MyMagic+ Payoff - I Don't Get It

[disneynutz]

It seems to me there has to be a piece to it that we just don't know about yet.

Sayhello

There are many pieces that Disney has yet to announce. If Disney has invested 1 billion dollars on NextGen, you can be sure that they expect 2 billion in return.

Tracking guests, adjusting schedules, selling commemorative bands and jewelry for them is all part of the RFID system and it's components. They don't make any money if you are standing in line, they do if you are eating, drinking, and shopping.

Rewarding the people who spend the most money at Disney is standard for Disney and I expect NextGen perks for that group will increase as time goes on.

Bill

 

[disneynutz]

I do not agree with this logic completely. DVC is one of their most profitable divisions and they are constantly building new DVC resorts to sell. I cannot see them now alienating all those potential new buyers of DVC, leaving DVC properties unsold for years.

Selling new DVC contracts to uneducated buyers makes Disney the most money in the DVC world. The number of DVC owners is so small compared to other guests, spending any money to keep DVC owners happy doesn't make financial sense.

The perks that we do get are discounts that most don't use, restaurants that have empty seats, shopping discounts, PAP's with restricted purchase and use periods. Anything is better than nothing but the perks are more fluff than substance.

 

[jrtoastyman]

Remember, Disney has 47 million people come through the Florida parks each year. Disney doesn't need to increase their per head revenue that much to make that money back fairly quickly, and if by virtue of this, people are having a better time, feeling like they are getting their money's worth, and accordingly spending more time in the shops and dining, it will be worth it sooner than you might think.

 

[MrRomance]

Remember, Disney has 47 million people come through the Florida parks each year. Disney doesn't need to increase their per head revenue that much to make that money back fairly quickly, and if by virtue of this, people are having a better time, feeling like they are getting their money's worth, and accordingly spending more time in the shops and dining, it will be worth it sooner than you might think.

Absolutely! If you think about it and do the numbers, how many sets of Mickey Mouse Ears do they sell every year? How many people pay to have their name stitched on them? The "Magic Band" will be a new "must have" accessory. We already know that there will be a range of custom/personalized bands. There will no doubt be limited edition ones that will attract collectors. X millions of people will buy into the magic band and want one with their name, favorite character, sparkles, crystals etc. etc and over a few years, they've recovered the outlay.

I think it's predominantly to improve guest experience for the "feel good factor" but also, many many people don't "feel" like they're really spending money when they just blip a card/wristband etc. I think Disney will cover the cost in 3 years but they'll be selling those custom bands for decades.

 

[*NikkiBell*]

So, I also don't see the sense in the customizable band argument. The bands can't be used anywhere else and Disney is obviously not interested in repeat guests so why would someone buy one? They're not like Pal Mickey or even ear hats. They aren't necessarily the hit style piece either. I'm sorry but I just don't see it.

 

[fall08CP]

I haven't berm following this closely, but how does this affect locals and cast members who 1) aren't staying at a hotel and 2) don't have the luxury of planning ahead? It bothers me that they're spending so much money on a project that I don't feel was broken, but they're laying of hundreds (thousands?) of cast members.

 

[WaDiWo]

Or perhaps, Corporate is actually investing in Guest Experience as a priority instead of profit??

(one can only hope)

 

[WaltD4Me]

The bottom line is Disney makes the most money on the guest that comes down every 1 or 2 years, stays for 7-10 days in a Deluxe Resort and buys the Dining Plan. Disney is trying to get more people to do this and the big incentive will be "you don't even have to wait in line, just give us your credit card and leave the rest to us".

This may be true, but they still need the people staying at the moderates and values and off property and locals too. Disney can't afford to focus just on the Deluxe guest and they know it...after all they did just a huge new Value resort. Disney might not have to be fair, but they do have to be smart. Believe me, they wouldn't be too happy if all the Deluxes were full, but all the other resorts were empty and they have to be careful about that. They don't want people who cannot afford a Deluxe but still have plenty of money to burn in the parks to say "Why bother going if I can't get on any rides?" They also don't want the buzz on "MyMagic" to be "If you can't afford $450 a night it isn't worth going." and that is just what would happen.

