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Avatar Land Addition to Benefit Disney's Theme Park Business

Posted
10/16/2013 1:02:00 PM
By: Trefis
Referenced Stocks:CMCSA;DIS

In the 2013 D23 Expo Japan, James Cameron, director of the movie Avatar and Disney ( DIS ) provided a glimpse of the planned Avatar based themed attraction to open in Walt Disney World. The park will include an immersive Pandora-like walk-through, a boat ride through a bioluminescent jungle and possibly a ride through the sky on the mythical Banshee. Avatar Land is part of the largest expansion in the history of the Animal Kingdom. Theme parks is an important business for Disney since it provides stable cash flows for the company and offers an opportunity to interact with the visitors and cross-market other company products. Avatar Land will cost around $500 million to build and will be operational by 2017. Avatar the movie had grossed more than $2.7 billion at the box office worldwide and has many fans across the globe. The new attraction is expected to boost attendance at the Animal Kingdom and aid Disney's overall growth.

The Avatar Land At Animal Kingdom

Avatar Land will feature rides and nighttime shows based on the fictional planet of Pandora as portrayed in the movie. Avatar in 2009, was produced and distributed by 21st Century Fox, but in September 2011, a long-term exclusivity deal was signed between Disney, James Cameron's Lightstorm Entertainment and 21st Century Fox. This deal allowed Disney's Animal Kingdom to receive a new themed area dubbed Avatar Land . Disney is set to begin the construction this year.

What This Means For Disney?

According to our estimates, Disney's U.S. theme parks and resorts account for more than 16% of Disney's value. Disney can promote movies, sell consumer goods, promote TV programming as well as online and other games through its theme parks. Avatar Land is one of the most hotly anticipated theme park additions since The Wizarding World of Harry Potter opened at Comcast's ( CMCSA ) Universal Orlando in June 2010. That attraction helped boost the theme park attendance by 20%. Similarly, Avatar Land will help boost the attendance at Disney's theme park. We estimate the attendance to grow from 76 million currently to close to 90 million by 2017 when the new theme park opens. If the theme park receives similar attendance growth as received by The Wizarding World of Harry Potter in 2010, there would be an upside of more than 5% to our price estimate of $72.

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