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Which Relevant Market(s) for Theme and Amusement Parks?

posted Nov 24, 2011, 10:53 AM by Julien Pillot   [ updated Nov 24, 2011, 10:53 AM ]

As many flourishing markets, the one of theme and amusement parks is highly competitive. Whatever the kind of recreational activities consumers are looking for, it is true that available choices are often endless. Adopting another perspective, a mere look on the Parc Astérix’s last-to-date ad campaign is a further evidence of the fierce competition in which professionals of this industry are engaged (for Francophobes, a correct translation of the selected piece of the campaign displayed on the very bottom of this post should read: “There, mice dance ; Here, Romans waltz fly around!”).

As any enlightened manager does know, sound and effective market strategies are critically based on assessing what the effects on the competitive structure of the market should be. In this way, a usual - but key - preliminary analysis consists in defining the relevant market in which undertakings compete. This step is an indispensable condition for identifying direct rivals as well as potential challengers, evaluating market shares and performances, and assessing both the effects and the lawfulness of competition moves. Surprisingly, while we could expect clear-cut relevant market definition (in-line with competitive concerns), to date, European competition bodies remained very equivocal in this regard. And now, businesses call for further clarification.

First of all, the Commission says, the whole leisure attractions market is split into visitor attractions market (museums, historical landmarks, galleries …) and the market of theme/amusement parks and zoos (see, for instance, cases COMP/M.4573 – Candover/Parques Reunidos ; COMP/M.4615 – Merlin/Tussauds ; COMP/M.5715 –  Caixa Corp/Port Aventura). Although main theme parks’ characters are often “animals” themselves, it is hard to believe that theme/amusement parks and zoos are both offering substitutable services which belong to the same relevant product market. In Merlin/Tussauds, the European Commission gave the following reasons for operating such market segmentation: “Theme/amusement parks are typically inland or seaside parks or piers which offer a recreational service focused on outdoor venues, with rides as a primary attraction but often featuring a broad range of other attractions (including zoos/other animal displays and outdoor shows)”. I let you judge by yourself whether this explanation fits.

Following this statement, however, keep in mind that Disneyland Paris and the zoo of Vincennes are part of the same relevant product market, market in which various and sundry parks like Port Aventura, Europa Park, Marineland, Aqualand and many others are also technically considered as substitutable recreational services. Sounds strange, isn’t it? At least, distinguishing activities by type or purpose would have made more sense, given that logical segmentation of the theme parks market should encompass much more essential characteristics like the average length of stay (ALOS), the availability of complementary services (hostelry, catering, shopping, conference centers… – especially if these services are also available to non-park customers), the seasonal nature of the business (year-round basis or pure seasonal operation), and the structure of the audience (target groups).

This last point is partly taken into account when assessing the geographic dimension of the market. According to the Commission, the relevant geographic market can – most of the time – be considered on a national basis, except for “mega theme parks” which attracts an international clientele (for instance, French visitors traditionally represents only about 50% of Disneyland’s annual customers attendance). As regards parks more modest in size and volume, the geographic scope of the relevant market tends to be considered as local (generally on a 2 hours’ drive distance basis). Nevertheless, the issue of the availability of near transportation facilities does not have to be underestimated. Both medium and mega theme parks take plainly advantage of their proximity to rail and airport hubs to enhance both their national and international appeals, but only mega theme parks are likely to incur antitrust liability because of their very potential dominant position (in terms of both value and volume) whether on a national or a European basis.   

Finally, whilst inferring that theme/amusement parks might compete in different relevant markets, European competition agencies remain unclear on the criteria used to assess the competitive effects of strategic moves. In a sector characterized by ups and downs vis-à-vis exogenous factors, and by constant concentration propositions (for instance, since the recent acquisition by Compagnie des Alpes – which owns many other leisure attractions including Parc Astérix – of Parc Futuroscope, the second and third most popular French theme parks are part of the merged entity), some clear guidance on the basis on which the effects of competition moves and transaction should be assessed could be, for sure, enjoyable.