Disney’s parks are its top money maker — and it plans to spend $60 billion to keep it that way

Three years ago, Josh D’Amaro stood in an almost empty Disneyland.

The California theme park’s Main Street was quiet: no cheery tunes from famed barbershop quartet the Dapper Dans, no clanging railroad bell, and no wafting scent of waffle cones from the Gibson Girl Ice Cream Parlor.

It had been greater than a 12 months because the Covid pandemic had forced Disney’s domestic parks to shutter, but D’Amaro, chair of Disney’s experiences division, was confident guests would flood back in when the gates reopened.

His confidence was well founded. D’Amaro’s division is now Disney‘s best-performing segment, rebounding and offering stability in recent quarters as Disney shuffles to adapt its entertainment business to match consumer habits that modified after the pandemic.

On that quiet day in 2021, D’Amaro had been answerable for the parks, experiences and consumer products division, now just called experiences, for under slightly greater than a 12 months. He took the helm when Bob Chapek was tapped as CEO in early 2020. D’Amaro spent much of those 12 months coping with substantial operating losses from global park closures, a docked fleet of cruise ships and a plunge in hotel visits.

Revenues fell 35% in 2020, an almost $10 billion decrease from the $26.2 billion the experiences division had tallied within the 12 months before the pandemic. Then revenue dropped a further 3% in 2021.

But so much has modified in three years. D’Amaro — sitting in a conference room in Burbank, an hour north of Disneyland and just just a few miles from the center of Disney’s theme park creative engine, Walt Disney Imagineering — has much to brag about.

The experiences division posted record revenue of $32.5 billion in fiscal 2023, a 16% increase from the prior 12 months. Operating income jumped 23% to $8.95 billion.

D’Amaro described the pandemic as “an opportunity to take a breath” and a time for his division to “think about what we wanted the future to look like.”

“So, as difficult as that situation was, we saw it as a platform, a new vantage point for us to look at the operation,” he said.

While its parks were shuttered, Disney continued construction of its Avengers Campus themed land in Disneyland and touched up old favorites akin to the King Arthur Carousel. And it built recent rides, and refurbished others, within the years that followed.

World of Frozen opened in Hong Kong Disneyland in November, and a Zootopia land opened in Shanghai Disneyland in December. The company also launched two recent rides at Walt Disney World in Florida: a “Guardians of the Galaxy”-themed ride in its Epcot park in 2022, and a “Tron”-themed roller coaster within the Magic Kingdom in April 2023.

Additionally, the corporate has revamped attractions and themed park areas, turning the Pacific Wharf area of Disneyland’s California Adventure into San Fransokyo Square, based on the animated hit “Big Hero 6,” updating Mickey’s Toon Town at Disneyland and making major transformations at Epcot.

Those investments, coupled with recent technology in mobile ordering and the flexibility for guests to pay to skip to the front of the road for certain rides, have kept guests coming and boosted Disney’s earnings at a time when the entertainment division is struggling to recapture its late-2010s boom.

“Sitting here now, today, you’ve seen our results; our results have been record-setting as recently as the last first-quarter earnings,” D’Amaro said. “Record revenue, record margins, record operating income. So, the recovery has been swift, it’s been strong. But more importantly, I think the future looks incredibly bright for our segment — and the company, quite frankly.”

In 2023, experiences was the best-performing a part of Disney’s business, accounting for 36% of the corporate’s total revenue but 70% of its operating income. Meanwhile, Disney’s entertainment division, which incorporates its theatrical and streaming businesses, represented 45% of revenue but just 11% of operating income.

The ability to get more out of the parks lately was crucial for CEO Bob Iger and Disney’s board as they tried to make the corporate more profitable and improve share performance. On Wednesday, Disney beat back activist investor Nelson Peltz’s proxy fight, reelecting its full board.

The division’s strength is why Disney has pledged to invest $60 billion in experiences over the subsequent 10 years — a key a part of its strategy to keep the parks fresh and relevant in a competitive segment.

