Transformers The Ride 3D opened on June 20 in Comcast’s (NASDAQ:CMCSA) Universal Studios, Orlando. Hundreds of people gathered to experience the intense, 3-D thrill ride. The new ride is Universal Orlando’s latest, hyper-real offering to park visitors. For the people who like dazzling special effects, serious drops and battling robots, the ride will not be a disappointment. 
While theme parks are just a small part of the mammoth Comcast’s business, they help the company promote other products and services of NBCUniversal and bring in stable cash flows. Theme parks chip in around $2 billion of Comcast’s $62 billion in revenues.
The Transformers Ride
Comcast reports The Transformers Ride as an interactive, mind-blowing, action-packed ride experience that pushes the limits of technology to place guests in the middle of a larger-than-life battle between the action film franchise’s main characters – the Autobots and Decepticons. The ride was created under license from Hasbro Inc. and is based on its iconic Transformers brand. ((Transformers – The Ride 3D Opens at Universal Orlando, Comcast Press Release, June 20, 2013)) The ride uses flight simulator technology, along with movie screens, wind, heat and smoke to make the riders feel immersed in the experience. The experience is reported to be longer than most of the theme park rides, stopping at various simulated battles with spiky gears, tires and shards of glass swirling around the riders.((New, intense Transformers ride opens at Universal Studios in Orlando, News-Sentinel, Jun 24, 2013)) Universal executives said they worked with Michael Bay, the director of the “Transformers” movies, to develop the ride. Universal Studios has been developing rides and parks within their theme park to attract more visitors. It directly competes with Disney’s (NYSE:DIS) theme park a few miles away, which is also coming up with new rides such as The Cars.
What Does Theme Parks Mean To Comcast?
Theme parks are part of NBCUniversal, which contributes 25% to Comcast’s value. However, theme parks generate just around $2 billion in revenue for the giant Comcast with overall revenues exceeding $62 billion.  While the proportion of revenue is lower for theme parks, it has a much wider meaning for NBCUniversal and Comcast as these theme parks offer a platform to promote films, media content and other related merchandise.
Universal Studios is one of the largest movie studios in the world with popular franchisees such as Fast And Furious, Jurassic Park and Bourne Legacy. Theme parks represent one of the few areas of stable growth outside of cable television for media and entertainment conglomerates such as Comcast and Disney. Theme parks are vulnerable to swings in the economy and require costly and continuous investments in developing new rides and parks within the theme park. If we look at the growing attendance and rising per capita spend at theme parks such as at Disney’s, it appears Americans have not cut back on expensive theme park vacations the way they have cut retail spending and other discretionary purchases.  ((Disney Hikes Theme Park Ticket Prices But It Means Little For Shareholders, Trefis, Jun 4, 2013)) For Q1 2013, the parks supplied around 9% of NBCUniversal’s total revenue but made up 18% of its earnings (before interest, taxes, depreciation and amortization), the second-largest contributor behind cable networks. 
The number of guests visiting Universal Studios grew 8% to over 34 million in 2012 as compared to close to 32 million in 2011.  This makes the theme park second most popular in the U.S. after Disney’s theme parks. The most popular rides in the park include The Simpsons, Revenge Of The Mummy and The Wizarding World Of Harry Potter. 
Disney, the most popular and largest theme park operator globally may bring Star Wars Land theme in its park in a direct reply to Universal’s Wizarding World of Harry Potter.  Transformers Ride 3D was a much-awaited ride and we believe the new addition will boost the attendance at the theme park due to its 3D experience and popularity of the film series.
Our price estimate for Comcast stands at $46, implying a premium of over 10% to the market price.Notes:
- New Transformers ride opens at Universal Studios, DelmarvaNow, Jun 24, 2013 [↩]
- Comcast’s SEC Filings [↩] [↩]
- Global Attractions Attendance Report, AECOM, 2012 [↩] [↩]
- Top 5 thrill rides at Universal Orlando, Orlando Informer [↩]
- Disney May Bring The Force To Orlando With Star Wars Theme Park, Trefis, Jun 26, 2013 [↩]