Official word on the success of MyMagic+

[Laketravis]

As others have stated, be careful touting an increase in operating income due to MyMagic+ as something positive. Looking at the most recent 10Q

“Selling, general, administrative and other costs decreased $26 million from $1,422 million to $1,396 million primarily due to the absence of development costs for MyMagic+”

In other words, operating income is up because MyMagic+ has been rolled out and they are no longer pumping so much money into its development.

Which ALSO signals that they've halted any further development, at least for that entire quarter.

 

[Laketravis]

Oh, and they've also stopped putting those white/dark chocolate sticks in the chocolate martini's at the resorts, so I guess Foo-Foo drinks have contributed to a rise in operating income as well.

 

[Lisa loves Pooh]

As others have stated, be careful touting an increase in operating income due to MyMagic+ as something positive. Looking at the most recent 10Q

“Selling, general, administrative and other costs decreased $26 million from $1,422 million to $1,396 million primarily due to the absence of development costs for MyMagic+”

In other words, operating income is up because MyMagic+ has been rolled out and they are no longer pumping so much money into its development.

Would that just mean expenses are down?
Income is always monies received and while your assessment might be true, it just sounds like the wrong vocabulary.

Net income might go up as a result of reduced expenses--perhaps that is what operating income is? Nevermind --googled it myself http://www.investinganswers.com/fin...cial-statement-analysis/operating-income-1207

*it has been ~18 years since my last accounting, finance, and business courses for my business minor.

 

[Shaden]

Oh, sorry. Didn't know you were looking for specific responses.

I was, we have had several exchanges on these boards around logic vs semantics and while we often disagree we have also come to some points of agreement, and I generally enjoy the exchange either way.

Specifically on MyMagic+... August 2014...

At Walt Disney World, this was the first full quarter in which MyMagic+ was available to all guests. About half of the guests now use MagicBands and 90% of them rate the experience as excellent or very good. We’re very pleased with the growing popularity of MyMagic+ and expect it to contribute to parks earnings growth starting in the fourth quarter.

I guess this confirms that overall the experience is indeed very positive (Excellent or Very Good) in general. Those who say most people don't like MyMagic+ are just wrong. And those who say nobody knows that only Disney knows if it's successful, well, now we know.

Just a note, though in general I think MM+ is probably rated as positive as well.

That is not what this sentence says, this sentence says Magic Bands are rated very positively. Nothing else.

This says nothing about the approval rating of Fastpass+ or My Magic+ (which are themselves 2 different things).

MM+ (including all aspects of it, one of which is FP+) did not cause the doom and gloom that many predicted. And those that don't like it are in the minority, because people are still visiting WDW in droves, and are for the most part, loving it.

This was tangential. Whether your literary breakdown is that the experience as a whole was 90% or the experience of those who wore bands was 90% is irrelevant. Either case is a resounding 90%, whichever subset you're applying it to (all who use MM+ vs all of those who used MM+ and had a band).

I don't think this is tangential at all, if you really read what was said, about 50% (which I am guessing is under 50% or he would have said "over half", this is an investor call after all) the guests used Magic Bands and 90% rate the experience as positive... The object of the positive experience is clearly the magic bands, not MM+ or "all aspects of if" ... not a tangent, quite an accurate description. Now, you can argue that he was referring to the whole MM+, but you are extending his words, you would be the one putting a spin or interpretation on what he "really" meant.

What he -said- was that 90% of the half the guests that are using bands are rating the experience positively.

For the record this also makes your first claim open to critique about the "Majority" of people enjoying MM+. Not only was he not speaking about MM+ (though again, I would imagine most people do in fact have a positive opinion about the program), he was talking about the bands here, But, he also notes that only "about half" of guests are using the bands, and of them 90% rate the experience well ... What does the fact that the other 50% of people are choosing not to use them say, if it says they don't like them, or the idea of them, which you could argue it does, than the majority of people in fact don't like the bands.

And on a far more sinister / conspiracy related note - I'd like to know how they determine who they question / what they ask. My own experience has been interesting with this. While in the parks this may, they had a ton of people kicking around with the Ipads asking people to take surveys, but more often then not they were actually just standing there with them, not surveying people. At first I just gave them the "I'm available" eyes ... but that didn't seem to work, so a couple days in I just offered to take their survey, I was told they couldn't survey me, it was "random". Random how exactly ? Random as in, see someone who is clearly having an awesome time and ask them ? Or random as in, every 17th person to walk by ? I did get to fill out one survey when I returned home though, but it was about the parks, not about MM+ or FP+. Even there though, the questions were pretty leading, and I agree that for some, there wasn't really a negative option to respond with.

Correct. You can't ask to be queried in a random sample. Then it's no longer random, and will instead be skewed toward those who want to say something, aka those who have a complaint. If 1000 guests visit happily and 1 out of 100 has a bad FP experience, but they make the survey a walkup-station labeled "tell us about your visit" they will get the 10 ppl that had a problem walk up and it'll seem like 100% dissatisfaction, even tho it's only 1%. instead by asking people on the streets and giving them no say in who gets chosen, the actual survey results will point to the correct 1%.

I very much agree, what I was referring to is more what LakeTravis pointed out, how exactly are they selecting the respondents. My question was whether this was really random sampling or not. I am guessing, pure guess, pure speculation, etc ... that its not random, that they are selecting people who look happy happy to take the quiz, especially if they are using this survey data to present to shareholders after they have spend a billion or a billion and a half dollars.

 

[Laketravis]

What does the fact that the other 50% of people are choosing not to use them say, if it says they don't like them, or the idea of them, which you could argue it does, than the majority of people in fact don't like the bands..

That really clicks with what I observed - it seemed like almost as many guests were using their AP cards at FP touch points as were guests with MB's.

You get a MB when you stay at a WDW resort; you don't get a MB when you purchase an AP, right? if not, I can't think of a lot of reasons an AP holder would be compelled to pay extra for a MB.

Surely Disney contemplated this early on?

 

[JimmyV]

Just some random thoughts:

• Disney employees with I-Pads is not a scientific Quinnipiac poll. Could be accurate. Could be way off.
• 4% revenue gain can be achieved by 5% cost cutting and 1% revenue loss in all other areas combined. Throw everything in the hopper and your net gain is 4%. We will never have the data to know.
• I don't think the doom and gloomers were predicting that FP+ and/or MDE were going to "fail" to the point of Disney seeing a drop in attendance or revenue. (Perhaps some thought that, but that was never a rational, dispassionate approach to all of this). I think that they were predicting that whatever positive impact it might have on Disney Corp., it was going to have a negative impact on their personal vacation enjoyment level. Each person here is solely in control of the outcome of that poll question. This is a board of hard corp Disney fanatics who were/are set in their ways, and many people saw these changes as being good for the corporation, or good for first-time visitors, or good for casual visitors, but bad for them personally. And they came here to kvetch about it. In the end, maybe this new system is great for the hard corp DisBoard poster. Or maybe it stinks. But either way, that sub-group is such a small group that Disney can't be bothered with trying to appease them. These changes were always guaranteed to help the corporation and the shareholders. Anyone who could not see that is blind. But does it help the "I go three times a year and am not having fun unless I can ride TSMM, RnR and ToT each 5 times in a day" guest? Hard to make out the argument that it does.

 

[Angel Ariel]

Over the course of 15 days I was asked multiple times for my zip code and if I would participate in a survey. I always responded affirmatively, and rather than continue to survey me they asked for my email address to send the survey to. I thought that was odd - I'm in the park right now, don't you want to capture my immediate impressions? Or do you want to see if I'm still pissed off about something even after several days or weeks?

That's what happened with us as well...asked to participate, then all they took was zip code and email address. We got the link to the survey a few days after we got home. I tried to take screenshots of the questions as we took it (forgot on some pages), and I keep meaning to post the qs, but haven't had time.

 

[Angel Ariel]

I think people are reading this quote two totally different ways, and I have no way to tell which was the actual subject of the survey.

"At Walt Disney World, this was the first full quarter in which MyMagic+ was available to all guests. About half of the guests now use MagicBands and 90% of them rate the experience as excellent or very good. We’re very pleased with the growing popularity of MyMagic+ and expect it to contribute to parks earnings growth starting in the fourth quarter.'