D’Amaro said about 70% of that money will go toward “new experiences” in domestic and international parks, together with cruise lines. The other 30% will go toward technology and infrastructure, including maintenance of existing attractions.

Innovation at theme parks has been a central goal since Walt Disney ran the corporate. Disney’s founder used to say that its theme parks would “never be finished” and would evolve to meet consumer demand and changing tastes, together with developments in technology.

Walt Disney Imagineering has long been on the leading edge of development. Its innovations, from ride mechanics and animatronics to creature design and immersive architecture, have made Disney’s parks a standout within the industry.

Last 12 months, guests caught a glimpse of one in all these innovations — a trio of tottering bipedal robots from Star Wars called BDX droids. First spotted at California Disneyland’s Star Wars: Galaxy’s Edge, they are only one iteration of a brand new technology Disney Imagineering is developing to bring walking robotic characters to life.

Engineers create the mechanics for the remote-controlled droids to move and balance, and work with animators to give those movements personality. The robots were designed to have childlike curiosity, reflected through cheeky head tilts and chirping beeps, together with a special emote dubbed “tantrum,” where their eyes glow red and they emit a high-pitched squeal.

Guests who visit Galaxy’s Edge in the subsequent three months may stumble across this trio as a part of Disney’s “Season of the Force.” They add to the regular roaming character meet-and-greets with the likes of Rey, Chewbacca, Kylo Ren and stormtroopers.

Disney hopes hands-on innovations akin to the robots will keep guests coming.

“Those moments where there’s a spark, there’s an emotion that’s on full display, where a guest is interacting with an attraction or a cast member or a character, it’s very real and genuine,” said D’Amaro.

That emotion was on display on the South by Southwest conference in March 2023, when Disney debuted a recent iteration of its “stuntronics” robot, this time in the shape of Judy Hopps from “Zootopia.” This technology had previously been used to create the Spider-Man leap stunt at Avengers Campus. During the 2023 presentation, Imagineers showed the audience how the Judy Hopps robot could balance on roller blades and perform somersaults.

The biggest audience response got here at the top of the presentation, when an Imagineer lifted the bot to sit on his shoulders and it realistically moved its legs to fit around his neck, as a toddler would. The easy motion — programmed only for the presentation, Imagineers told CNBC — captured something intrinsic to the human experience.

D’Amaro said those moments show why it’s necessary for Disney animators to be a part of the event process: As the Imagineers craft recent technologies, the artists may also help bring them to life.

It shows in Disney’s rebrand of Splash Mountain. In each the California and Florida parks, the corporate is refurbishing the ride into Tiana’s Bayou Adventure, which can feature dozens of animatronic characters from “The Princess and the Frog.”

Imagineers have developed all-electronic audio-animatronics for the ride for characters akin to Lewis, the trumpet-playing alligator from the film. Disney revolutionized animatronics many years ago with its hydraulic, or liquid-fueled, and pneumatic, or air-fueled, systems, however the electronic animatronics for Tiana’s Bayou allow for more refined and precise movement, making them appear more realistic. Similar animatronics might be seen within the rides Smuggler’s Run and Rise of the Resistance, in Galaxy’s Edge.

Interior pieces of among the animatronics were crafted using 3-D printing, leading to a lighter-weight material.

Disney’s ambitions to grow its experiences unit hinge partially on making its attractions feel more real.

“They continue to push the envelope of storytelling and creativity,” D’Amaro said of the Imagineering team.

He cited the recently shuttered Star Wars Galactic Starcruiser, a hotel and immersive experience that took guests on a two-day “voyage” in space. It was a 48-hour interactive story that allowed fans to physically play within the Star Wars universe.

“This is something that had never been done before,” D’Amaro said. “It was difficult to even explain to the public, and I think it was incredibly brave for us to move into this space. … And this, to me, says Imagineering is still at its best today.”

