30 theme parks were developed abroad in 50 years, while 2,500 theme parks were developed domestically in just 20 years, basically covering most provinces and cities in my country. However, there are only 300 theme parks with an investment of more than 50 million yuan. The main market participants are not pure cultural and tourism industry operators, but more comprehensive real estate developers. The quality of their projects varies greatly, and they are more “supporting” projects established to cooperate with real estate development. To date, there has been no large-scale group in China with a comprehensive layout across the entire cultural tourism industry chain like Disney. It is obviously lacking in the refined management of theme park construction and operation, customer service quality and rich content. In other words, it lacks comprehensive coverage but insufficient depth. Relying on a single ticket revenue leads to insufficient competitiveness.
1. Analysis of the Current Situation of China’s Theme Park Market
Between 2015 and 2020, 64 more theme parks are expected to be added domestically, with potential attendance expected to reach 166 million and total investment reaching US$23.8 billion. In 2015, the global theme park industry maintained a growth rate of 7%, and the number of tourists received by domestic theme parks has exceeded 200 million. According to regression analysis fitting results, by 2025, the number of visitors to my country’s theme parks will reach 369 million, with an annualized average growth rate of 6.05%. In recent years, the degree of specialization of theme parks has continued to increase, the scale of investment has continued to increase, and the trend of big eating small and strong chasing weak has basically been established. In 2015, China accounted for 13 of the top 20 theme parks in the Asia-Pacific region in terms of visitor numbers, and the proportion of the top two such as OCT, Songcheng and Huaqiang Fantawild continued to increase. We expect that while the overall market investment scale continues to increase, the number of theme parks will continue to decrease, loss-making projects will be cleared at an accelerated pace, and about five leading companies will remain to form an oligopoly market.
When choosing a site for a theme park, factors such as economic development level, population density, transportation conditions, and climate need to be considered. The number of theme parks in a region is often highly positively correlated with local GDP and population. The Yangtze River Delta, Pearl River Delta and Beijing-Tianjin-Hebei are clusters of domestic theme parks. In addition, due to climate factors, there are more theme parks in the South than in the North. The theme parks from the east to the west basically follow a three-tiered structure: the eastern coastal areas are more distributed and larger in scale, the central areas are less distributed but smaller in scale, and the western areas are less distributed and smaller in scale. According to research by the Urban Land Institute in Washington, D.C., the areas within an hour’s drive around theme parks are first-level source markets, with a population of at least 2 million people; areas within a 2- to 3-hour drive are second-level source markets, with a population of more than 2 million people; potential consumers within these effective source radii have the conditions and possibility to make multiple purchases. The contribution of third-level passenger sources with a driving time of more than 3 hours has been significantly reduced. It should be noted here that the per capita income level and car ownership of Americans are much higher than those of China, and the first choice for travel is basically aviation and self-driving. Although the form of self-driving tours in China is growing, major groups still rely on the public transportation system for travel, and their consumption habits also vary greatly. Theme parks need to take into account the few advantages of high-speed rail in terms of time radius. In areas with more developed public transportation systems, the effective coverage radius of theme parks is farther. my country’s theme park coverage group should not be circular and layered, but rather distributed in a network.
II. Main Phenomena of China’s Theme Parks
(1) Serious homogenization problem: 40% of the 2,500 theme parks in China are equipment parks. The demonstration effect of successful projects is too great. Many projects pursue short-term, flat and fast projects that are blind copycats and shoddy. They lack a few characteristics and brand IPs, resulting in a large number of projects with similar models and content. The homogenization problem is very serious. In addition, the concentration of theme parks in my country is very high, which makes competition for theme parks in the Yangtze River Delta, Pearl River Delta and Beijing very fierce, and puts them in an endless cycle of price wars without differentiation. The theme park death wave experienced in the late 1990s is likely to repeat itself in the next five years, and industry concentration will increase significantly after the reshuffle.
(2) Losses account for the majority: 70% of domestic theme parks are in a loss-making state, 20% break even, and only 10% can be profitable. About 80% of the theme parks that have emerged in the past 10 years have closed down, causing economic losses of more than 300 billion yuan to the domestic tourism industry. On the one hand, it is difficult to gain competitive advantage under a homogeneous price war; on the other hand, investors attach too much importance to the positive externalities driven by the economy and ignore feasibility analysis. After blindly investing and building, they have no intention of continuously updating, maintaining and innovating content. The negative impact of failed and unfinished projects is no less than the positive driving effect of successful projects. Investment still needs to remain calm during this round of enthusiasm.
(3) The emergence of strong domestic market players: According to the ranking of tourist reception volume, OCT Group has always occupied the fourth highest position in the Asia-Pacific region in the world. Huaqiang Fantawild Group ranked ninth and eighth in 2013 and 2015 respectively, and achieved a year-on-year growth rate of 77.4% in 2015. Chimelong Group occupied the ninth and seventh positions in 2014 and 2015 respectively. Its subsidiary Zhuhai Chimelong Ocean World ranked 13th among global theme parks and first among national theme parks with 7.49 million visitors. Guangzhou Chimelong Water Park even ranked first among global water parks with 2.35 million visitors. Songcheng Group, as one of the few cultural and performing arts theme parks, has ranked tenth in the world for 14 or 15 consecutive years, and achieved a year-on-year growth rate of 55.4% in 2015.
Analyzed from the perspective of the operating group, the market position of domestic strongmen continues to stand out, including many leaders who have made better use of technology development, customer service, marketing promotion and other aspects, and have passed the 20 million mark one after another with their own core competitiveness. In this regard, the development trend of the Chinese market is moving closer to that of the United States, eventually forming an oligopolistic market composed of several large groups spanning various entertainment and tourism fields, such as Disney, Universal Studios, and Six Flags. As foreign markets mature, several major leaders are basically in a natural growth stage. According to the current development momentum of domestic strongmen, by 2020, China’s theme park groups can clearly achieve five to two and ten to five results. Analyzing from the perspective of individual venues, in 2013, no single venue in mainland China ranked in the top 20. By 2014 and 2015, Chimelong’s Zhuhai Ocean World and Songcheng’s Hangzhou Songcheng ranked in the top 20 respectively. Although it is still far behind the leading Disney and Universal Studios, the theme park cluster model has been successfully applied domestically. We see that whether it is Orlando, California or Tokyo Disney, there are multiple venues that form a closed-loop ecosystem with each other.
When operational management, service levels, and content resources can maintain high quality for a long time, thereby cultivating strong brand effects and sufficient user stickiness, large theme park clusters can achieve a virtuous cycle of mutual promotion, because each venue meets different experiences for different needs. On the contrary, if the dense pile of homogeneous experience products is difficult to expand market share, it will lead to vicious competition from infighting within the same column (imagine the feeling of ten HelloKitty theme parks opening in the same city).