I agree a billion dollars is HUGE, but also that there does have to be something missing still. Something we don't know about yet. Even still, at this point, I think it's a huge risk. I guess we'll just have to wait and see.

 

[disneynutz]

So, I also don't see the sense in the customizable band argument. The bands can't be used anywhere else and Disney is obviously not interested in repeat guests so why would someone buy one? They're not like Pal Mickey or even ear hats. They aren't necessarily the hit style piece either. I'm sorry but I just don't see it.

Many don't see the attraction to little vinyl dolls, pin trading, putting your name on a brick or on a piece of metal in Epcot but Disney has made all of these popular and very profitable. The bands can be used over and over since all of your data is computer stored and updatable on the fly.

Bill

 

[*NikkiBell*]

Many don't see the attraction to little vinyl dolls, pin trading, putting your name on a brick or on a piece of metal in Epcot but Disney has made all of these popular and very profitable. The bands can be used over and over since all of your data is computer stored and updatable on the fly.

Bill

I understand that. However, if Disney's #1 focus is on the "once in a lifetime guest," why would that person need a band that they can't use anywhere else but at the parks?

 

[Superspectral]

I think $1 billion is for the whole "next generation initiative" not just RFID/MyMagic+/Fastpass+. Some of this total may be recharacterized ongoing capital equipment sustainment budget. For example, it seems to me the magnetic media readers throughout the park were well worn and in need of wholesale replacement.

Perhaps Disney is hoping to reduce future labor costs by load management between the parks. FP+ can distribute guests more evenly by park capacity. As resort guest numbers exceed park capacity, you want to reduce the time they spend in the park per day. Guests get their 3 rides per day then leave. Stay 10 days and see what you used to see in 5. Double the number of guests in the resort while at any one moment the parks are full. So parks are open fewer hours or you don't have to build another park.

 

[Kimberle]

I understand that. However, if Disney's #1 focus is on the "once in a lifetime guest," why would that person need a band that they can't use anywhere else but at the parks?

I don't see a "band", I see a bracelet. WDW will most likely have many different styles from which to choose. They could include 1 or more that are marketed to adults. If done tasetfully, it could be a bracelet that holds memories of being in the world. Think of building a charm bracelet with one of the charms the RIF reader. (Personally, I wouldn't buy this, but I know many who would.)

Also, I see lots of adults buying Mickey ears, etc. that are only worn in the parks. I don't see adults with their "ears" in the mall..

 

[*NikkiBell*]

Also, I see lots of adults buying Mickey ears, etc. that are only worn in the parks. I don't see adults with their "ears" in the mall..

Don't you have Hat Day at work?

 

[jrgutknecht]

I'm sure those that signed off on this investment believe the payoff will come from two places. 1. new and returning guests who see the value in the system (a small portion of the payoff) and 2. the INFORMATION they gather from those that use it.

Think about a company like Facebook. Why are they so valuable right now? Because of the information they are gathering about people, their habits, their likes, their dislikes, their brands, their networks, their friends, etc.. As soon as I heard they were using this to track your purchases, I knew that the information was the key to this program.

Believe it or not (and I personally think it's not as valuable as those selling it would have you believe) but information about consumers is the most valuable commodity in the business world right now. Companies are spending big bucks on analytics to try and better identify their customers and deliver them targeted messages. Think about all those coupons that print out at the checkout at Target, Walmart or your local grocery. Those are not random coupons. Those companies spent millions of dollars on software to track and analyze your purchases to deliver those coupons to you.

Disney is no doubt doing the same thing. I'm sure they believe this system will ultimately give them information they need to better target potential guests with offers that they just can't refuse - why ? Because they know exactly what offer to make. As quikah said, it's a whole new revenue stream.

Just my two cents.

Personally, as a gadget / tech geek, I can't wait to try it out.

