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Disney’s Magic Bands Enhancing Customer Experience Case Study This case was written by Vasudha M, Amity Research Centers Headquarters, Bangalore. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2014, Amity Research Centers Headquarters, Bangalore. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.
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Author: Ms. Vasudha M
Disney’s Magic Bands: Enhancing Customer Experience
Abstract: MyMagic+, the vacation management system, was Walt Disney’s $1 billion experiment in crowd controlling, data collection and wearable technology. It had the potential to change the way guests spent their vacation at Disney World, considered to be ‘the Most Magical Place on Earth’. It was predicted that if MyMagic+ was a success it would be copied not just by other theme parks but also by museums, zoos, airports, and malls. The band had the potential to become a ‘complete game changer’. The vacation management system was expected to drastically change the way Disney World visitors went about their vacation. The MagicBand was an ace up the sleeve of the entertainment giant as it expanded its empire of theme parks and strove to ward off threat from rivals. MyMagic+ was a new ‘reservation and ride planning system’ that helped visitors to make bookings in advance either through a website or a smart phone app. The bands served as admission tickets, hotel keys, credit or debit cards and also enabled payments for food or trinkets. The bands were embedded with RFID chips and blue tooth technology. Critics derisively called these as ‘spychips’ owing to its ability to track people and things. The case talks in detail about this new Disney initiative to enhance customer experience at its parks and resorts. Amidst mixed reviews about the Magic band, critics wondered if customers would find this a seamless and immersive experience or be ‘creeped out’ by the information collecting, tracking devices. Pedagogical Objectives The case study helps to understand and analyse: The Disney MagicBand Customer Experience Management tool The impact of the MagicBand on Customer Experience Safety and privacy concerns of consumers. Case Study “Our goal from the beginning has been to enhance the guest experience and make it even more immersive, seamless and personal than ever before.”1
– Tom Staggs, Chairman, Walt Disney Parks and Resorts 1 Staggs Tom, “MyMagic+ Now Available to Walt Disney World Resort Hotel and Day Guests”, http://disneyparks.disney.go.com/blog/2014/04/mymagic-now-available-to-walt-disney-world-resort-hotel-and-day- guests/, April 2nd 2014
“© 2014, