MM+/Magic Bands: what was the benefit/perceived ROI to Disney?

[Princess Jes]

I want to preface this by saying something:
For the love of mickey, please, let's not get into whether you like/love/hate MBs. I'm not intending this to be a debate about that.

So, I'm listening to an old podcast from 2013 where Pete and the team are discussing MM+ and the cost and they mentioned something significant to me: with the money they've invested (keeping in mind, this was in 2013, so not total amount invested as at today) they spent what they spent on updating DCA, and could have spent it on upgrading/updating DHS.

So, when you put it like that, I don't understand what the motivating factor is to spend money on MM+ (seemingly something to make life easier) verses updating a dying park which would surely bring in more revenue/ROI than this.

I have only ever used MM+, never traveled before it, so I don't know any other way, but I still, to this day, wish I had a magic band for my life (hello Apple watch) so I see how it's made life more convenient for the guest (I know, that's a matter of opinion) but I don't see how the system as a whole would create much of a return on investment for disney.

Has it made life easier/more cost effective for disney in the background?
If it had, wouldn't they be implementing it at DLR?

For a country that's so paranoid about their information being stolen from a band (which could have been done from the cards anyway, although it can be done from a further distance now. In Australia, it doesn't seem we have anywhere near the paranoia about this) it seemed a risky step no?

So... In your opinion, or in fact, why? Why did they invest in a convenience system rather than upgrading the parks, boosting their money making potential?

 

[MermaidOfNeverland]

Well, my first guess is financial. A boost in one park could only boost attendance in one park. Magic Bands could potentially spread to every park on the planet, increasing profit like crazy.

Now, I don't see this anywhere near DLR in the future, its a smaller park with a more protective audience. But... who knows. I don't work for Disney and they can do whatever they please, haha.

 

[Lesverts]

Data is king. MagicBands and MM+ are tremendous sources of data on Disney guests. The bands provide the mouse with everything they need to know about you as a guest. Monetizing data is how companies like facebook make a living. Using data to provide targeted advertisement is very valuable to Disney.

Think iris-scan advertisement in Minority Report.

 

[jcb]

MM+ is supposed to make money because when people pre-plan their vacation, they spend more time at WDW; it also lets WDW put more people in the parks on high volume days. It doesn't hurt that the magic bands make it easier to spend money.

Jay Rasulo explained it this way (2013):

So the fundamental driver that we feel is, number one, like every other enhancement of our product, the better the product gets the more people want to come and visit. Whether that's new attractions, new services, or in this case the combination of planning tools and on-site conveniences that this technology will provide. That -- in terms of its ability to drive volume and spending, because people who plan in advance tend to spend more at Walt Disney World -- are the key drivers of the revenue push behind that.

However, a secondary driver of revenue will be the services that we can now offer on a personalized basis because we know who you are, where you are and, if you tell us, why you are coming to Walt Disney World for this vacation, whether you're a first time visitor, a 50th time visitor, it is your child's fifth birthday, it is a graduation, it's an anniversary. The more you share with us as a guest the more we are able to tailor services and we think get lift in selling those services. So that is the fundamental economics.
​

And:

The first, as it greatly improves the experience at Walt Disney World, we expect that -- as we have with everything else we've done to improve the experience at our parks -- to have an underlying increase in business. Whether that's more individuals coming to the resort every year, or those individuals who come down to Orlando, spending more time with us and having a better time. That tends to reverberate throughout our business in a very positive way. And then, sort of easing some of the, let's say, logistics of getting around the property -- paying for things, entering the parks, getting in and out of the resort hotels -- when you make that easier, people tend to spend more time on entertainment, more time on consumables, be that food and beverage, merchandise, et cetera. So, as we are still very much in the early days of rollout, we haven't been characterizing that impact, but we do expect this to be a net positive and growingly positive impact on our business in the years to come.​

After it had been implemented Iger (Feb 2014) explained how it let WDW increase capacity:

I can't quantify it from a financial perspective yet. It's still early, and we are still rolling out facets of it. What I can say is that what has been rolled out has been a real success, both for the guest and for us. So to give you a for instance, our Parks people in Walt Disney World believe during the peak holiday season that we were able to accommodate about 3,000 more additional guests in the Magic Kingdom per day, thanks to MyMagic+. One of the most attractive features and one that I think will have possibly the biggest benefit is the FastPass+, which is the ability to reserve three times on three attractions per day, either before you visited the park if you are a resort guest, or on the day that you enter the park if you are a same-day or a single-day ticket holder.

What we are seeing there is substantially higher utilization of that product among our guests than we saw with a traditional FastPass, by the way, by a wide margin. And since the goal of this was to make the guest experience better, enable the guest to experience more, to do so more efficiently, and essentially to be able to customize, we think that these are very, very good signs for us because clearly guest satisfaction is very, very important to the value equation for us, both how they spend their time when they are with us and a determining factor in terms of whether they come back.

So this is all very good. So I would say the biggest impact is, one, being able to accommodate more people, because it's just more efficient, and secondly, enabling guests to have a substantially better experience than they have had before because they are doing more.​

 

[k5jm]

Disneyland will not implement it in it's current form. It really has no benefit to how customers go to Disneyland. Disneyland is really a "local's" park. I see this working at Disneyland Paris and Tokyo Disneyland. But DLR just does not have the same type of folks. If I lived in Southern California, I would not want to have to schedule FastPasses 30 days out or dining reservations and I would not care if the MagicBand opened my doors. I am not sure if the current park media is RFID enabled, but if it is, you might see a limited implementation of some features of MM+. I know the last time I got a Premier Passport, it was RFID enabled.

