Disney's $1 billion dollar bet on magical wristband - Wired

[midaroco]

How do you resolve the additional spending that results from a travel boom?

When they purport that the magic band has increased spending, legally they would have already run the stastical analysis on the back end that I mentioned. They would have to be able to corroborate their claims with substantial numbers from the data, which would not simply come from a travel boom. Increased profits from a travel boom would not equate to the same thing as increased profits from the magic bands - at least not in the claim that they are a success. It couldn't be, due to shareholder value reporting on new initiatives. Due to changes in reporting financial data, and what claims you can and can not make publicly, about financial gains and losses changed with Sarbanes-Oxley in 2002 due to the whole Enron fiasco.

This is also why they can't release official numbers and make vague claims.

 

[Yellowstonetim]

In all this discussion about Disney and whether or not they are doing good with MM+ and MBs, and whether or not they are keeping repeat business happy, I want to introduce another idea: Now this is only from anecdotal evidence, but I believe Disney is reaching a new place in our culture. Disney has had a special place for some time, but now... Here is what I mean:

14 years ago in 2001 I took the family to Disney when AK was still new and so was All Star Resorts. Disney had at that time begun to be a 4 park destination. Since then the 4 parks have grown to some degree and there have been changes and additions at the resorts. Well, when we went, I knew a few other people who had been to Disney and a few fans. Fast forward to 2014 and 2015. More people are talking Disney at church and a work. A large percentage of people are planning to go to Disney with the family at some point or already have. We have a whole group at church that love Disney and we are planning a Disney party just to celebrate all things Disney.

What I am saying is Disney has done something right (despite all the hate over neglect and lack of updating) that is attracting more people. They have placed themselves in a special niche in culture with the combination of quality movies, a top notch cruise line, and all the expansion in the past that has built over time to put them in this position. BTW, a significant percentage but not the majority of these people are Disney Cruisers first, and parks visitors second. Some are DVC's, but most are just Disney fans that visit anywhere from once a year to every 5 years.

If I am right, then Disney probably knows this and knows they are going to have a lot of people visiting in the future. If I am right and this isn't just an anomaly in my neck of the woods (PA) then they needed to do MM+ and begin to adjust for the continually rising crowds while worrying less about the 2+ times a year visitor.

Does anyone else see this in their circles?

 

[Cormoran]

When they purport that the magic band has increased spending, legally they would have already run the stastical analysis on the back end that I mentioned. They would have to be able to corroborate their claims with substantial numbers from the data, which would not simply come from a travel boom. Increased profits from a travel boom would not equate to the same thing as increased profits from the magic bands - at least not in the claim that they are a success. It couldn't be, due to shareholder value reporting on new initiatives. Due to changes in reporting financial data, and what claims you can and can not make publicly, about financial gains and losses changed with Sarbanes-Oxley in 2002 due to the whole Enron fiasco.

This is also why they can't release official numbers and make vague claims.

So you're saying that their statements at the shareholder meeting were precise? I saw no statements of fact when I read what they had said. Al I read were vague statements that were open to interpretation.

 

[clsteve]

When they purport that the magic band has increased spending, legally they would have already run the stastical analysis on the back end that I mentioned. They would have to be able to corroborate their claims with substantial numbers from the data, which would not simply come from a travel boom. Increased profits from a travel boom would not equate to the same thing as increased profits from the magic bands - at least not in the claim that they are a success. It couldn't be, due to shareholder value reporting on new initiatives. Due to changes in reporting financial data, and what claims you can and can not make publicly, about financial gains and losses changed with Sarbanes-Oxley in 2002 due to the whole Enron fiasco.

This is also why they can't release official numbers and make vague claims.

SOX has zero to do with this discussion. "Magic Bands" doesn't show up on the chart of accounts and they aren't secretly filling it from the "Better weather, It's a Leap Year" account.

The revenue is still coming from the same channels - tickets, merch, per guest spend at the resorts, etc. and still going into the appropriately accounted for buckets

All they are saying is they are seeing an increase due to capex investment into infrastructure, and process optimization. That's why you do those things.

The Feds don't go and check to see if you're getting the ROI the sales rep told you to expect from that server farm you purchased.

Now, if you want to talk about how the big overruns that pushed the cost from 500 mil into the 1.5 to 2.5 bil range and how they were classified, and the crossover of all of those big System Integrator costs from depreciable development to maintenance....

Then we're talking SOX

 

[DDLand]

It seems we're getting close to colored font time

DDL, without going into all of the above, I'd kinda move away from this record profit thing you're holding onto.

If for no other reason then - it's kinda something they might have brought up. That's rarely something that corporations hide.

Just sayin'

1995- $859,000,000
1996- $990,000,000
1997- $1,136,000,000
1998- $1,287,000,000
1999- $1,446,000,000
2000- $1,620,000,000
2001- $1,586,000,000
2002- $1,200,000,000
2003- $957,000,000
2004- $1,100,000,000
2005- $1,200,000,000
2006- $1,500,000,000
2007- $1,710,000,000
2008- $1,897,000,000
2009- $1,418,000,000
2010- $1,318,000,000
2011- $1,553,000,000
2012- $1,902,000,000
2013- $2,220,000,000
2014- $2,663,000,000

I said record Disney P&R Profits. Here is every SEC 10 K on their website.
http://www.sec.gov/cgi-bin/browse-e...01039&type=10-K&dateb=&owner=exclude&count=40

Maybe if you looked at the data clsteve we wouldn't be in this situation. Would it help if I put it in a chart?

That's record profit clseteve.

Oh, who knows maybe these numbers aren't clear enough? Hey do these official SEC numbers meet the criteria? I mean it may be good enough for the SEC, but for the good old CLSteve? No way.

 

[lockedoutlogic]

1995- $859,000,000
1996- $990,000,000
1997- $1,136,000,000
1998- $1,287,000,000
1999- $1,446,000,000
2000- $1,620,000,000
2001- $1,586,000,000
2002- $1,200,000,000
2003- $957,000,000
2004- $1,100,000,000
2005- $1,200,000,000
2006- $1,500,000,000
2007- $1,710,000,000
2008- $1,897,000,000
2009- $1,418,000,000
2010- $1,318,000,000
2011- $1,553,000,000
2012- $1,902,000,000
2013- $2,220,000,000
2014- $2,663,000,000

I said record Disney P&R Profits. Here is every SEC 10 K on their website.
http://www.sec.gov/cgi-bin/browse-e...01039&type=10-K&dateb=&owner=exclude&count=40

Maybe if you looked at the data clsteve we wouldn't be in this situation. Would it help if I put it in a chart?

That's record profit clseteve.

Oh, who knows maybe these numbers aren't clear enough? Hey do these official SEC numbers meet the criteria? I mean it may be good enough for the SEC, but for the good old CLSteve? No way.

JHC...you just tied Disney world to the us economy and a reflexion of their price increases...

You can plot it on a graph and the three curves would practically align.

What case are you arguing?

This is like a defense attorney standing up for opening statements and yelling "he did it! He did it! Case closed!"

 

[wallrock]

In all this discussion about Disney and whether or not they are doing good with MM+ and MBs, and whether or not they are keeping repeat business happy, I want to introduce another idea: Now this is only from anecdotal evidence, but I believe Disney is reaching a new place in our culture. Disney has had a special place for some time, but now... Here is what I mean:

14 years ago in 2001 I took the family to Disney when AK was still new and so was All Star Resorts. Disney had at that time begun to be a 4 park destination. Since then the 4 parks have grown to some degree and there have been changes and additions at the resorts. Well, when we went, I knew a few other people who had been to Disney and a few fans. Fast forward to 2014 and 2015. More people are talking Disney at church and a work. A large percentage of people are planning to go to Disney with the family at some point or already have. We have a whole group at church that love Disney and we are planning a Disney party just to celebrate all things Disney.

What I am saying is Disney has done something right (despite all the hate over neglect and lack of updating) that is attracting more people. They have placed themselves in a special niche in culture with the combination of quality movies, a top notch cruise line, and all the expansion in the past that has built over time to put them in this position. BTW, a significant percentage but not the majority of these people are Disney Cruisers first, and parks visitors second. Some are DVC's, but most are just Disney fans that visit anywhere from once a year to every 5 years.

If I am right, then Disney probably knows this and knows they are going to have a lot of people visiting in the future. If I am right and this isn't just an anomaly in my neck of the woods (PA) then they needed to do MM+ and begin to adjust for the continually rising crowds while worrying less about the 2+ times a year visitor.

Does anyone else see this in their circles?

The question I'll throw out there is this truly due to an increased interest in Disney or is it because social media has made everyone so much closer and the conversations are being heard more? 20 years ago you wouldn't get news beyond your local broadcasts (CNN was around but hadn't quite made the impact yet). Today if there's news anywhere you'll hear about it, sometimes within the same day of the occurrence. I think things like Facebook have helped close that distance as well. This may not address the examples you cite around your church or workplace, but do either have something like a Facebook page where people discuss things outside of what is typically discussed in those venues? I know my workplace uses a social media site - Yammer - and that's helped bring people together with similar interests that probably otherwise wouldn't have met.

More to your example, is this something you've seen gradually increase since 2001 or did you notice a significant spike in 2014? I ask because the Frozen popularity (out debates notwithstanding) could have contributed to people discussing Disney more. I'd also wager that Disney's acquisitions over the past several years - notably Star Wars - have probably brought people into the Disney fold whereas they wouldn't have been interested before. In that regard you're probably right in that Disney is doing something right, but is it Disney that people are interested in or the properties they have acquired?

