Is now a good time to invest in theme parks?

The theme park business is big business — but is it a good business to invest in?

Article updated: 28 February 2019 10:00am Author: Michael Baxter

A good time to invest in theme parks

Are the likes of Merlin, Disney and Universal good punts? Actually, two new developments make this sector interesting — understand them, and opportunity awaits.

Merlin Entertainment owns Madame Tussauds waxworks, Legoland Theme Parks, Legoland Discovery Centers, Sea Life Centres, Gardaland in Italy, Heide Park Resort in Germany, The Dungeons, The London Eye, The Blackpool Tower attractions, The Orlando Eye, Warwick Castle, Alton Towers, Thorpe Park, and Chessington World of Adventures.

Disney owns that mouse and associated characters, Star Wars and Marvel.

Universal, among other things, owns ‘Harry Potter: The exhibition’, which is part of Universal Theme Parks, which is owned by NBC Universal, which is owned by Comcast.

Then there is The Making of Harry Potter, the highest rated attraction worldwide, according TripAdvisor Reviews. This is part of the Warner Brother Studios Leavesden, owned by Warner Bros, owned by WarnerMedia, owned by AT&T.

I am sure that Warner Brother Studios Leavesden is great, but relative to the size of AT&T it is about as important as a few drops of water in a pond. It is hard to justify investing in AT&T — market cap $226 billion, simply because it owns a cool tourist attraction in Hertfordshire.

Comcast’s market cap is $174 billion, Universal being an important part, and Harry Potter rides being an important part of Universal. If investing in theme parks appeals to you, then Comcast may be worth considering, but only if you like the company for other reasons too.

Disney and Merlin are different. If you want to invest in theme parks, they are the obvious candidates — unless you want to go small, and invest in Brighton Pier, or similar — although I am still narked over the way Brighton’s West Pier was allowed to crumble — boy was that indifference of the 1980s short-sighted?

What’s different

But the theme park business is changing — and it is changing for two reasons:

Firstly: there is the rise of TV blockbusters that would translate well into theme parks.

TV shows have been big in the past, but the market is mutating. I guess you can date it back to the rise of Game of Thrones and The Walking Dead, two shows that are practically begging for a theme park, although admittedly not suitable for young children.

But we are in the ‘Netflix era’. I mean that as shorthand for Netflix type business models, not just Netflix.

Netflix itself has a market cap $158 billion, while Game of Thrones makers HBO, is owned by WarnerMedia — are you seeing a pattern? The Walking Dead, the TV show, is produced by AMC, but Universal already has Walking Dead theme park attractions.

The Netflix phenomenon is creating the potential for a significant rise in theme park products.

Let the force be with you

Some products are perfect for theme parks — a Star Wars movie feels a bit like a rollercoaster ride.

Lords of the Rings doesn’t really work.

Immersive reality

Technology is set to change the business. For one thing we are seeing increasing crossover with the cinema. Not so long ago 3D movies was what you saw at theme parks. But now, at my local Cineworld, 3D is old hat; instead there is 4DX — moving seats, smells, water spray and jets, and smoke. ScreenX is coming, with a 270 degree panoramic screen.

So if you are interested in theme parks, maybe Cineworld should be part of your portfolio.

But immersive reality — so that’s augmented and virtual reality, could be transformative.

They are quite different. One is clearly complementary with existing theme parks, the other is potentially competitive.

Virtual reality is totally immersive. You don’t need to go to a theme park to enjoy the experience.

Augmented reality superimposes images over reality. Augmented reality combined with a theme park can provide a very powerful experience indeed; Universal are looking at this for a ground-breaking Mario Kart attraction.

Barriers to entry

The point about immersive technology in the theme park business is that it lowers barriers to entry. Sure, there are upfront costs in producing virtual and augmented reality products, but once complete, such products could be rolled out worldwide rapidly.


It is the convergence between immersive reality and the Netflix economy that I find exciting.

I am not sure about Merlin — if they don’t read this right, they could go the way of Blockbusters or Kodak. Disney should be safe, because of the nature of its assets.

The big disruptors in this business could prove to be Netflix and Amazon. But watch the new BBC/ITV alliance, if they apply imagination and vision, something that I am afraid has been lacking at times in the past, they could embrace immersive technology to become players in this space too.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

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Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.