Malibu, Danerys Studios.
Today was Monday, May 8th.
At the weekly executive meeting of Danerys Entertainment, the focus was on summarizing the first month of operations at Universal Studios Osaka and preparing for the upcoming European Universal Studios project.
Since the beginning of 1995, Japan had been plagued by a series of disasters and crises.
On January 17, a 7.2 magnitude earthquake struck the Kansai region of Japan, affecting the final preparations for the opening of Universal Studios Osaka. Fortunately, the damage didn't delay the planned opening. Then, on March 20, the Tokyo subway sarin gas attack killed and injured over 5,000 people, just two weeks before the park's grand opening. This forced the team to significantly ramp up security at Universal Studios Osaka. To ensure safety, Simon even deployed a private security network from the Westeros family to operate covertly beneath the public security team.
The impact of these back-to-back events was profound. Japan's Nikkei Index, which had stabilized at around 20,000 points, dropped dramatically, sinking below 15,000 in less than six months. The overall decline exceeded 25%, and the Japanese economy was severely shaken.
Yet, on April 6, amid this turbulence, Universal Studios Osaka opened its doors. The theme park team had lowered its initial target of 10 million visitors in the first year to 8 million, implementing various promotional strategies to attract visitors.
This 8-million target for the park's first year was only half of Tokyo Disneyland's 16 million visitors in 1994. However, Universal Studios Osaka couldn't compare to Tokyo Disneyland in terms of size or location. Given the social climate, hitting 8 million visitors in the first year was already seen as a success.
As it turned out, the grim economic situation didn't have as severe an impact as anticipated. In fact, there seemed to be signs of the "lipstick effect"—a phenomenon where entertainment thrives in economic downturns.
On opening day, Universal Studios Osaka attracted 46,000 visitors.
This exceeded expectations, indicating a stable demand for theme parks in Japan.
The following weekend, the park hit a new single-day high with 53,000 visitors.
Then, during the Easter festivities around April 16, visitor numbers were equally impressive, with over 100,000 visitors flocking to the park over the weekend.
From April 6 to May 7, Universal Studios Osaka attracted a total of 970,000 visitors in its first month, surpassing the initial target of 900,000.
If this pace continued throughout the year, the park could potentially draw over 11 million visitors in its first year.
However, this estimate was overly optimistic.
The strong numbers in the first month were largely driven by the park's novelty and aggressive promotional campaigns—a common "grand opening effect."
Once the initial excitement wore off, visitor numbers were expected to decline.
Even so, during the summer months, the park's popularity would likely remain high. However, over the course of the year, the average monthly visitor count could drop by 10% to 20%. Based on these projections, Universal Studios Osaka was expected to attract between 8.8 million and 9.9 million visitors in its first year, comfortably surpassing the revised goal of 8 million.
No one was getting complacent, though, as the original goal had been 10 million visitors.
The real challenge would come after the first year.
In the first year, Universal Studios Osaka would benefit from its novelty across Japan and even Asia, along with widespread marketing efforts. But the key to long-term success would be maintaining steady operations in the years to come.
Given the park's investment scale, it needed at least 7 million visitors annually to break even.
However, simply breaking even wouldn't meet Danerys Entertainment's expectations.
Both Danerys Entertainment and the park's Japanese shareholders aimed for profitability, not just break-even. Tokyo Disneyland, for example, generated over $500 million in net profit in 1994. If Universal Studios Osaka merely broke even, it would be considered a disappointment by many.
Thus, at this meeting, the executives weren't focusing on the impressive first-month numbers. Instead, they were discussing lessons learned and areas for improvement.
As per Simon's directive, the team gathered 30,000 visitor surveys during the park's first month of operation. Simon had wanted more, but frequent surveying would disrupt the visitor experience. Additionally, the various departments collected detailed data from attractions.
The findings were divided into three categories: "Highlights," "Shortcomings," and "Expectations."
Surprisingly, the biggest highlight of Universal Studios Osaka's first month was the strong sales of merchandise within the park.
Danerys Entertainment had prepared a vast array of new merchandise for the park's opening, many of which were exclusive to the Japanese market. These products featured characters from key Danerys franchises such as Pixar's animated films, the DC cinematic universe, and Jurassic Park.
With 970,000 visitors in its first month, ticket sales generated 7.1 billion yen (around $68 million). However, merchandise sales surpassed even that, reaching 8.3 billion yen (around $77 million), thanks to the popularity of limited-edition items, many of which sold out.
The third major revenue stream, food and lodging, wasn't as strong as Disney's, but still brought in 2.7 billion yen (around $26 million).
In total, Universal Studios Osaka generated 18.1 billion yen (around $175 million) in its first month.
Comparing this to Tokyo Disneyland, Universal Studios Osaka's ticket sales accounted for 39% of its total revenue, far lower than Tokyo Disneyland's 51%. Meanwhile, merchandise sales, at 45%, far exceeded Tokyo Disneyland's 27%, hitting Disney where it was strongest. The only area where Universal Studios Osaka lagged behind was food and lodging, with 16% of its revenue coming from these categories, compared to Disney's 24%.
This analysis revealed a decline in Disney's overall appeal. With fewer quality content offerings in recent years, Tokyo Disneyland visitors were spending less inside the park beyond ticket purchases.
In contrast, Danerys Entertainment's content was at its peak.
Most of the recent Hollywood blockbusters had come from Danerys Entertainment, and the company's top franchises dominated the market, frequently breaking through cultural barriers to succeed in Japan. This content dominance helped Universal Studios Osaka achieve such high merchandise sales in its first month.
