Universal Bought Osaka's Universal Studios Back From the Japanese — 7 Charts on Why

Universal Studios Japan in Osaka is adding visitors faster than any other theme park in the world's top ten.

Universal Studios started on 38 acres of land in Hollywood, where admission cost five cents the first time it opened to the public. A century later, it draws more than 30 million visitors and takes in $4.9 billion a year.

A recent deal suggests the expansion is not slowing down. NBCUniversal, owned by Comcast, announced it would pay $2.3 billion for the remaining 49% of Universal Studios Japan in Osaka, taking full control of the park.

Universal Studios Japan opened in Osaka in 2001 and was originally run by a Japanese company under license from NBCUniversal. For several years NBCUniversal has wanted the park for itself. In 2015 it bought 51%. Now it has the rest.

The park's rapid growth is the most direct reason for the purchase.

Universal Studios Japan has not been open long compared with other famous theme parks, but it is already one of the biggest in the world. In 2015 it drew 13.9 million visitors, passing Tokyo DisneySea to become the world's fourth-largest theme park — behind Walt Disney World in Florida, Disneyland in California and Tokyo Disneyland.

It is also growing the fastest. Its visitor count rose nearly 18% in 2015, far ahead of the three parks above it and unmatched anywhere in the world's top ten.

But Comcast collected little from that strong run, because until 2015 the park was still operated under license, and only a small share of the money reached Comcast's books.

Comcast runs four Universal Studios parks: Universal Studios Hollywood, Universal Orlando, Universal Studios Japan in Osaka and Universal Studios Singapore on Sentosa Island. The Singapore park is licensed and wholly owned by Genting Singapore, part of the Genting Group. Before Comcast started buying into Japan, most of Universal's revenue came from the two parks it ran itself, Hollywood and Orlando.

Seen that way, it is easy to understand why Comcast wanted all of Universal Studios Japan back. In the two years since it began buying in, Universal's revenue has jumped — from $2.6 billion in 2014 to $3.3 billion in 2015 to $4.9 billion last year.

Universal Studios Japan came out strong from the day it opened.

On October 28, 1998, Arnold Schwarzenegger presided over the groundbreaking. Two and a half years later the park — about 440,000 square meters in Osaka's Konohana Ward — opened for business. Thirty-seven days after that it became the fastest theme park ever to reach 1 million visitors; in its first year it took in more than 11 million, a record for reaching 10 million.

In the years that followed, attendance settled at around 8 million a year. That was enough to hold a place among the world's 25 largest theme parks, but the park could not break past it, and the ceiling nagged at management.

2011 was an unusual year. It was the tenth anniversary, and the aftermath of the March 11 earthquake was an unprecedented test. Fukushima was hit hard, the whole country sank into gloom, and tourism took a heavy blow that had not lifted a month later.

Perhaps to show there was no way back, perhaps because the park really was close to going under, general manager Tsuyoshi Morioka said that unless things turned around, Universal Studios Japan would go bankrupt. Over the objections of others, he proposed letting children from the Kansai region in free. It worked: a park that had gone silent filled up again with the noise of children.

In the second half of 2011, Halloween became Morioka's next marketing miracle. He rebuilt the holiday for Japan and sold it as a chance to "make a racket, play pranks, and let out the dark side that manners and social rules normally keep down." For a country weighed down all that year, it was the perfect release.

Once the event opened, the crowds at Universal Studios Japan stood three deep. Some 400,000 people came to Halloween Horror Nights, against the 20,000 expected.

That escape came from a single idea. The rest of the time, Universal Studios Japan has kept visitors coming back by rebuilding and adding attractions.

In the summer of 2013, a rebuilt version of "The Amazing Adventures of Spider-Man" returned, showing ultra-high-definition 4K 3D footage on a screen 18 meters wide and 9 meters tall. Younger visitors loved it.

The most important addition was "The Wizarding World of Harry Potter" in 2014. Attendance that year hit 11.8 million, a record for the park and nearly 17% above the year before. In 2015, the first full year with Harry Potter running, it climbed to 13.9 million, up nearly 18%.

Japan's tourism boom has helped too. Last year the number of visitors to the country rose 22% from the year before, to a record 24 million.

After setting records year after year, Universal Studios Japan raised its prices this year, with an adult ticket going from 7,400 yen to 7,600 yen (about $67). That is above the 7,400-yen adult ticket at Tokyo Disneyland and Tokyo DisneySea.

Even so, the Japanese price is not high next to other Universal parks — it is lower than Singapore's, which draws fewer visitors. If the crowds keep growing at this rate, the price will probably keep going up.

When Carl Laemmle founded Universal Pictures in Hollywood, he probably never imagined that what he built there would turn into a worldwide business.

Laemmle, then the boss, founded Universal Pictures in 1912. Two years later he found land north of Hollywood that suited soundstages and location shooting, and bought 38 acres of it. That is how Universal City took shape, with its own shops, school and bus service — a working town from the start.

Universal City first opened to the public as a film studio, not a theme park. That was March 14, 1915, 40 years before Disneyland opened in 1955.

For five cents, visitors could watch Universal shoot films on its stages, and got a boxed lunch with chicken thrown in. In the silent era, when Universal City was still farm country, Laemmle's tour even included picking fresh produce. Then talkies arrived in 1930, and Universal cancelled the tour so visitors' noise would not ruin the sound.

