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 a nearly empty Disneyland.

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

It had been more than a year since the Covid pandemic had stiff Disney’s domestic parks to shutter, but D’Amaro, chair of Disney’s experiences division, was confident guests would throughout back in when the gates reopened.

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

On that quiet day in 2021, D’Amaro had been in charge of the parks, experiences and consumer products splitting up, now just called experiences, for only a little more than a year. He took the helm when Bob Chapek was bugged as CEO in early 2020. D’Amaro spent much of those 12 months dealing with substantial operating disappointments from global park closures, a docked fleet of cruise ships and a plunge in hotel visits.

Revenues mow down 35% in 2020, a nearly $10 billion decrease from the $26.2 billion the experiences division had tallied in the year in the presence of the pandemic. Then revenue dropped an additional 3% in 2021.

But a lot has changed in three years. D’Amaro — sitting in a conference accommodation in Burbank, an hour north of Disneyland and just a few miles from the heart of Disney’s theme park creative mechanism, Walt Disney Imagineering — has much to brag about.

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

D’Amaro recounted 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 same.”

“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 go oned construction of its Avengers Campus themed land in Disneyland and touched up old favorites such as the King Arthur Carousel. And it assembled new rides, and refurbished others, in 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 gathering also launched two new rides at Walt Disney World in Florida: a “Guardians of the Galaxy”-themed ride in its Epcot estate in 2022, and a “Tron”-themed roller coaster in the Magic Kingdom in April 2023.

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

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

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

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

The ability to get more out of the car parks in recent years was crucial for CEO Bob Iger and Disney’s board as they tried to make the company more profitable and gain strength share performance. On Wednesday, Disney beat back activist investor Nelson Peltz’s proxy fight, reelecting its well-stacked board.

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

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

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

Walt Disney Imagineering has sustained been on the cutting edge of development. Its innovations, from ride mechanics and animatronics to creature design and immersive architecture, clothed made Disney’s parks a standout in the industry.

Last year, guests caught a glimpse of one of these innovations — a trinity of tottering bipedal robots from Star Wars called BDX droids. First spotted at California Disneyland’s Be featured Wars: Galaxy’s Edge, they are just one iteration of a new technology Disney Imagineering is developing to bring walking robotic fruit cakes to life.

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

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

Disney hopes hands-on modernizations such as the robots will keep guests coming.

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

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

The biggest audience retaliation came at the end 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 child will-power. The simple motion — programmed just for the presentation, Imagineers told CNBC — captured something intrinsic to the human encounter.

D’Amaro said those moments show why it’s important for Disney animators to be part of the development process: As the Imagineers talent new technologies, the artists can help bring them to life.

It shows in Disney’s rebrand of Splash Mountain. In both the California and Florida preserves, the company is refurbishing the ride into Tiana’s Bayou Adventure, which will feature dozens of animatronic descriptions from “The Princess and the Frog.”

Imagineers have developed all-electronic audio-animatronics for the ride for characters such as Lewis, the trumpet-playing alligator from the integument. Disney revolutionized animatronics decades ago with its hydraulic, or liquid-fueled, and pneumatic, or air-fueled, systems, but the electronic animatronics for Tiana’s Bayou authorize for more refined and precise movement, making them appear more realistic. Similar animatronics can be seen in the expeditions Smuggler’s Run and Rise of the Resistance, in Galaxy’s Edge.

Interior pieces of some of the animatronics were crafted using 3-D copy, resulting in a lighter-weight material.

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

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

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

“This is something that had under no circumstances 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 shake up into this space. … And this, to me, says Imagineering is still at its best today.”

High ticket fees deterred the average parkgoer, and the Galactic Starcruiser shuttered in September. Still, D’Amaro said the experiment was a learning moment for the company.

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

Storytelling is at the verve of everything across Disney’s experiences division.

This extends to Disney’s cruise line and hotels, as well as its video devil-may-care business. The company has a fleet of five cruise ships, and plans to add three more by fiscal 2026.

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

There’s a “Frozen” sing-along dinner and a Marvel dining experience, as well as a Star Wars-inspired Hyperspace Lounge. The cutter also has the first ever Disney water ride attraction on board, the AquaMouse.

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

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

Next to open for Disney is Fantasy Springs, an eighth port at the Tokyo DisneySea greens. The land will be home to three new areas — inspired by the films “Frozen,” “Tangled” and “Peter Pan” — as reservoir flow as the new Tokyo DisneySea Fantasy Springs Hotel.

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

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

“We actually have a fairly good idea in the near term of what’s being built, but we’re purposefully not effective 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 monster hit movie — think ‘Frozen’ — that we may want to mine essentially as an attraction, or a hotel or restaurant in our parks. So you call for to maintain some flexibility.”