 

[clsteve]

I said record Disney P&R Profits. Here is every SEC 10 K on their website.
http://www.sec.gov/cgi-bin/browse-e...01039&type=10-K&dateb=&owner=exclude&count=40

Maybe if you looked at the data clsteve we wouldn't be in this situation. Would it help if I put it in a chart?

That's record profit clseteve.

Oh, who knows maybe these numbers aren't clear enough? Hey do these official SEC numbers meet the criteria? I mean it may be good enough for the SEC, but for the good old CLSteve? No way.

Take a deep breath, go back and read your posts, go back and look at the topic of discussion, and bring it back to the "WDW in Orlando Fla where MM+ is implemented" discussion.

The only reason these unadjusted for anything numbers you tossed up are even here is because you stated in a post sometime this morning that Disney recognized record attendance and record profits at WDW which proved the consumer didn't want new stuff. Unadjusted operating income Disney Intl P&R numbers aren't going to make that previous statement correct, no matter how much you want them to.

So, why don't we just leave it here. Okay?

 

[DDLand]

JHC...you just tied Disney world to the us economy and a reflexion of their price increases...

You can plot it on a graph and the three curves would practically align.

What case are you arguing?

This is like a defense attorney standing up for opening statements and yelling "he did it! He did it! Case closed!"

This particular conversation is not a commentary specifically on My Magic. My original thesis was because of record attendance (verified) and profit (verified) Disney was giving the people what they wanted. My Magic included. They've navigated the booms perfectly, and have grown enormously.

Though your simplification is not accurate either. Since 2010 the company has doubled D&R profits. The economy has not doubled in size during the period. Not even close. People have chosen to deploy their funds in increasing amounts at D&R at faster rate then economic growth. That means the company is creating a compeling product. As soon as many people have that extra leisure money, they choose Disney. That's because Disney has not only maintained a compelling product, but also because they've invested in their product in a way people love.

 

[Cormoran]

So, why don't we just leave it here. Okay?

That's never going to happen.

 

[DDLand]

Take a deep breath, go back and read your posts, go back and look at the topic of discussion, and bring it back to the "WDW in Orlando Fla where MM+ is implemented" discussion.

The only reason these unadjusted for anything numbers you tossed up are even here is because you stated in a post sometime this morning that Disney recognized record attendance and record profits at WDW which proved the consumer didn't want new stuff. Unadjusted operating income Disney Intl P&R numbers aren't going to make that previous statement correct, no matter how much you want them to.

So, why don't we just leave it here. Okay?

You're the one who brought it down this path @clsteve. I'm merely finishing the job so you're left with a better understanding of P&R.

Non adjusted for anything? Here's some randomly selected years that have been plugged into an inflation calculator for your viewing pleasure.

1995- $1,323,006,548
1997- $1,661,334,529.60
2000- $2,208,186,062.72
2008- $2,068,097,676.30
2014- $2,663,000,000

Is it that just me or is it still a record profit?

Your context is wrong too. It all started when my fine friend @Cormoran said:

I sometimes believe the parks would be better off under new ownership. in a company that understood theme parks and appreciated the Disney brand of theme parks prior to the Iger administration.

I replied:

Yeah, because Iger hasn't been doing enough to maximize profits.

To which rteetz replied:

Well of course he has, that's more money for him, but what about the consumer they want new stuff as well. Dessert parties and hard ticket events can only go so far.

So in order to vindicate the entire Walt Disney Parks and Resorts strategy I responded (actually you were the guy who originally made it big picture. Cormoran was responding to some of your Comcast stats)

Record profit and attendance suggests that the consumer doesn't really want new stuff

You never clarified anything on how you were viewing the thread. If you wanted to make it about solely about Domestic operations then you should have been more up front about that. Though I do think it's ironic you're getting upset about using total P&R Results when you yourself are not breaking down Universal Theme Park Operating Income by Domestic v. International. Funny.

 

[DDLand]

That's never going to happen.

This may be the first time I agreed with you Cormoran!

 

[rteetz]

This particular conversation is not a commentary specifically on My Magic. My original thesis was because of record attendance (verified) and profit (verified) Disney was giving the people what they wanted. My Magic included. They've navigated the booms perfectly, and have grown enormously.

Though your simplification is not accurate either. Since 2010 the company has doubled D&R profits. The economy has not doubled in size during the period. Not even close. People have chosen to deploy their funds in increasing amounts at D&R at faster rate then economic growth. That means the company is creating a compeling product. As soon as many people have that extra leisure money, they choose Disney. That's because Disney has not only maintained a compelling product, but also because they've invested in their product in a way people love.

