I watched a bit of TPW’s Q&A from last night and thought he made a good point when he suggested that whilst Universal coming obviously represents a threat to places like the Merlin parks, it also represents an opportunity as people will be travelling to the UK for Universal but could then choose to visit other attractions whilst they’re here that they wouldn’t ordinarily make a specific trip for.
Although what he's said is quite a crude assessment, the conceptualisation is correct. Despite all this talk of "competition for Merlin" as if it's purley a binary choice, it's possible that Merlin could do nothing at all in response other than just cut costs to offset the competitive overlap, which itself could be partially offset itself by the benefits it would bring to them, and still be profitable.
From a sedentary position, it looks crazy to build a Universal here. But then there's clearly some well thought out overall market strategy behind this that leads them to the stage where they are now seriously investigating the feasibility of it.
Maybe they've concluded there is a large opportunity here because this kind of market is under represented in the UK? In which case there is a large hole to be filled. So by coming here, rather than just nicking a slice of the pie from each of the Merlin parks, the pie itself gets bigger. In 1994 Blackpool, Drayton and Towers didn't just spend all that money and sit still because the others had a new coaster as well, they grew the UK theme park market. In which case, although there will clearly still be some competitive overlap, both parks could benefit from people staying in the UK rather than seeking parks abroad, as well as benefiting from additional tourists visiting the UK, or visiting from London who currently don't venture as far as Towers. Disney World and DLP probably compliment Busch Gardens and Asterix Park respectively more than harm them.
Secondly, they won't be operating in identical sections of the market, so won't always be competing for the same custom. UK Merlin parks are mid market offerings at best, Universal is premium. People who can just about afford to visit Towers every year, won't be able to do the same with Universal. People like me live closer to Bedford than Alton as the crow flies, but despite zero rail links, Towers is still far quicker and easier for me. It's more central location will make it easier and cheaper to visit for huge swaths of the UK population. There's a very different market there for both parks.
Of course there will be a lot of competitive overlap, but Merlin will devise a strategy to offset some of this with the opportunities it also brings (which they'll only do by the way when they have confirmation. No large scale decision we'll see out of Merlin right now will be related to Universal at all untill there is certainty). Whatever strategy they decide on, it won't necessarily involve Towers "upping their game". It will likely be devised with far more nuance in mind, and certainly not on the current hypotheticals being banded around.
