International Association of Amusement Parks and Attractions (IAAPA) 319 million people attended Americas 450 amusement parks, which grossed over $9 billion in revenues in the year 2001.1 ("The U.S. Amusement Industry," 2002) Amusement Parks are an essential part of American Life and have been for decades. Theme Parks blanket the country and add an interesting dynamic to the American economy. Many of us can't imagine the world without Mickey Mouse and the Tasmanian devil. America's amusement parks have brought these characters to life and created a lucrative industry in the process.
The following discussion will aid us in understanding the United States Amusement Industry.
The purpose of this essay is to provide an in-depth analysis of the Amusement Industry. We will begin by clearly defining the Amusement Industry. Then we will discuss the industry's impact on Gross Domestic Product. Employment factors relating to the industry and the Major Players that make up the market will also be discussed. A major focal point of the essay will be the competition that companies within the industry face and the types of investors that have interests in this particular industry.
SWOT analysis of the industry will also be provided along with an analysis of the supply and demand of the Amusement Industry. Let's begin our discussion with a definitive view of the industry.
Defining the Industry
The amusement and recreation industry includes more than 102,000 establishments; these establishments cover a large range of attractions from theme parks to fitness centers. The industry is composed of any activity that occupies a person's free time, but excludes the viewing of motion pictures and rentals. The multifaceted range of activities presented by the amusement and recreation industry can be classified into three large groups including sports, performing arts, and amusement.("Amusement and Recreation Services," 2000)
The sports segment of the industry includes professional sports, as well as establishments, which offer sports amenities and services to amateur athletes. In addition, commercial sports clubs manage professional and amateur athletic clubs and promote athletic events. There are various types of sports that can be found in these establishments, including boxing, baseball, basketball, ice hockey, football, soccer, wrestling, and auto racing. Both professional and amateur companies involved with sports promotion are a part of this segment industry. In addition, sports establishments' in which gambling is allowed, such as dog, auto, and horse racetracks are a part of this segment of the industry.
Amusement and Recreation Services," 2000)
Moreover, the sports segment of the industry also includes physical fitness amenities that are characterized by exercise and weight loss programs, health clubs, gyms, and day spas. Many of these establishments also offer aerobic dance, exercise classes and yoga. Other amusement and recreation businesses within the sports segment include bowling centers that rent lanes and equipment for, duckpin, tenpin or candlepin bowling. These services can be public or private. Sports and recreation clubs that are only available to members and their guests include some golf, yacht, tennis, racquetball, hunt, and gun clubs. ("Amusement and Recreation Services," 2000)
The Performing Arts segment facilitates a wide variety of businesses and groups involved in live theatrical and musical performances. Theatrical production companies, manage all aspects of producing a play or theater event, including employing actors and actresses. Agents also represent actors and assist them in getting new jobs. These booking agencies create performance engagements for theatrical groups and singers. In addition Costume design management companies create costumes for productions. ("Amusement and Recreation Services," 2000)
Also included in the performing arts segment are lighting and stage crews that manage the technical aspects of productions.
The performers of musical entertainment include dance bands, popular music artists, jazz musicians, orchestras, and rock and roll bands. ("Amusement and Recreation Services," 2000)
The performing arts segment can also include dance schools, studios, and halls, which provide parks for the purpose of entertaining. Some of these establishments have shows, mechanical rides, and refreshment stands. The other amusement and recreation services may include day camps, go-cart rentals, fireworks display services, rodeos, riding stables, ski lifts, waterslides, skating rinks, and also establishments offering rental sporting goods. ("Amusement and Recreation Services," 2000)
For the purposes of this discussion we will focus on the Amusement Segment of the industry. According to the bureau of labor and statistics the amusement segment of the industry is composed of an assortment of establishments, which provide amusement for a large number of customers. Some of these businesses within the industry supply video games, pinballs, and gaming machines to amusement parks, arcades, and casinos. This segment consists of casinos and gaming establishments that provide off-track betting and represent a quickly emerging part of this industry segment. ("Amusement and Recreation Services," 2000)
In addition this segment also includes amusement and theme parks, which range in size including local carnivals to multi-acre parks. These parks or carnivals may have shows, mechanical rides, and refreshment stands. ("Amusement and Recreation Services," 2000)
According to the International Association of Amusement Park Attractions " the amusement industry is a responsible, regulated one. Besides a thorough set of internal checks, each facility is subject to one or more layers of independent examination. According to the CPSC, 42 of the 50 states regulate parks. Of the eight states that don't, the legislature in one is studying the issue (AL), five have a few facilities each at most (AZ, KS, MS, SD, UT), and two have none (ND, MT). In addition, the American Society for Testing and Materials (ASTM), an independent standards-writing body, has developed ride safety standards in conjunction with the industry and other interested parties for over two decades." ("Media and News" 2002)
The Amusement Park Industry would be defined as an oligopoly. An oligopoly is a market in which a limited number of sellers follow the lead of a single major firm. (Scott 1997.)
In this case the major firm is Walt Disney. Disney has the largest market share in the industry. The industry is an oligopoly because there are significant barriers related to entering this industry; the first of which is money. Parks spend millions of dollars to build theme parks and maintain them. In some cases these parks do not attract patrons, which means that there is no return on investment and investors loose money. This creates an environment in which only a small portion of companies are willing to take the risk associated with investing in an amusement park and so an oligopoly is created.
The Gross Domestic Product is defined as the fiscal value of all the goods and services shaped by an economy over a specified period of time. According to the Oxford Dictionary of Business, the GDP is measured in three ways:
On the basis of expenditure, meaning the value of all goods and services bought, including capital expenditure, consumption, increase in the value of stocks, government expenditure, and exports less imports.
On the basis of income, meaning income created by employment, self-employment, rent, company profits (public and private), and stock appreciation.
On the basis of the value added by industry, meaning the value of sales minus the costs of raw materials. ("Dictionary of Business" 1996)
The Bureau of economic analysis writes that, the gross domestic product by industry accounts present estimates of quantity and price change for GDP by, value added by industry, and estimates for gross output by industry and for intermediate inputs by industry. These estimates in combination with the current-dollar estimates can be used to decompose an industry's real out-put and price growth. (Gross Domestic Product by Industry, 2000)
Statistics provided by the Bureau of Economic Analysis concerning GDP by industry shows that in 1990 the Amusement and Recreations services made up $36.5 billion of the GDP compared to $80.8 billion in 2000. Percentage wise the Amusement and recreational segment made up.08% of the GDP from 1997 until the year 2000.2 (Gross Domestic Product by Industry, 2000)
The Bureau of Labor Statistics projected that U.S. real gross domestic product would exceed $8.5 trillion by 2006, which is an increase of more than $1.6 trillion during the ten years between 1996 and 2006. (Su, 2001) According to the Bureau of economic analysis Gross Domestic Product increased at an annual rate of 1.3% in the second quarter of 2002, according to revised estimates released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 5.0%. (Gross Domestic Product by Industry, 2000)
The amusement and recreation services industry provided more than 1.7 million jobs in the year 2000. Miscellaneous amusement and recreation services including amusement parks, coin operated amusement devices, public golf courses, membership sports and recreation clubs, and physical fitness facilities, accounted for 3 out of 4 jobs. Even thought the majority of establishments within the amusement and recreation industry are small, over half of all jobs were in establishments that employ over 50 workers. ("Amusement and Recreation Services," 2000)
In the amusement and recreation services industry jobs are held by a huge number of seasonal and part-time workers and by employees…