High ticket prices deterred the typical parkgoer, and the Galactic Starcruiser shuttered in September. Still, D’Amaro said the experiment was a learning opportunity for the corporate.

“Those learnings are being employed on the next experiences, which we haven’t even announced yet,” he said.

Storytelling is at the center of every part across Disney’s experiences division.

This extends to Disney’s cruise line and hotels, in addition to its video game business. The company has a fleet of 5 cruise ships, and plans to add three more by fiscal 2026.

The Disney Wish, which made its maiden voyage in 2022, was the primary addition to the fleet in a decade and bet big on its powerhouse franchises to entice travelers to the high seas.

There’s a “Frozen” sing-along dinner and a Marvel dining experience, in addition to a Star Wars-inspired Hyperspace Lounge. The ship also has the primary ever Disney water ride attraction on board, the AquaMouse.

“This is something I think that’s really important, the idea of the Disney difference,” D’Amaro said. “That this company works together as one is more powerful now than I think it ever has been — whether it’s [entertainment co-chair] Alan Bergman in the studios creating a new property that we can then take to Disney experiences and bring it to life and extend that story in brand new ways, or franchises that are birthed out of the theme parks.”

Disney’s experiences division has immediate expansion plans — even before the majority of the planned $60 billion investment kicks in.

Next to open for Disney is Fantasy Springs, an eighth port on the Tokyo DisneySea park. The land might be home to three recent areas — inspired by the movies “Frozen,” “Tangled” and “Peter Pan” — in addition to the brand new Tokyo DisneySea Fantasy Springs Hotel.

Concept and design work can also be underway for the Tropical Americas area at Disney’s Animal Kingdom in Florida. There have been no official updates on the previously announced third ride at Avengers Campus within the California Adventure area at Disneyland.

The company is developing what it’s dubbed “blue sky” ideas for its parks — projects that are still in early development and may ultimately not see the sunshine of day.

Disney has teased that an area based on “Coco” or “Encanto” or each could possibly be underway within the Magic Kingdom. There were also talks about opening an area of the Magic Kingdom that can be overrun by Disney villains.

During the corporate’s investor meeting this week, Iger even teased the opportunity of an “Avatar” land at Disneyland in California.

“We have thousands of acres of land still to develop,” Iger said through the Morgan Stanley Conference in March. “We could actually build seven new full lands if we wanted to around the world, including the ability to increase the size of Disneyland in California, which everybody thinks is kind of landlocked, by 50%.”

Price points for these projects will vary, in the event that they do come to fruition. The recent additions of the 2 Star Wars: Galaxy’s Edge lands in Disneyland and Disney World are estimated to have cost $1 billion each.

That’s where the $60 billion investment is available in.

Disney likely won’t spend it all soon.

“We actually have a fairly good idea in the near term of what’s being built, but we’re purposefully not going to allocate it all,” Iger said at a media event Tuesday, according to the Los Angeles Times. “Because who knows? In five years we can end up with a giant hit movie — think ‘Frozen’ — that we may want to mine essentially as an attraction, or a hotel or restaurant in our parks. So you want to maintain some flexibility.”

But Iger won’t be head of the corporate in five years, if all goes according to plan. The CEO, who returned to the post in 2022, is ready to step down at the top of 2026. Disney’s board is within the strategy of succession planning.

D’Amaro is on the short list.

His track record helming Disney experiences is an element of a 26-year profession with the Walt Disney Company, through which D’Amaro has held posts as chief financial officer for consumer products and global licensing and chief industrial officer for Walt Disney World Resort.

For now, nevertheless, D’Amaro said he’s concentrating on his current post. He called it a “blessing” to have Iger back as CEO.

“I’m focused on Disney experiences,” he said when asked about potential succession plans. “And I’m focused on driving innovation and storytelling forward and paying tribute to our fans and continuing to grow this business.”