In 1962, after the Music Corporation of America bought Universal Pictures, an accountant proposed reviving the studio tour to lift profits. Two years later Universal launched a tour that took visitors through dressing rooms and makeup studios, let them watch real shoots and sit in on soundstage recordings, and Universal City reopened as a theme park. Guided trams still wound through backlots where filming often went on, but stage shows, stunt demonstrations and high-tech rides had taken the place of the moviemaking that once drew film fans to Universal Studios Hollywood.

Running the Hollywood park convinced Universal that theme parks had a future. Universal Orlando opened in 1990.

Foreign markets could not be left alone either. Universal Studios entered Japan in 2001 and Singapore in 2010. To avoid tripping in countries it did not know, it licensed the business to local companies that understood the market.

Perhaps because it saw what Universal Studios Japan earned, Universal dropped that apparently safer model when it expanded to Beijing, taking a 30% stake instead — the first time it had done so abroad.

If all goes to plan, you will be able to spend a day at Universal Beijing Resort by 2019.

Universal Studios has kept growing overall, but its results and its strategy differ from place to place. The clearest sign is which attractions get built where. That decision rests on how big the local following is.

Star Trek and The Simpsons have been popular in the United States for decades but have few fans abroad, so neither was transplanted to Japan or Singapore. When Harry Potter and the Deathly Hallows – Part 2 was released in 2011, it took $124 million at the Japanese box office and only $6.5 million in Singapore, a twentieth as much. From that angle, it makes sense that Singapore has no Wizarding World of Harry Potter.

One thing holds everywhere, though: every Universal park keeps adding rides as visitors' tastes shift. In 2014 and 2015, Universal Studios Hollywood added a Minions virtual 3D coaster and a new Fast & Furious attraction. Those helped the oldest Universal park post back-to-back gains in attendance, nearly a million more visitors a year from 2013 to 2015.

Adding rides is how a theme park stays fresh. For Universal, the ideas come straight out of its own films. The Jaws water ride at Universal Studios Japan came from the movie Jaws, a series that took $800 million worldwide and spun off soundtracks, a stage musical and more.

But a character worth putting in a theme park is not something you come up with on demand. It asks a great deal of the filmmaking: the character has to be popular, and it has to last.

The good news for Universal is that it does not have to fight alone. The characters in its parks are not limited to Universal Pictures' own films.

Take Universal Studios Japan: Harry Potter comes from J.K. Rowling and Warner Bros., Spider-Man belongs to Sony and Marvel, and the park plans to open a Nintendo world in 2020. Look beyond Japan and the borrowing is even more common: Men in Black from Columbia, The Simpsons from 20th Century Fox, Star Trek from Paramount.

Calling in allies is not cheap. The Wizarding World of Harry Potter cost $250 million to build. To bring Super Mario in, Universal is paying $346 million for the project.

There is a reason Universal has to pool other people's strength: in theme parks, Disney looks unbeatable. Disney's parks brought in $16 billion in 2015, about five times Universal's. That is why Wang Jianlin calls Disney the largest tourism company in the world.

Disney is also strong at putting its films into its parks. Characters from Toy Story, Monsters, Inc. and Finding Nemo have all found a permanent home there. In 2018, the Avatar land at Disney World in Orlando will open, the same year as the long-awaited Avatar 2 — which should bring in plenty of new visitors.

Leaning on its own work also saves Disney expensive licensing fees and the trouble of dealing with other studios. More important, Disney has shown a level of invention no one else matches. On both counts, Universal and its allies will not seriously threaten Disney's hold on the market for a long time.

Without heavy backing from its parent, Comcast, Universal Studios could not have made this much noise.

When Comcast took 51% of NBCUniversal in 2010, analysts still treated the theme park business as dead weight and expected it to be sold. NBCUniversal's earlier owners — General Electric, Vivendi and Seagram — had paid it little attention.

Comcast was different. It looked genuinely interested in the park business. "Theme parks are, by scale, a huge business. Over the next five, ten, fifteen, even twenty years, we see this as one of the main drivers of the company's growth," said Stephen B. Burke, Comcast's senior executive vice president.

In 2012, Comcast spent $100 million building the Transformers ride at Universal Orlando. Three years later it proposed a new water park at the Universal Orlando Resort, due to open in May 2017.

Orlando was not the only one. In 2014, Comcast put $1.6 billion into Universal Studios Hollywood on the West Coast and rebuilt 70% of its rides; the new Minions and Fast & Furious attractions were part of that.

"We're working to expand our fan base," said Larry Kurzweil, president of Universal Studios Hollywood. "This isn't just adding a roller coaster. This is a complete transformation."

The push abroad has grown too. Besides Beijing, parks are being planned for Moscow and Hwaseong, South Korea.

The spending has paid off. Comcast's television business swings a great deal; theme parks have become the steady, growing part of its entertainment side. In the first nine months of 2013, operating cash flow at the NBCUniversal division reached $747 million, up 5.6% year on year, while operating cash flow at Comcast's broadcast television business fell 23.4%.

Theme parks are not without hazards. The economy and visitors' expectations are both variables a park cannot control. Disasters like earthquakes are rare, but plenty of other sudden events can darken a park. Take the measles nightmare Disney went through in 2015: one report found that of 59 measles cases identified in California, 42 were linked to Disneyland. It left the park with a sizable public relations crisis.

Still, Stephen B. Burke summed up Universal's strategy in one line: "We plan to keep investing heavily."

Charts: Feng Xiuxia

Cover and in-article images from: Wiki Commons