Will New Universal Studios Be Viable?
By Do Je-hae
After a small town in Gyeonggi Province announced Tuesday it would be the site of the world's largest Universal Studios, one question remains ― how viable can the new park be in Asia's increasingly competitive theme park market?
U.S. film giant Universal Studios signed an agreement Tuesday with a Korean consortium to develop Asia's largest theme park in the provincial city of Hwaseong, about 60 kilometers southwest of Seoul.
Plans for the park were first announced in 2007, but difficulties in raising funds have delayed the proceedings of the project, according to regional authorities.
The $2.7 billion deal would give Korea its first global-brand theme park, which is expected to serve as a major addition to the country's underdeveloped leisure infrastructure. The movie-themed resort will feature the Universal CityWalk, an 18-hole golf course, themed hotels, a water park, premium retail outlet stores and condos.
Gyeonggi Province is expecting 10 million visitors annually from Korea, China and Southeast Asia.
Prospects for the new park, however, remain uncertain. First, there is the stiff domestic competition with existing amusement complexes like Everland, operated by Samsung Group, and Lotte World, which have continued to rank in the top tier of global amusement park attendance surveys.
A single admission fee to Universal Studios Japan costs around 5,800 yen (72,000 won). If similar prices are applied to its counterpart in Korea, a family of four would have to pay almost 300,000 won for a daily trip.
"Considering that a domestic theme park charges around 30,000 won to 40,000 won per person, that is quite expensive, given the income level of Koreans," said Park Gyeong-ryeol, a researcher at the tourism industry division of the Korea Culture & Tourism Institute.
Korea's homegrown theme parks have generated $1.2 billion in annual ticket sales. More than 8.2 million people, or one out of every six Koreans, visited Everland in 2006, making it the third busiest in Asia, after Tokyo Disneyland and Universal Studios Japan.
A theme park's viability can be sustained only if it hosts around 7 to 8 million tourists annually, according to industry watchers.
"People may find the new park interesting for the first few years and go once or twice. It could be difficult, however, to attract tourists on a more consistent basis," Park added.
Also, there is the problem of outside competition from Asian neighbors. Asia has emerged as a focus of theme park development, with countries like Singapore, Malaysia, Japan and China rushing to build large-scale theme parks.
Asia's theme park industry, which accounts for nearly half of the global $23.5 billion market, has largely been controlled by local companies, as in the case of Korea.
However, global brands like Disneyland and Universal Studios are expanding their presence in Asia.
In a landmark move, the Chinese government approved the construction of a $3.5-billion project to build the country's first Disneyland, one of the largest-ever foreign investments there. Universal Studios Singapore at Resorts World Sentosa (RWS) is set to open next week.
Theme park developments are also under way in Beijing, Gangzhou and Shenzhen.
Gyeonggi is expecting many Chinese and Japanese tourists, who constitute a large portion of visitors to the country.
"We're going to make this resort a signature facility of the West Coast economic tourism belt by successfully attracting tourists from China and other nations," Gyeonggi Governor Kim Moon-soo said.
But will Universal Studios Korea serve as a must-visit destination for Japanese and Chinese tourists, when they have similar facilities in their own backyard?
"The reasons for going to a theme park in one's own country and visiting one in a foreign country are not necessarily the same. People still find reason to visit Universal Studios in Orlando, even though they are in their own country," Park said.
"Chinese tourists still have the tendency to travel in groups when they visit Korea. As long as this pattern of travel continues, I would say that prospects for the Universal Studios in Korea are good in terms of attracting Chinese tourists."
Gyeonggi Province and many other local governments, with strong backing from the central government, have been rushing to build theme parks, leading to concerns that the domestic theme park market may become saturated.
Korea has also attracted interest from Paramount Pictures and Metro-Goldwyn-Mayer, with both announcing plans this year to build resort parks in Incheon.
Around eight large-scale theme parks are expected to be established in the Seoul, Incheon and Gyeonggi Province by 2012. When including the ones in Daegu, Gwangju and other provincial areas, the figure could increase to 14.