For Sea World Parks & Entertainment, their killer whale-branded theme parks may now be their biggest liability, and could hold company growth captive for the foreseeable future. Yet, as media, political and consumer backlash against SeaWorld’s treatment of whales affects ticket sales, SeaWorld management is doubling down on their killer whale exhibit, reportedly investing several hundred million dollars to build new habitats for Orcas at theme parks and $10 million for killer whale research.
In spite of SeaWorld’s expensive and ambitious efforts to shore up acceptance of its core attraction, will consumers reject a brand that stands primarily for majestic whales in captivity? Is the company digging an even deeper hole, for itself and investors, by not evolving for consumers to a broader value proposition that goes beyond Orcas?
While it could be too early to tell, declining park attendance may be a lagging indicator that SeaWorld long term market value is at risk. Online reports have noted that the company’s current problems are directly related to the CNN documentary “Blackfish” which was released last year.
More than a momentary bad PR event, “Blackfish” has directly affected SeaWorld’s balance sheet, as SeaWorld CEO, Jim Atchison, explained this week, acknowledging that the severe drop in customer demand is due to the bad publicity over the past year. SeaWorld stock tumbled 33% this week and $832 million evaporated from shareholder portfolios. The company signaled that 2014 revenue will decrease up to 7 percent: a greater than expected decline. Many families, it seems, are refusing to support with ticket purchases the whale captivity that defines the SeaWorld experience.
The tide needs to turn on SeaWorld’s image with consumers. That starts with resolving the dangerous disconnect with the very people who should be buying tickets at their parks. For these folks, the more noble mission of SeaWorld, as a protector of animals, is eclipsed to the point of being buried in their website. Yet the vision is most likely a strong platform on which consumer faith in the brand can be rebuilt.
Companies caught in positions similar to SeaWorld are what we will start referring to (not coincidentally) as Orca Brands. Successful Orca Brands “own” one feature or product or service: a single offering that is entirely unique to their category and that consumers really want. If the unique offering is compromised, fickle consumers may dismiss not just the single offering but the company’s entire experience – and move on to others. Which makes Orca Brands vulnerable. Sea World, without the appeal of killer whales, may represent the promise of an empty experience for park visitors.
Ultimately, an Orca Brand, like a quarterback that’s been mercilessly sacked, has to prove they have the stamina to shake off the hit and make the necessary adjustments to get back in the game for the long haul. If they don’t, the balance sheet of an Orca Brand is highly exposed – just like a quarterback’s blind side. Successfully calling the offensive play, turning short term rejection into long term growth, is where a win for investors is ripped from the jaws of defeat.
Other powerful companies and brands have lost their way on similar playing fields.
The former block buster – Blockbuster – is a great example of an Orca Brand. Their management couldn’t accept that consumers would reject their singular experience: brick and mortar DVD rental. While Blockbuster continued to invest heavily in stores, consumers shifted to a new DVD experience with Netflix. With a broader focus on diverse niches of entertainment, block buster movies, and convenient online and in-home delivery, Netflix pulled consumers in droves from Blockbuster.
In response, Blockbuster management proved what myriad studies have shown: once decision-makers invest in a project, they’re likely to keep doubling down, because of the money already at stake. Rather than evolve to a more sustainable brand position and dramatically scale back on stores, its primary brand liability, Blockbuster just kept throwing good money after bad. Worse, the feature on which the brand was built, turned out to be the brand’s biggest weakness.
In 2010, the same year that Blockbuster declared bankruptcy, Netflix had morphed their business model. They skillfully avoided becoming another Orca Brand casualty by shockingly cannibalizing their own DVD business in favor of streaming entertainment.
The impact was astounding. Netflix streaming movie business grew “… so quickly that within months the company had shifted from the fastest-growing customer of the United States Postal Service’s first-class mail service to the biggest source of Internet traffic in North America in the evening”, according to a 2010 New Yorker article.
Flash forward to August 2014: Netflix earnings of $1.146 billion slid past HBO’s earnings of $1.141 billion. Could HBO soon have an Orca of their own circling about?
Another Orca Brand, RadioShack, has not found the right strategy or position with consumers to reverse sales declines. Consumer habits have shifted from buying at brick and mortar locations to the ease of purchasing online from competitors at often better prices. RadioShack CEO, Joseph Magnacca, acknowledged that generating same-store traffic is their biggest issue. Confoundingly, the company says it will continue to invest in what appears to no longer be a compelling feature for consumers: convenient RadioShack store locations.
The company announced in March that 4,000, or 80%, of their stores will remain open in the US alone. With greater abandon than SeaWorld, RadioShack seems to be doubling down on its Orca Brand. Recent company press releases announced the opening – not closing – of 21 remodeled stores in San Francisco and another 23 stores in the Washington DC area. The new, proudly positioned, interactive stores feature “products from tech-savvy inventors”, but may fail to engage tech-savvy consumers who have no interest in a physical store experience regardless of bells and whistles.
There is no denying that the Orca Brands mentioned here have created billions of dollars of investor value and, in most cases, will continue to generate returns. However, the overriding risk of being an Orca Brand is volatility. Unforeseen events, like a documentary film that creates consumer backlash or a wholesale shift in consumer behavior from one distribution channel to another, can shake the foundations of an Orca Brand and make it more costly to maintain consumer demand and sustain growth. Over time, shareholder value can be reduced or, in some cases, completely eroded.
Take The Challenge.
An easy process for leaders to determine if their company is an Orca Brand (or at risk of becoming one) is to take the challenge of these five questions:
- Imagine a World Without. How would you position your company in a world without your “killer whale”? If you took away your leading product, feature or service, for what value would consumers hold your brand accountable? What does your company stand for beyond products?
- Worship Consumer Accountability. Once you discover what consumers hold your brand accountable for (without your “killer whale”), how can your company make that value proposition so meaningful that people will increase their demand for what you sell? What does your company uniquely add to your consumer’s life? How does what your company makes, provides, serves or creates prove what your company stands for?
- Challenge Biases. What inaccurate assumptions are your leadership team elevating to the status of unquestioned business strategy? Are the very features that people thought were strengths turning out to be weaknesses? How do consumer expectations and behaviors align with your demand assumptions and expected revenue outcomes?
- Execution IS Strategy. Can everyone in the company understand a shift in, and their relationship to, company objectives? What is the detailed plan for each area of – and each person in – the company to successfully translate a broader value proposition into tactics? What are the tactics that will drive the engine of demand creation? Is every part of your organization ready to execute their role in the plan?
- Tactics Create Outcomes. Are your tactics tied directly and reliably to creating value with consumers? Are your tactics prioritized according to the success metrics in your business plan: E.G., meaningful top line and profit drivers like consumer purchase preference, increased purchase frequency, shorter decision cycles, faster time to market for game-changing initiatives or more cost-effective outcomes that also fulfill stretch revenue goals?