Does this mean that 90% rate their experience with MagicBands as excellent or with MM+ as excellent? Those are completely different questions.

I, personally, liked the MagicBands quite a bit. They were convenient for opening doors, charging without having to carry my purse everywhere, and for not accidentally leaving them in FP machines (as I once did in the days of yore). However, if you asked me about MM+ as a whole, I'd have a very different opinion.

I agree completely. How the quote is worded simply says that half of the guests are now using Magic Bands, and 90% *of that half* (not 90% of all guests) rated the *magic band* experience as excellent. The subject of that sentence is magic bands, not MM+ - those two are not synonymous. magic bands are a tool of MM+, but they are not MM+ itself.

As I said earlier, if surveyed about magic bands alone, I'd have a very positive response as well. Ours worked great! And we loved buying the My Fantasy Band vinyl decals for them...DH got tons of comments on his Dr Who inspired decal. If asked about other aspects of MM+, or about MM+ as a whole, my responses would be different.

How the quote is worded isn't a tangential point, IMO. Surveys are all about nuanced wording, and so are their respective results.

 

[Angel Ariel]

That really clicks with what I observed - it seemed like almost as many guests were using their AP cards at FP touch points as were guests with MB's.

You get a MB when you stay at a WDW resort; you don't get a MB when you purchase an AP, right? if not, I can't think of a lot of reasons an AP holder would be compelled to pay extra for a MB.

Surely Disney contemplated this early on?

Way back when this all started rolling out, the speculation was that the interactive elements MBs would provide with attractions (as Disney implemented them) would be the incentive for non-resort guests to buy MBs.

If they are reducing development costs for MM+ as the previous quote referenced (I haven't had a chance to read the transcripts, so I'm only going off of that), then I honestly wonder if those interactive elements are still on the table.

 

[MrInfinity]

As others have stated, be careful touting an increase in operating income due to MyMagic+ as something positive. Looking at the most recent 10Q

“Selling, general, administrative and other costs decreased $26 million from $1,422 million to $1,396 million primarily due to the absence of development costs for MyMagic+”

In other words, operating income is up because MyMagic+ has been rolled out and they are no longer pumping so much money into its development.

Great, if that's what they said. BUT IT'S NOT in the slightest! If that was what they meant, they might have said "with the completion of the rollout of MyMagic+, reduced capital expenditures did not weigh on profits" or the like.

They said clearly "My Magic + had a positive contribution to the increase in revenue. That really is as definitive as you get. They are not playing word games.

Instead what you have is the costs of implementing MyMagic+ is a capital expense. That is, if it costs $2B, they capitalize that over the time of 5, 10, or even 20 years. So the costs associated w MyMagic+ are *not* $1.2B in the first year and $.8B in the next year, then nothing, they are $2B/20 (or however many years) so maybe $100k per year that would be. That's because MyMagic+ are not yearly expenses but an investment that adds value to the corporation.

In other words, the corporation is not $2B poorer after spending $2B on a computer system, because the corp now owns the computer system instead, which devalues at an agreed upon rate.

So with the completion, the company is *not* all of a sudden no longer pumping money into it. They are "pumping into it" the capitalized portion each year for a pre-set number of years.

Even tho you pay for it up front with cash in the bank (or you finance it) you spread the costs evenly over the capitalization period.

 

[jtowntoflorida]

That really clicks with what I observed - it seemed like almost as many guests were using their AP cards at FP touch points as were guests with MB's.

You get a MB when you stay at a WDW resort; you don't get a MB when you purchase an AP, right? if not, I can't think of a lot of reasons an AP holder would be compelled to pay extra for a MB.

Surely Disney contemplated this early on?

AP holders do get MBs; they customize after their passes are activated. But if you're on your first visit with an AP but are staying offsite, then you won't have a MB to use because you can't customize the MB until after the AP been activated. So if you have a new AP holder staying offsite, the only option is the card unless you want to buy an AP, and who wants to buy one knowing they have one coming for free?

I'd also bet that for a lot of local AP holders, an AP card is much more convenient because it likely resides in the holder's wallet, which they need to carry anyway. A MB is one more thing to remember to put on while heading to the parks.