 

[jrtoastyman]

One other thought: a lot of this "under the hood" stuff that makes up a large part of this NextGen thing has the result of eliminating the need to purchase certain supplies (mostly thinking about paper, room keys, photopass cards, etc.) and eliminating the need to do maintenance on machines that rely upon mechanics to function (like FastPass machines). When a Fastpass machine goes down now, you've got to send someone out there to fix it on the spot, which is disruptive. These RFID things, though, just program another one backstage, swap it out, and deal with the problem without the clock ticking and everyone watching. Definitely has the potential to cut down on maintenance costs and the burn of constantly replenishing supplies.

Moreover, with virtually everything you do being linked to these RFID bracelets, the amount of control Disney can maintain from a centralized location is enormous. It has to streamline their operations.

Point is, even apart from whatever increased revenue Disney may see as a result of the NextGen thing, the savings and efficiencies it may realize will certainly help offset that cost as well.

 

[mjtm610]

If we're there for 7 days, do I have to wear this bracelet thing everywhere I go? Can I take it off? I can't imagine kids keeping it on. They can't even keep the band they use for SAB on.

 

[doconeill]

I think Disney are looking to recover the costs in multiple ways. Increased spending (people not thinking the wristband is really spending money), decreasing staff (better mobilization of CM's where needed), rolling in "perks" for on-site guests (increasing resort guest numbers), custom wristbands (why get the standard one for free when you can have one with Mickey and your name on it for $25), perhaps some new paid interactive experiences. Doesn't take long for all of those to add up. I don't think they plan on recovering the cost super quickly, but WDW will be selling those wristbands for a long time yet!

I think this is a lot of it. Disney stated that they expect this to somehow translate into 10-20% more spending by guests. Whether that translates into an extra day in the parks for every 5-10 days of a typical stay instead of going to Universal (another focus they have mentioned, although I don't see how this would make people stay on property yet, unless they make FP+ more desirable than it is appears to be), or people spending more due to convenience (I can walk up and buy a $3 soda in a couple seconds, instead of having to wait for the room charge or get change back), I don't know.

Upcharges like designer styles I think might be a big sell though.

So, I also don't see the sense in the customizable band argument. The bands can't be used anywhere else and Disney is obviously not interested in repeat guests so why would someone buy one? They're not like Pal Mickey or even ear hats. They aren't necessarily the hit style piece either. I'm sorry but I just don't see it.

I guarantee you if there is a Dooney & Bourke designer bracelet for an additional $5-10, there are plenty of people here who would snap them up...

But it is interesting that these don't appear to be reusable, at least for some of their function. The bands supposedly contain a non-replaceable button battery for a transmitter that allows them to know when you are close enough to certain locations. That battery can't last forever. I don't know what the lifetime is, but I don't think it's going to be a full year and I wonder if it would last a month.

 

[bcrook]

This is a great question NikkiBell - everything doesn't add up yet.

If people buy the bands? will they still buy the ears? or a balloon? or whatever. I would think some percentage of the new gadget is going to replace some other low cost high profit item. doconeill brings up a good point about the battery life. If I bought a designer bracelet (no way that will happen), I would like for it to work for a few visits.

 

[AndyPok1]

I'm not sure why everyone is talking about tiers and on property. MyMagic+ is going to be for everyone by the end of the year. It's simply that they are rolling it out in stages, that way they can control it and ensure the users have a good experience.

They've done progressive rollouts with everything recently. Art of Animation opened in 4 stages over the course of 5 months. Two parts of Fantasyland opened, one in the beginning of the year, and one at the end... with two more parts still to come. Doing progressive rollouts ensures everything goes smooth, unlike the mess that was Harry Potter.

 

[disneynutz]

This is a great question NikkiBell - everything doesn't add up yet.

If people buy the bands? will they still by the ears? or a balloon? or whatever. I would think some percentage of the new gadget is going to replace some other low cost high profit item. doconeill brings up a good point about the battery life. If I bought a designer bracelet (no way that will happen), I would like for it to work for a few visits.

People will buy anything Disney sells once the Disney spin is applied.

These are RFID chips in the bracelets and cards, they do not require a battery. They contain only a user ID and maybe a check sum. All of the info about you, your charging privileges, room access, likes and dislikes, park access, fast passes, game high scores, location on property, buying habits, eating habits, rides that you have been on, are all kept in a computer.

Bill