The Interview Issue

Bob Iger on Disney California Adventure


"Building in the downturn turns out to be a great thing"

Photograph by Thomas Prior for Bloomberg Businessweek

"Building in the downturn turns out to be a great thing"

Iger has committed more than $1 billion over five years to remake the 11-year-old Disney California Adventure. On a hot July morning, he shows Devin Leonard around the park.

Thanks for squeezing me in.
My pleasure. It’s sort of killing two birds. My granddaughter is over in the Magic Kingdom [the original park, California Adventure’s adjacent sister], so she’s going to come over later, and we’re going to go on some rides together.

Where to first?
Well, just to give some perspective, Disneyland, the first park we opened in ’55, is on the other side of this promenade. This opened in February of 2001. And Michael Eisner actually had a good concept, and that was to turn Disneyland into more of a destination resort. To do so, he wanted to build a second park—a second day—so that people would want to stay longer. And it coincided with us building a beautiful hotel, the Grand Californian. Like all of our parks, this one was a work in progress. In this particular case, there was a lot about it that wasn’t working.

You once described it as a “brand eyesore.”
What I really meant—look, to quote a friend who is no longer with us, Steve Jobs, there’s brand deposits and brand withdrawals. Obviously, whatever you invest in, you do so with an eye toward making a brand deposit. Once in a while you do something with a brand that is the opposite. But rather than dwell on that—there were definitely parts of this park that needed changing.

It does seem strange that it was a California theme park with hardly any Disney (DIS) characters.
We probably underestimated how much people would demand Disney when they come to a park that has the Disney name on it.

Did you imagine the overhaul on a smaller scale? Isn’t it now a billion dollars?
A billion, a billion-one. It’s a big bet. But I was determined to pay off the vision that Michael had. Yet there’s always a bit of chicken and egg to it, too. Even though I may say, “OK, time to fix California Adventure,” until the [Imagineers] come back with great concepts, you don’t say, “OK, let’s do it.” And they blew me away with their ideas. I loved the idea of Buena Vista Street.

Where we’re walking now.
Right. What we really wanted was: What did Walt see when he first came to California in the 1920s? And that’s Buena Vista Street. [Pointing.] That is the Hyperion Bridge. One of Walt’s early studio locations was on Hyperion Avenue. That building is the Carthay Circle Theatre. That’s where Snow White premiered. So that’s the primary theming: what Walt was greeted by when he came to L.A., and, in some form, the hopes and dreams and fantasies he brought. [Arriving at a vintage streetcar.]

These red cars operated in Los Angeles from the early part of the century to 1961 and then disappeared, so we have two beautiful replicas. I mean, look at this thing! In the prior iteration of this park, when you came in, you got a California feeling, but it wasn’t anchored in the era, and it wasn’t warm and inviting. To give you an idea just how inviting we want it to be, even Walt’s statue is accessible. If you go into Disneyland, Walt’s statue is on a pedestal, and it’s surrounded by a fence. We decided that people ought to be able to touch and feel Walt Disney. So that’s unique. [Passing a Starbucks (SBUX).]

I didn’t realize you had outside concessions.
It’s the first presence of Starbucks in one of our parks. We’re told it’s one of the most successful Starbucks in the country. And up ahead—that’s the Carthay Circle. There’s a restaurant upstairs and also a private club called 1901. Come on, I’ll show it to you. [Entering a multilevel restaurant and nightclub.]

We’ve worked hard on upgrading the quality of our food, both from a health perspective and also just from a taste perspective. And so we’ve hired a number of great chefs, a number of sommeliers.

You started this all right around the downturn. People thought it was a huge risk.
I’m a big believer in investing for the long term, and the decisions you make shouldn’t be made if the economy is good or bad at a specific time. And in the last five years, we’ve built two billion-dollar ships. We opened this. We committed to building Shanghai Disneyland. We opened a $900 million resort in Hawaii. We made a decision to build a new Fantasyland in Florida. We’re expanding Hong Kong Disneyland by about a third of its size. It may seem counterintuitive, but building in the downturn turns out to be a great thing because costs are lower. You don’t have as much competition for labor or material.