The AP cards look so much like the regular RFID tickets, I'm not sure I'd be able to tell the difference from any distance. Are you sure you weren't observing offsite guests in addition to AP holders?

 

[Laketravis]

The AP cards look so much like the regular RFID tickets, I'm not sure I'd be able to tell the difference from any distance. Are you sure you weren't observing offsite guests in addition to AP holders?

You know, I'm sure you're right - I just assumed they were AP's because they looked just like the AP's we got when we upgraded our tickets. But they were probably also regular tickets.

That sounds like possibly an even larger segment that Disney may not persuade to purchase bands?

 

[Laketravis]

“Selling, general, administrative and other costs decreased $26 million from $1,422 million to $1,396 million primarily due to the absence of development costs for MyMagic+”

Great, if that's what they said. BUT IT'S NOT in the slightest! If that was what they meant, they might have said "with the completion of the rollout of MyMagic+, reduced capital expenditures did not weigh on profits" or the like.

Not necessarily true - capex spending would be reflected on the balance sheet as an offset to assets, not the income statement as costs below the revenue line. They were clearly talking about operational costs, not depreciation of capex investment.

 

[Lisa loves Pooh]

That really clicks with what I observed - it seemed like almost as many guests were using their AP cards at FP touch points as were guests with MB's.

You get a MB when you stay at a WDW resort; you don't get a MB when you purchase an AP, right? if not, I can't think of a lot of reasons an AP holder would be compelled to pay extra for a MB.

Surely Disney contemplated this early on?

We just bought APs and can order bands now. We actually have them from prior visits, but they are in the land of boxes from our move. My 14yo happened to have hers set aside and had it for this trip. She eschewed the card and stuck with her band. It required no extra effort since I added her Ap to her existing profile.

I would have preferred the band as I had to take my wallet out of my bag every time I wanted to use the card. I know that lanyards are an option, but I'm always afraid I will lose my ticket.


As for AP identification, my card has an orange stripe at the bottom as it is an AP while kids' Seasonal passes have a black stripe. Not sure what regular ticket cards have--I would assume no stripe at all.

Back to the purchase of bands--Disney has band designs that my daughter has been eyeing and quite frankly, so have I.

So while I, at 40, may think twice--my kids are looking at band bling and will likely spend their own money at some point in the future.

I admit that I thought the whole buying bling thing was an odd merchandising gimmick--but it has drawn my kids' attention.

 

[Shaden]

We just bought APs and can order bands now. We actually have them from prior visits, but they are in the land of boxes from our move. My 14yo happened to have hers set aside and had it for this trip. She eschewed the card and stuck with her band. It required no extra effort since I added her Ap to her existing profile.

I would have preferred the band as I had to take my wallet out of my bag every time I wanted to use the card. I know that lanyards are an option, but I'm always afraid I will lose my ticket.


As for AP identification, my card has an orange stripe at the bottom as it is an AP while kids' Seasonal passes have a black stripe. Not sure what regular ticket cards have--I would assume no stripe at all.

Back to the purchase of bands--Disney has band designs that my daughter has been eyeing and quite frankly, so have I.

So while I, at 40, may think twice--my kids are looking at band bling and will likely spend their own money at some point in the future.

I admit that I thought the whole buying bling thing was an odd merchandising gimmick--but it has drawn my kids' attention.

Totally fair, I think I would feel the same. Actually on our last trip we got MBs that were assigned to the APs we had upgraded to the previous year.

But what about offsite guests ... esp 1 day guests or even 4 days guests, (1 day per park) ... are they going to pay for a MB ??? That's a pretty significant cost for a family of 4

 

[Lisa loves Pooh]

Totally fair, I think I would feel the same. Actually on our last trip we got MBs that were assigned to the APs we had upgraded to the previous year.

But what about offsite guests ... esp 1 day guests or even 4 days guests, (1 day per park) ... are they going to pay for a MB ??? That's a pretty significant cost for a family of 4

I don't really know.

I have seen band bling. I haven't noticed anyone wearing the designer bands with characters. And no way to tell if that was an off site guest or not. But more than likely those were all onsite guests.