By George Glover

Harry Potter and Super Mario are about to go head-to-head with Luke Skywalker and Mickey Mouse. That isn't the plot of the latest superhero blockbuster -- it's a real-life fight for dominance in Orlando, Fla.

Walt Disney has been the biggest player in the world's theme-park capital for more than half a century, but Comcast's NBCUniversal will challenge that when it opens Epic Universe on May 22, expanding its already large presence in the area.

Thrill seekers will be able to ride new roller coasters based on Mario and the Wizarding World at Universal's park, then drive 15 minutes down Interstate 4 to sample Disney attractions centered on Star Wars and the Marvel Cinematic Universe. This is a clear win for the millions who visit Orlando each year.

But the House of Mouse's shareholders have reason to be nervous. Investors have long regarded the Orlando park as the biggest moneymaker for Disney's experiences business, which made up about 60% of its total profit in fiscal 2024. The company can't afford to take the battle for Central Florida lightly.

Disney's parks have faltered in the run-up to Epic's launch. Operating income for the experiences segment was flat last year, overshadowing other successes, like streaming turning a profit for the first time. Shares are down 14% over the past 12 months, compared with an 8.5% jump for the S&P 500 index.

Some of the slowdown has been due to factors out of Disney's control. Stubborn inflation and elevated interest rates mean that Americans have cut back on vacation spending. Other theme parks are struggling, too: Six Flags Entertainment's losses have widened, and its stock is down 12% since March 2024.

But some of Disney's parks problems are self-inflicted. The company hasn't built enough new rides in recent years to persuade vacationers to keep coming back.

Its $71 billion acquisition of 21st Century Fox in 2019 sucked up cash, and Disney has prioritized other parts of its business since then. The company spent $23.4 billion on produced and licensed content over the past fiscal year as it bid to woo subscribers to its Disney+ streaming platform, while investing $5.4 billion in its cruise fleet, parks, resorts, and other property.

As a rival park launches nearby, the biggest changes set to happen at Disney World this summer are cosmetic improvements for the slot-car ride Test Track. That's a real risk: Without the promise of shiny new attractions, vacationers may decide to go to Epic instead.

"Amusement parks have to build rides to get customers to come back year after year," says Len Testa, president of Touring Plans, a data provider that helps vacationers plan theme-park visits. "Just saying, 'Come and see the new version of Test Track' doesn't seem like a viable strategy."

Disney executives have been sanguine about the threat the new park poses. "We looked at the history of other attractions opening up in other parks in Florida, and it has generally been beneficial to us," said Disney Chief Financial Officer Hugh Johnston on an earnings call in November. That is, Disney believes that Epic makes Orlando more appealing as a vacation destination, boosting foot traffic at Disney World as well as at Universal's resort. Disney declined to make executives available for this article.

Wall Street isn't so sure about Disney's theory. MoffettNathanson, a boutique investment research firm focused on technology, media, and telecoms, has estimated that Epic will lure about one million visitors away from Disney World in the first year that it's open. That's a decent-size chunk of Disney's customer base: Its flagship Magic Kingdom park in Orlando pulled in 17.7 million attendees in 2023, according to the latest edition of the Aecom Theme Index, which measures amusement-park attendance.

Ric Prentiss, who heads up telecommunications equity research for the investment firm Raymond James, thinks Epic's launch could put a lid on growth for Disney's parks.

"Epic is going to have that new-car smell. It's a pretty exciting launch, and that will be a headwind," Prentiss, who rates Disney shares at the equivalent of Hold, tells Barron's. "People coming to Orlando are going to want to give this new park a try -- there will be some pressure on Disney."

Epic will be the fourth theme park in the broader Universal Orlando Resort, which also features on-site hotels and the CityWalk shopping and dining district. Until now, the development didn't feel like much of a threat to Disney World -- vacationers have tended to visit there for a day or two, either before or after a longer stay with Mickey Mouse & Co.

Mark Woodbury, CEO of Universal Destinations & Experiences, thinks Epic can flip the script. "This is about continued growth in Orlando, and it really speaks to our bolder ambition to become the destination of choice in each of our key markets....Prior to this, consumers would spend a day or two at Universal, but we wanted that to expand to the full week," he tells Barron's.

Universal has poured about $7 billion into the development, according to analyst estimates, and is bringing out the big guns from its vast intellectual-property library in a bid to get consumers to shell out for tickets. One of Epic's five "worlds" is themed around The Super Mario Bros. Movie, a 2023 videogame adaptation that grossed about $1.4 billion, and another will center on the How to Train Your Dragon franchise, to tie in with a live-action film coming out in June.

Woodbury says that Comcast is "playing the long game and looking at how [it] can drive growth" from theme parks. Universal is also planning to open a kids-focused site in Frisco, Texas, and is in talks with the United Kingdom government about a 700-acre development in Bedfordshire, a rural county just outside London.

Theme parks make up just 7.4% of Comcast's overall revenue, so don't expect any of this to boost shares right away. But the expansion plans could help Comcast by giving it a route to growth apart from its ailing broadband business, which lost about 400,000 customers last year.

Disney won't just roll over. Even though Disney World hasn't opened many new rides lately, it still offers 94 attractions and shows in Orlando right now, compared with Universal Orlando's 56, according to data from Touring Plans. In September 2023, the company set aside $60 billion to invest in experiences over the following 10 years, which could help undo some of the damage caused by the recent underspending on parks.

Disney has also experimented with a so-called dynamic pricing model, in which tickets become more expensive at times of high demand, focusing on Disneyland Paris. Industry insiders believe that it's only a matter of time before the company introduces a similar system in Orlando. The strategy could help Disney maximize how much revenue it can make per attendee but has proved unpopular in sectors such as event ticketing, with fans feeling ripped off when prices surge.

Higher capital expenditures won't change the reality that Americans are tightening their belts. Tariffs, labor-market shakiness, and a slowdown in spending don't bode well for a Disney rebound, according to Raymond James' Prentiss.

"The health of the consumer, what's going on with unemployment and tariffs....[P]eople are going to be taking care of food and shelter before they start thinking about a Disney vacation," he says.

Between the faltering economy and the new competition up the road, Disney shareholders have good reason to buckle up.

Write to George Glover at george.glover@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 20, 2025 00:30 ET (04:30 GMT)

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