I don't think anyone went out there and said hey I wish disney had a system that tied everything to their phones and you got to wear a wristband that is your ticket and hotel key and it should be called mymagic+. No one did because they were just as happy with the system before MM+. Disney put this in as a new infrastructure. Everyday guests don't care whether your FP is paper or electronic as long as they have a FP. Now for the diehard disney fans like us that may be different.

 

[DDLand]

I don't think anyone went out there and said hey I wish disney had a system that tied everything to their phones and you got to wear a wristband that is your ticket and hotel key and it should be called mymagic+. No one did because they were just as happy with the system before MM+. Disney put this in as a new infrastructure. Everyday guests don't care whether your FP is paper or electronic as long as they have a FP. Now for the diehard disney fans like us that may be different.

I think this sums up what Disney was trying to do with FP+ and My Magic:

“Some people say, give the customers what they want, but that’s not my approach. Our job is to figure out what they’re going to want before they do.”
Steve Jobs

Sometimes that means ruffled feathers or tech glitches, but ultimately they're trying to move everyone forward. I certainly never thought to myself "You know what would work great at DAK, a Mountain from Nepal with a Yeti inside of it!" I mean I'd love to say I did that, but no. Disney is about creating guest experiences that surprise, and delight. My Magic has been controversial, but I've seen many awesome experiences in the Parks with it. Also the paper FP system was archaic. Something was needed to be done. A whole bunch of issues that had been plaguing Disney World for years were solved with My Magic. Is one giant leap into the future. Some people weren't ready. Looking back it may still be controversial, but most will realize the value gained.

 

[rteetz]

I think this sums up what Disney was trying to do with FP+ and My Magic:

“Some people say, give the customers what they want, but that’s not my approach. Our job is to figure out what they’re going to want before they do.”
Steve Jobs

Sometimes that means ruffled feathers or tech glitches, but ultimately they're trying to move everyone forward. I certainly never thought to myself "You know what would work great at DAK, a Mountain from Nepal with a Yeti inside of it!" I mean I'd love to say I did that, but no. Disney is about creating guest experiences that surprise, and delight. My Magic has been controversial, but I've seen many awesome experiences in the Parks with it. Also the paper FP system was archaic. Something was needed to be done. A whole bunch of issues that had been plaguing Disney World for years were solved with My Magic. Is one giant leap into the future. Some people weren't ready. Looking back it may still be controversial, but most will realize the value gained.

Now I'll agree there but disney could still do some work on their websites so they don't crash constantly. Disney hasn't always bee the best from that front. I'm not opposed to the system but I still think they need to invest in attractions as well at parks like DHS and Epcot.

 

[DDLand]

Now I'll agree there but disney could still do some work on their websites so they don't crash constantly. Disney hasn't always bee the best from that front. I'm not opposed to the system but I still think they need to invest in attractions as well at parks like DHS and Epcot.

I agree about some of the IT stuff still being sloooow. I haven't run into crashes, but those occasional slow downs are annoying. I do agree there's still growth potential in those two parks.

 

[clsteve]

ou're the one who brought it down this path @clsteve. I'm merely finishing the job so you're left with a better understanding of P&R.

Non adjusted for anything? Here's some randomly selected years that have been plugged into an inflation calculator for your viewing pleasure.

1995- $1,323,006,548
1997- $1,661,334,529.60
2000- $2,208,186,062.72
2008- $2,068,097,676.30
2014- $2,663,000,000

Is it that just me or is it still a record profit?

Again, that's operating income - not profit.

Which is why it's best to leave it here

 

[DDLand]

Again, that's operating income - not profit.

Which is why it's best to leave it here

Alright, we'll leave it there CLSteve.

As I gave this disclaimer in my lengthier post to you:

The numbers I shared clearly show that pre tax profit has grown to record heights @clsteve. That's what the vast majority of people mean when they say "record profits." (Or the flip side post tax profit, sadly I'm not finding P&R net income break down).

It's the best business indicator we've got CLSteve. In light of the fact they've been reporting their numbers this way for years, it makes a good year to year comparison. That's what we're were after. Though you'd never complained about using Pre Tax Profit before. In fact you were lobbying to use a system of measuring business performance based on that same indicator.

"Just sayin"

We'll leave it here.

 

[Cormoran]

I don't think anyone went out there and said hey I wish disney had a system that tied everything to their phones and you got to wear a wristband that is your ticket and hotel key and it should be called mymagic+. No one did because they were just as happy with the system before MM+. Disney put this in as a new infrastructure. Everyday guests don't care whether your FP is paper or electronic as long as they have a FP. Now for the diehard disney fans like us that may be different.

Maybe if Disney had only converted legacy attractions to FP+ the whole system would've been more palatable.

 

[lockedoutlogic]

That's never going to happen.

It really should...at this point you'd have a better chance of proving the theory of realitivity