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Old 10-14-2014, 02:03 PM   #1
Suvadoo
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High operating costs will kill FP+

I have move this post to a new thread because I think it's worth discussing but it doesn't belong in the previous thread.

Picture this:
A software company approaches an entertainment giant with a program that will increase theme park revenue by reducing the time people spend in line. Additionally, the software was supposed to automate a lot of systems thereby reducing personnel. The company buys the software.
Once the software is implemented and guests are starting to make their ride reservations 60 days out, it is discovered that the system is full of glitches so the company is required to hire additional IT support for their reservation system. Then once the guests arrive at the theme park there are more problems, so additional IT support is hired to work with guests in the theme parks.
The majority of the guests who visit this theme park are first timers, and the ride reservation system is pretty complicated. So if the company wants to continue using the ride reservation system, they must continue to provide a lot of IT support personnel which is very expensive. So far, this company has spent at least 1 billion dollars on the new system. Overall, theme park attendance is up, but this is because the country’s economy is improving, not because of this new ride reservation system. The company is also experiencing increased attendance at their West Coast theme parks.
Overall the new ride reservation system has cost a lot of money, and it will continue to be a money pit because of the IT support required to help guests with the system. IMO this ride reservation system that is FP+ will be scrapped, because there is no way Disney can make it user friendly enough for their first time guests without the additional IT support. A lot of people say FP+ is here to stay because Disney has invested too much money in the project. But there does come a time when a company has to cut their losses. I would be very surprised if the FP+ portion of MM+ was still around in 5 years.
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Old 10-14-2014, 02:06 PM   #2
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Here's another post from the thread from Flip Hipster:

Some remnant of it will remain. I doubt they get rid of it completely if they can't make it work. "They" are clearly too heavily invested. This could drag out for a while. But I agree, somebody bought the demo. Never buy the demo.

"We are absolutely determined to introduce great product, even if the cost of introducing that product is kind of having your arms around it more than you need to when it's in its steady state. And we've been doing that, we've talked about that on our earnings call, the additional cost we've experienced with the MyMagic+ introduction, whether it was communication about it or the handholding and help that guests get when they're in the park. That will not last forever. Guests will figure it out and we will really start to see the revenue come through. " - Jay Rasulo Goldman Sachs 23rd Annual Communacopia Conference 9-10-2014

http://thewaltdisneycompany.com/cont...pia-conference

What I found really interesting about his whole spiel is the lack of a excitement. He knew the question was coming. Borst threw him a slow underhanded pitch right over the plate and he basically whiffed. If he had any good numbers to drop he would have dropped them.
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Old 10-14-2014, 02:06 PM   #3
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You are assuming they are constantly hiring more IT professionals. Big assumption. Can't see them bringing on a ton more employees if the problems are being experienced by 10% of the guests or less. To them they'd rather thrust those 10% upon Guest Services who will try to accommodate. It's a "good enough" mentality.
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Old 10-14-2014, 02:14 PM   #4
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You are assuming they are constantly hiring more IT professionals. Big assumption. Can't see them bringing on a ton more employees if the problems are being experienced by 10% of the guests or less. To them they'd rather thrust those 10% upon Guest Services who will try to accommodate. It's a "good enough" mentality.
Actually, I'm not assuming they will be hiring more IT. I'm assuming that Disney will not be able to reduce the amount of IT support they are currently providing.
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Old 10-14-2014, 02:20 PM   #5
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Pretty limited analysis. Your not taking into account that they don't have to man all of the paper FP machines they had around the parks and help the people who couldn't figure out how to use the machines or had problems with their cards being read. How quickly we forget the problems that system had and how much support was needed with it.

On these boards we tend to only hear from those who have issues not those who get through it without problem (like me a few times now). On top of that, many people who do complain get their problems solved on these boards and don't need technical support. And when the planned this system they would have factored in technical support needs.

