Tokyo. Another example, baseball games. My memory is a little fuzzy here (back to 2010-2011 when it was ~90 JPY/USD), but to get into a Yakult Swallows game (in Tokyo) was only about $15 and beers were normally only $6-8 (500-600 JPY depending on the brand – yes, choices at a baseball game) compared to $12-15 here (for whatever macrobrew you were forced to imbibe). I’m sure the cost structure is lower for JP teams (lower player salaries, teams are owned by major corporations, etc.), but it’s still interesting for what was then one of the most expensive cities in the world.

    • Very interesting insights from the Disney expat. It definitely makes sense that they’d sell more annual passes (which then get higher use) in Tokyo. It looks like an adult annual pass is ¥86,000 versus $779 in California, so the gap does indeed narrow there. Plus the annual pass can’t be used for parks on “attendance control”, which I’ll assume means peak days. There was a ton of folks rolling into the park late Friday evening, and I’m sure they were all annual pass holders.

      We didn’t have long queues – we were there on a Thursday and Friday and really heavy rain was forecast (we got lucky with just light morning showers). Many rides had no wait, so it was a stark contrast to Disneyland on spring break. I imagine once school is out and the rainy season ends, it’ll be a very different story.

      One other wrinkle on the corporate sponsorships – my wife spoke to someone employed at a sponsoring company, and it’s a big deal. They’ll have special events there, extended hours, etc., and the company apparently pays a small fortune and is happy to do so. A big benefit of being near so many huge, deep-pocketed companies in Tokyo, and something I’m sure Anaheim and Orlando envy.

      Really interesting insights on baseball – I didn’t know games were that cheap. But it does underscore how Japan is different – in a lot of places that are more expensive than your own, you can plan on just grossing up costs across the board. Japan is definitely non-linear and sometimes surprises with inexpensive categories.

      Thanks for the note. If you guys are getting nostalgic, the yen is saying it’s time for a visit!

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