However, while the results were promising, they also highlighted how much room Danerys' consumer products division had to improve in Japan. Nancy Brill, the executive in charge of this division, promised to develop a comprehensive merchandise strategy for the Japanese market as soon as possible.
Beyond the merchandise success, the three most popular attractions during the first month were the Jaws water park, Jurassic Park, and Pixar World.
These findings underscored the importance of content for a film-themed park.
Danerys Entertainment needed to keep producing high-quality films to maintain long-term visitor interest in Universal Studios.
While there were many highlights, there were also shortcomings.
The biggest drawback, according to visitor feedback and internal assessments, was that the park was too small.
This was a result of Simon's decision to adopt a conservative approach during construction.
Tokyo Disneyland, including its auxiliary areas, covered 250 acres, while Universal Studios Osaka only occupied 100 acres.
This inevitably led to overcrowded attractions and reduced visitor time spent in the park. The small area also meant long lines at popular attractions, negatively impacting the overall experience.
Unfortunately, this issue couldn't be resolved in the short term.
Japan's theme parks primarily catered to domestic visitors. Tokyo Disneyland, located in the Kanto region, had a potential audience of 30 million people, while Universal Studios Osaka, in the Kansai region, had only 10 million potential visitors. If Universal Studios had been built to Tokyo Disneyland's scale, the visitor experience would have improved, but the park would take much longer to become profitable.
Simon's plan was to operate the park for three years before deciding whether to expand. The goal was to avoid a financial disaster like Paris Disneyland, but expanding the park could eventually yield more benefits for Danerys Entertainment.
For now, they could only focus on fixing the manageable shortcomings.
Fortunately, some of the other issues—such as certain shows being lost on Japanese audiences, insufficient restaurant space, and some attractions not being child-friendly—were all fixable.
This approach was part of the park's original plan.
Even Orlando's Disney World had initially been unprofitable. The key to its eventual success was constant improvements to the visitor experience post-opening.
Of course, some projects, like Paris Disneyland, were doomed from the start due to poor location and uncontrollable construction costs. Even with the "grand opening effect," Paris Disneyland had drawn less than half of its expected visitors in its first month.
By comparison, Universal Studios Osaka was faring much better.
Despite the earthquake, terrorist attacks, and a weak economic outlook, the park's first month had exceeded expectations, unlike the disastrous start of Paris Disneyland.
Lastly, there was the "Expectations" section of the survey.
This was aimed at assessing potential expansions for the future.
The results showed that the most anticipated new attraction among visitors was a roller coaster.
Disney parks in both North America and overseas had their own "Indiana Jones Roller Coaster" rides, which were extremely popular.
Initially, Universal Studios Osaka had planned to include a similar attraction called "Space Fantasy Train." However, it wasn't a real roller coaster but an indoor simulation, and the project had been scrapped due to safety concerns.
There was another reason a roller coaster hadn't been built.
Roller coasters were standard amusement park fare and could be found all over the world. Adding a large roller coaster might make visitors feel like Universal Studios was just another amusement park, not a unique theme park.
Universal Studios aimed
to cater to visitor demands while still preserving the cultural identity of Danerys Entertainment. Losing that cultural distinctiveness would risk turning the park into just another amusement park.
After some discussion, including input from Simon, everyone agreed that starting a roller coaster project was necessary. A suggestion was made to build a dinosaur-themed roller coaster inside Jurassic Park. However, this would require additional investment, and the popular Jurassic Park attraction would have to close during construction. For now, the idea would remain in the planning stages.
After discussing Universal Studios Osaka, the meeting shifted to the plans for building Universal Studios Europe in Rome.
Since the location had been finalized, Simon suggested naming it "Universal Studios Rome," similar to how "Paris Disneyland" had been rebranded. This would help visitors immediately associate the park with its location.
Although Universal Studios Osaka was proving to be a bit small, Simon didn't plan to go overboard with Universal Studios Rome. He had no intention of making the same mistakes as Paris Disneyland, which was built on 5,000 acres of land.
However, Universal Studios Rome would be larger than its Osaka counterpart. Land in Italy wasn't as scarce as in Japan, and the slower economic growth meant lower land and construction costs. The same $2 billion budget used in Japan could buy twice as much land in Italy.
By the time the meeting ended, it was already noon.
Simon had lunch with Amy and others before returning to his office, where his assistant brought over Danerys Entertainment's stock information after the East Coast markets had closed.
While the meeting had been in progress, media across North America had widely reported on Universal Studios Osaka's first-month performance.
Danerys had initially lowered the park's first-year target from 10 million visitors to 8 million. This detail was never made public. Instead, the focus of the media coverage was the successful first month with 970,000 visitors and the news that the park would surpass the 7 million visitors needed to break even in its first year, ensuring profitability.
The impressive merchandise sales within the park were also highlighted.
Industry insiders knew that merchandise profits weren't divided based on the park's ownership structure. Danerys Entertainment took the largest share of these earnings, making this a significant windfall for the company.
Given the failure of Paris Disneyland and the grim economic conditions in Japan during the first half of the year, the market had been pessimistic about Universal Studios Osaka's prospects.
Now, the news that the park would break even and turn a profit in its first year without requiring additional funds from Danerys or its Japanese partners was seen as a major positive development.
Moreover, Universal Studios Osaka's success had eased concerns about Simon's insistence on building Universal Studios in Europe.
By the time the East Coast markets closed at 4 p.m., Danerys Entertainment's stock had risen by 0.7%, setting a new all-time high with a market capitalization of $141.9 billion. The company continued to outpace its Hollywood competitors.
Danerys Entertainment had completed its internal review of the three major U.S. television networks.
With the company's market value hitting new heights, Simon spent that afternoon formally discussing with Amy Pascal the potential acquisition of ABC.
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