Your analysis is wishful thinking I think, gathering the info that supports you idea. What really needs to be done is get all the facts and let the facts tell you what's really happening.
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Old 10-14-2014, 02:25 PM   #6
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Based on that transcript of the analyst Q&A with Rasulo that was posted in the other thread ( http://cdn.media.ir.thewaltdisneycom...-2014-0910.pdf ), it seems to me that the analysts are expecting to see some sort of revenue jump from MyMagic+, as has been promised by Disney for at least 2 years. It looks like Disney management is trying to back away from those statements now because the profits/revenue likely aren't emerging as they had expected it to. I don't see FP+ going away--it's Disney's #1 strategy for locking people in to spending money at the Disney parks--but I do think that if it doesn't live up to the hype then they're going to have to change it in ways that will make it less expensive to run and maintain.
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Old 10-14-2014, 02:25 PM   #7
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Quote:
Originally Posted by Polydweller View Post
Pretty limited analysis. Your not taking into account that they don't have to man all of the paper FP machines they had around the parks and help the people who couldn't figure out how to use the machines or had problems with their cards being read. How quickly we forget the problems that system had and how much support was needed with it.
They have had to man the kiosks, though, and man them with additional iPAD CM support. The quote from Rasulo talks about how that won't be necessary long term because guests will figure the system out. But those same people who couldn't figure out how legacy FP worked over the course of 15 years, are the same ones they are counting on figuring out how to work FP+. The interface for FP+ is more complicated than "insert ticket here" that legacy had. With WDW visitors being comprised of so many first time visitors, I have a hard time seeing how they can realistically dwindle the extra support they've been putting out there...at least not until they make the system as a whole less glitchy. You've got fully informed DISers here who post problems and issues with MDE/FP+ every day...the first time visitor who doesn't do their research (which we all know is quite a lot) - how is that going to be any less for them?
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Old 10-14-2014, 02:27 PM   #8
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If you have observed Disney's job listing page you will see they have a constant need for programmers. It never seems to let up. Anyone that's used their web site since inception would know it's never been that good. All sorts of performance and "glitch" issues.

From what I can tell they don't pay that well even for IT. A friend was offered an Imagineering poistion and he had a Masters in Robotics and PhD in Electrical Engineering. The weren't offering any more than what he was making here in Maryland. Besides that he'd have to live in Los Angeles.

If they don't pay their top technical people at the top of the scale they are certainly not going to pay anyone else the going rate either.
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Old 10-14-2014, 02:29 PM   #9
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All they have to do is start requiring people purchase their magic bands and boom, they'll be rolling in the dough.

People are willing to purchase designer magic bands for $29 or regular ones at $13.
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Old 10-14-2014, 02:30 PM   #10
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Quote:
Originally Posted by Polydweller View Post
Pretty limited analysis. Your not taking into account that they don't have to man all of the paper FP machines they had around the parks and help the people who couldn't figure out how to use the machines or had problems with their cards being read. How quickly we forget the problems that system had and how much support was needed with it.
With the old FP machines, I never saw more than 1-2 cast members available to help with any FP issues.

With the new system, guests need IT help for FP+ when they're making their reservations 30- 60 days out, and then again when they use the Kiosks in the theme parks. When I've been, there have been 2 cast members at every FP+ kiosk.

I don't recall that the CM's at the legacy FP machines had to consult their ipads to assist guests.
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Old 10-14-2014, 02:37 PM   #11
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Quote:
Originally Posted by Suvadoo View Post
"Guests will figure it out and we will really start to see the revenue come through. " - Jay Rasulo Goldman Sachs 23rd Annual Communacopia Conference 9-10-2014
Think about that statement. I mean, really think about that statement and how he connected two things that I'm not sure can be connected.

I figured out FP+ a long time ago and as a result I spend less time and money in the parks. I think that will be true of others as they "figure it out".

So where does "the revenue come through"? Is it from increased guest turnover in the parks each day? While that might be true on already crowded days, I don't think it can be counted on every day of the year - they aren't having to turn people away from the parks every day.
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Old 10-14-2014, 02:45 PM   #12
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Quote:
Originally Posted by Suvadoo View Post
With the old FP machines, I never saw more than 1-2 cast members available to help with any FP issues. With the new system, guests need IT help for FP+ when they're making their reservations 30- 60 days out, and then again when they use the Kiosks in the theme parks. When I've been, there have been 2 cast members at every FP+ kiosk. I don't recall that the CM's at the legacy FP machines had to consult their ipads to assist guests.
Also the many managers at the front gates checking hard tickets on ipads.
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Old 10-14-2014, 02:46 PM   #13
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Originally Posted by Laketravis View Post
Think about that statement. I mean, really think about that statement and how he connected two things that I'm not sure can be connected.