But the rap is that theme parks are so sensitive to the economy.
When the economy truly tanked in late ’08-’09, we suffered somewhat from a decrease in attendance, but we lowered our prices to keep attendance up as much as possible. That was a long discussion, because there was some concern that if we lowered prices too much that we’d have a tough time climbing back up. But I really felt that it was important to keep the pump fully primed.

Were there layoffs?
There were some modest reductions during the downturn, but not nearly what we would have had to do had we not lowered prices. We could have held prices, reduced volume, and reduced staff substantially. But we have a phenomenal cast that is extremely well-trained and that has a lot of pride in what they do. [Arriving at the entrance to Cars Land, the huge, new attraction based on the Pixar film franchise.]

This was the Big Kahuna. This is 12 acres unto itself. It takes people’s breath away when they see it. No one’s ever built anything like this.

Did you consider anything else, or was Cars always going to be the main attraction?
It just lends itself to a landscape, because the Radiator Springs world that John Lasseter created—it’s a place that people want to go to. Then there’s all the great characters and stories that Pixar and John created. And there’s the racing. It was a natural.

Are you feeling pressure at all over what Comcast/Universal (CMCSA) is doing with Harry Potter?
Universal did a good job with Harry Potter. It’s had a modest impact on our business in Florida. But we continue to expand and improve that place, too. We’re building out Fantasyland now in the [Orlando] Magic Kingdom, then we’ll add Avatar Land.

Any reason why you guys didn’t bid on Harry Potter?
We negotiated for Harry Potter way back, and at the time the folks that were running that side of the business didn’t like the terms.

Was that before you were CEO?
I had just become CEO. Yeah, I’m not a big believer in second-guessing decisions.

I take it we’re not going to see a John Carter attraction?
No, no, no. You know, you try things creatively all the time, and while you want every one of them to be great, and you set out to do that, that’s not always going to end up being the case. [Iger greets Alan Bergman, president of Walt Disney Studios, and visits briefly with Bergman’s family.]

So how do you go about making an attraction like this out of a movie?
It’s a very interesting creative process, because we’re not just creating a story or set design. Overlaid on all of those creative issues, you have to consider physics. You’ve got to consider durability. You have to consider safety. You have to consider accessibility.

How involved were you in this whole thing?
The Imagineers are the ones that deserve the most credit. And John Lasseter supervised a lot of this, because this all comes from him. But if something costs a lot of money, I get involved. I see all the details. And I had a thing or two to add here and there, thank you.

How did you learn the business?
Very generously, Michael [Eisner] included me in all of the work he was doing. I owe him a lot for that. I was his COO for five years. At that point, he had a lot of experience. [Iger sits down in the Radiator Springs Racers ride. In a digital effects glitch, the whitewalls appear to come away from the tires.]

What did you learn from Eisner specifically? Is there a secret to doing something like this?
Attention to detail. Always working to make things better. Looking to see where something might have been missed. There were a couple of glitches on that ride—

There were?
Yeah. You didn’t even notice? The tires for some reason—

The way the whitewalls came away from the tires? That was a glitch?
Yeah. That wasn’t supposed to happen.

Notice any others?
Yeah, I did.

Anything you could tell me about?
Well, the tractors were supposed to tip. [Passing the Radiator Springs Racers line. The wait for the ride exceeds three hours.]

The nice thing about this is that the queue goes along the ride, so people actually enjoy watching other people race while they wait.

Did you expect these crowds for Cars?
You never know. But to know that all these people are going to be entertained, or downright thrilled—that’s pretty unique.

[Iger’s daughter and granddaughter arrive; they appear a bit bushed. Iger addresses his granddaughter.]

Are you ready for a ride, sweetheart? How about just one, and then we’ll get some lunch?

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Leonard is a staff writer for Bloomberg Businessweek in New York.

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