 

[CampbellzSoup]

Disneyland will not implement it in it's current form. It really has no benefit to how customers go to Disneyland. Disneyland is really a "local's" park. I see this working at Disneyland Paris and Tokyo Disneyland. But DLR just does not have the same type of folks. If I lived in Southern California, I would not want to have to schedule FastPasses 30 days out or dining reservations and I would not care if the MagicBand opened my doors. I am not sure if the current park media is RFID enabled, but if it is, you might see a limited implementation of some features of MM+. I know the last time I got a Premier Passport, it was RFID enabled.

It'll come there slowly but surely ...

The locals won't have to participate in magic bands if they don't want but for sure eventually maybe years from now it will come.

I would love the hands to be used on Disney cruise line

 

[Princess Jes]

I would love the hands to be used on Disney cruise line

You mean, you can't use your hands on a disney cruise?! What is this craziness? How am I supposed to hold my cocktails? What about the beef rolls the team all talk about? Are we supposed to eat them like animals in a hot dog eating contest?
That's it!
I'm writing to Bob Iger myself, to demand a change in policy!
Nay, I'll go to Burbank and storm through his office like PL Travers did to Walt as depicted in Saving Mr Banks!
Yeah, that'll work!
Oh, and they've clearly ruined my vacation, my life, my children's children's lives, and my lunch.
Good day! I say, good day sir!!!
;-)
ETA:
And I'm NEVER going back to WDW *buys tickets the next day*

 

[OKW Lover]

I am not sure if the current park media is RFID enabled, but if it is, you might see a limited implementation of some features of MM+. I know the last time I got a Premier Passport, it was RFID enabled.

The admission media we got in December wasn't RFID, instead it was a bar-code as I recall. I think they made the Premier Passport (the gold card) RFID enabled so that it could be used at WDW.

 

[*NikkiBell*]

To be honest, I don't think that we have seen the full capability of MBs/MM+ just yet. All of the issues they had put it on the back burner until things were sorted out. I really believe that there's more to come.

 

[k5jm]

To be honest, I don't think that we have seen the full capability of MBs/MM+ just yet. All of the issues they had put it on the back burner until things were sorted out. I really believe that there's more to come.

The potential for MBs is pretty amazing. They really have not started using the long range portion of the active RFID's in the magic bands. I am waiting for the next gen MBs. There is a potential for them to be interactive similar to Glow with the Show.

 

[*NikkiBell*]

There is a potential for them to be interactive similar to Glow with the Show.

Bingo.

Amongst other things....

 

[jcb]

The potential for MBs is pretty amazing. They really have not started using the long range portion of the active RFID's in the magic bands. I am waiting for the next gen MBs. There is a potential for them to be interactive similar to Glow with the Show.

Bingo.

Amongst other things....

If my "magic band" were to start "interacting" with me, there would be quite an undignified commotion.

 

[k5jm]

If my "magic band" were to start "interacting" with me, there would be quite an undignified commotion.

With high pitched screaming and colorful metaphors?

 

[jcb]

 

[OKW Lover]

There is a potential for them to be interactive similar to Glow with the Show.

Oh great - not thinking its a good idea for my pocket to glow.

 

[WDW Crawl]

It's all about data mining. Where, when, and what will be sent to their systems in a way that will help determine how you vacation and what they may be able to sell to you. They'll take a while to compile that data further from overall attendance and try to bean count that as well into further statistically backed efforts.

 

[Goofy_Disney_Dad]

I don't think the majority of the benefits are things we, the paying customer, will see. I think the data that becomes available behind the scenes is a huge reason for the system itself. The ROI will be based on what they do, or are capable of doing with that data.

 

[timmac]

I think it's not only about data mining, but about making it easy for guests to make more purchases. Room charge has always been an option, but the magic band for payment is even a little easier. Anything even just a little easier that encourages just a few percentage points increase in sales (possibly impulse purchases) is huge in terms of revenue. I would guess that there's a psychological thing about the band being less like money as well... and when it feels less like money, people are less hesitant to purchase.

I have to disagree with a fundamental assumption posed in the OP however, that "updating a dying park which would surely bring in more revenue/ROI than this". The important thing to consider is what would be the net result of an updated DHS? Would people spend more time there, and spend more money there? Maybe to probably. But, the time and money guests spend there isn't coming out of the ether. Would it simply re-balance the time a guest would be spending on Disney property already anyway? To illustrate, consider that the difference in revenue between a guest who spends two days at MK versus one who spends a day each at MK and DHS isn't likely all that much.

Now, if we could argue that an improved DHS would result in more people visiting who wouldn't already be coming, or that people already in the area would spend more time and money with Disney as a result, then there might be a good ROI to consider. And, we would then have to ask ourselves, is that increased revenue more than the cost it would take to execute? Followed in short order by, how does that compare against the ROI we predict for any of a number of other endeavors (including magic bands). 100% guaranteed these questions were asked internally, discussions happened, and decisions reached. What you see happening now is a result of Disney's running the numbers and analyzing the data for themselves.

In other words, Disney themselves disagrees that the ROI would have been better. The proof is in the pudding, if it could have made more money, Disney would have done so.

 

[KeithNotKieth]

I fully agree with the past few comments. Let's not forget that Disney is a financial genius -- the inclusion of MM+ not only means added consumer benefits that enhance the guest experience from ticketing to FP+ and Bill-to-Room ability. In addition of having data related to Guests staying on-property, they also have that same access to the habits and special event bookings of all of their Annual Passholders. From a research & development ROI and marketing strategy, it is absolutely a profitable investment.