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Epic Universe poses competitive threat to Disney World

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Comcast ( CMCSA ) invests an estimated $7 billion in Epic Universe

expansion

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Analysts predict Epic Universe will attract millions,

impact

Disney ( DIS ) attendance

By Dawn Chmielewski

ORLANDO, Florida, May 21 (Reuters) - For decades,

Universal Orlando Resort was a pit stop on a vacationer's way to

the "Most Magical Place on Earth," Walt Disney World.

Now, NBCUniversal owner Comcast ( CMCSA ) aims to rewrite

the travel itinerary with Epic Universe, a major new theme park

in Central Florida set to open on Thursday.

An estimated $7 billion investment has doubled the resort's

size, adding 750 acres and populating it with familiar movie and

game characters, which it owns or licenses. It features five

themed worlds: The Wizarding World of Harry Potter-Ministry of

Magic; Super Nintendo World; How to Train Your Dragon-Isle of

Berk; Celestial Park; and Dark Universe.

Epic Universe represents the largest investment Comcast ( CMCSA ) has

made in Universal's theme parks since gaining control of the

business in 2011. Analysts say it poses a heightened competitive

threat to Walt Disney World, whose last major expansion was in

2019.

"This is the one part of the media ecosystem that is not

vulnerable to screen-shifting. It's still beloved as a thing to

do with friends and family," Comcast ( CMCSA ) President Mike Cavanaugh

told Reuters on Tuesday. "It would be silly not to be stepping

on the gas."

Comcast's ( CMCSA ) big investment in parks is one of six areas that

will contribute to growth. The Experiences group is

experimenting with new concepts, including the August launch of

a permanent attraction in Las Vegas, Universal Horror Unleashed.

It includes four haunted houses inspired by movies like "The

Texas Chainsaw Massacre" and "The Exorcist: Believer." A

family-friendly regional park, Universal Kids Resort, debuts

next year in Frisco, Texas, inspired by "Shrek," "Minions" and

SpongeBob SquarePants.

"One of our key pillars of growth is how we bring the

Universal brand to new audiences in new markets," Mark Woodbury,

chairman of Universal Destinations & Experiences, said in an

interview. "And you can see that in our Kids Resort in Frisco,

Texas, for our horror genre venue in Las Vegas."

Universal also has another major theme park resort planned

for the United Kingdom, Comcast's ( CMCSA ) first in Europe.

The theme park business is not without risk. It's vulnerable

to economic downturns - something the industry experienced

during the COVID-19 epidemic.

Comcast ( CMCSA ) CEO Brian Roberts said he is comfortable making

long-term, capital-intensive bets.

"When you find something extraordinary, that's when you make

these bets," said Roberts, citing the example of the first Harry

Potter themed land in Orlando. "When that Harry Potter opened, I

think there was a massive increase in attendance the next day,

and it never went backwards."

WINNING STREAK

Disney ( DIS ) has dominated the Orlando scene since Walt

Disney World's Magic Kingdom opened in 1971.

In 2023, Walt Disney World attracted 48.8 million visitors,

more than double Universal's attendance of 19.8 million that

year, according to a report from the Themed Entertainment

Association and AECOM.

Epic could "siphon off at least some of the demand,"

MoffettNathanson analyst Craig Moffett wrote in an investor

report about Epic Universe's potential impact on Disney ( DIS ).

Moffett predicts Epic Universe could attract 9.5 million

visitors in 2026, and bring in more than $1.3 billion in

revenue. Some of those gains will come at the expense of other

parks, including Disney's ( DIS ), which Moffett estimates could lose 1

million guests over the next two years. In time, it could draw

13 million visitors a year, more than either of its sister

parks, he estimates.

"In the long run, I think it makes Orlando an even more

attractive vacation destination," said TD Cowen analyst Doug

Creutz. "That's probably good for Disney ( DIS )."

Universal's theme park business has been rooted in its

movie-making from its earliest days offering studio tours a

century ago. When Universal Studios Florida opened in 1990, it

promoted the park as offering the chance to "ride the movies."

The opening of The Wizarding World of Harry Potter marked a

watershed moment for Universal's Orlando resort, helping to fuel

attendance with an experience that faithfully recreated the

Warner Bros movies. A second Potter-themed attraction, The

Wizarding World of Harry Potter-Diagon Alley, opened in 2014.

Ever since Universal tapped in to J.K. Rowling's fantasy

world, Moffett said it has been "on an asterisk-free winning

streak."

Ahead of the Epic Universe launch, Disney ( DIS ) has reassured

investors about its theme parks business

Disney ( DIS ) told investors that bookings at Walt Disney World remain

strong over the next two fiscal quarters. It has been making

steady improvements to its Florida resort to keep the experience

fresh for visitors, including adding the Guardians of the

Galaxy: Cosmic Rewind spinning roller coaster at Epcot in 2022,

and the TRON Lightcycle Run roller coaster in the Magic Kingdom

in 2023. It plans to spend $60 billion over a decade to

"turbocharge" growth in its parks and cruise businesses.

In April, Disney ( DIS ) began offering half-price tickets for

children ages three to nine this summer, and cut by half the

downpayment Florida residents make to purchase annual passes.