I figured out FP+ a long time ago and as a result I spend less time and money in the parks. I think that will be true of others as they "figure it out".

So where does "the revenue come through"? Is it from increased guest turnover in the parks each day? While that might be true on already crowded days, I don't think it can be counted on every day of the year - they aren't having to turn people away from the parks every day.
"But the MyMagic+ proposition was a big upfront investment in technology with a number of very crystal- clear goals: Enhance the planning process, get our guests to plan their activities at Walt Disney World up front. Orlando --- Walt Disney World is a big property, with lots of things to do, but Orlando is a very competitive space. When people go down to Orlando, there are many distractions from the products we offer that are other offers in that market and we know that when people plan at home, they plan more time with us than if they come down to Orlando unplanned."

"So the number one goal was to basically get them to plan up-front and I'm happy to say that I think 50% now of all guests that come down are using the MyMagic+ planning tools...So the number one goal was to basically get them to plan up-front and I'm happy to say that I think 50% now of all guests that come down are using the MyMagic+ planning tools that, by the way, not only helps us but helps them a great deal, enhances their vacations enormously, allows them to book attraction times of their favorite things, allows them to really get a clear view of the offer, how they can most efficiently spend their time."


With the bolded part, I think they are counting on higher guest turnover. I think they do want you to do your 3 rides, eat, shop, and then leave, so there's room (and presumably higher guest satisfaction due to lower crowds) for other guests to come in and do their 3 rides. With a higher turnover, but each guest spending less time overall in the parks, they'll increase ticket sales without having to increase capacity. I don't think they want guests in the parks from RD-close. I think they want them in for 5-hours, max.

"So the guest satisfaction ratings, which are the ultimate driver of our future success and our future business, are also incredibly high with like 90% of the people rating the experience in the top two boxes, which doesn't happen very often."

I think this is where the "are they asking skewed questions" comes in.

Last edited by jtowntoflorida; 10-14-2014 at 02:48 PM. Reason: Edited to add color to highlight what words aren't mine.
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Old 10-14-2014, 02:50 PM   #14
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Originally Posted by Laketravis View Post
Think about that statement. I mean, really think about that statement and how he connected two things that I'm not sure can be connected.

I figured out FP+ a long time ago and as a result I spend less time and money in the parks. I think that will be true of others as they "figure it out".

So where does "the revenue come through"? Is it from increased guest turnover in the parks each day? While that might be true on already crowded days, I don't think it can be counted on every day of the year - they aren't having to turn people away from the parks every day.
I inferred from the his comment that he meant once the guests figure it out, Disney will be able to reduce the amount of IT support they are currently providing and then their profits will improve.

I really think Mr Rasulo has spent too much time in Fantasyland if he thinks the guests figure it out. Everytime a new software program is introduced at my work, it takes a lot of practice before I become proficient. How are first time guests expected to become proficient without a lot of IT support?
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Old 10-14-2014, 02:56 PM   #15
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Originally Posted by Laketravis View Post
Think about that statement. I mean, really think about that statement and how he connected two things that I'm not sure can be connected.

I figured out FP+ a long time ago and as a result I spend less time and money in the parks. I think that will be true of others as they "figure it out".

So where does "the revenue come through"? Is it from increased guest turnover in the parks each day? While that might be true on already crowded days, I don't think it can be counted on every day of the year - they aren't having to turn people away from the parks every day.
Good points. When we finally get to try FP+, etc it won't be until 2016. I already know that most of the time we'll use FP+ to avoid having to get up early enough to hit rope drop every day. Fewer early days so that will automatically reduce park time. I've been there a bunch of times so I don't have the pressure to ride E-tickets every trip either.

Our last trip in 2012 included several things we liked that did not require riding any rides. Special tours and just spending more time taking in the atmosphere. We don't buy a lot of souvenirs because it's mostly cheap junk but we do buy some so they are not going to get us that way.
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