JIN-321 -- Tokyo Disneyland: The Kingdom Losing Its Magic?

T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business, Technology and Cultural News

Issue No. 321
Wednesday May 18, 2005 TOKYO

+++ VIEWPOINT Tokyo Disneyland: The Kingdom Losing Its Magic?
1. Never-neverland
2. Pixie Dust
3. A Hong Kong Rival

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+++ VIEWPOINT Tokyo Disneyland: The Kingdom Losing Its Magic?
1. Never-neverland

Oriental Land (OLC), operator of Tokyo Disneyland (TDL),
has taken the bold step of replacing its president for the
first time in a decade. OLC hopes the appointment of Senior
Executive Managing Director Yoshiro Fukushima (58)
as president and COO will pull in more customers to the
theme park, reputed the sole winner in the domestic industry.
President Toshio Kagami (69) will be bumped up to CEO. The
return to the never-neverland of youth is an attempt to
revive the Disney myth of perpetual growth. The two men assume
their new posts from June 29.

At the press conference Fukushima declared he would exert
himself for the stable growth of TDL, which accounts for
more than 80 percent of OLC's proceeds.

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2. Pixie Dust

He will have to. The theme park faces a gaggle of problems
on the eve of its 25th anniversary in 2008. In addition to
sluggish growth in number of visitors, net sales per visitor,
an important measure, are dipping. The figure for the quarter
ending March 2005 was 9,180 yen, down 67 yen. In response,
OLC began drawing up diversification plans including a theater
and a hotel. However, OLC's excessive concentration on TDL
has not changed, the hotel and theater like pixie dust tossed
in investors' eyes.

Amidst difficulty in formulating a growth strategy, OLC has
been rocked by a series of scandals that may result from
success-induced conceit. In this year alone the company has
had to dispose of approximately 7,000 moldy food products
and inadvertently leaked the personal information of some
120,000 year-passport holders. President Kagami mouthed the
usual platitudes about "overhauling the company structure,"
but the Magic Kingdom has lost some of its luster. Some
analysts blame structural defects.

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3. A Hong Kong Rival

If that weren't enough, Hong Kong Disneyland, scheduled to open on
September 12, will pose a formidable rival as Asia's second

OLC's management dismisses the notion of the Chinese theme
park as a rival, remonstrating that TDL's high rate of repeaters
means the new kid on the block will have little or no impact.
In fact, TDL does have a steady flow of visitors from the
Japanese hinterlands. Yet some travel companies estimate that
at certain times of the year they will be able to put together
package tours to Hong Kong Disneyland for less than trips
to TDL.

A greater challenge lies in demographics. These don't bode
well for TDL. The theme park's prime visitors are families
with kids in tow and couples on dates. The downward spiral
of the birthrate is reducing the former, and will diminish
the latter. The Disney myth is one of ever-ever growth.
Like the myth of ever-rising land prices, it will punctured.

-- Burritt Sabin

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Note: JIN is next due to appear on Friday May 27.

SUBSCRIBERS: 29,283 as of May 18, 2005

Written and edited by Burritt Sabin (editors2@japaninc.com)

(C) Copyright 2005 Japan Inc Communications KK. All Rights Reserved.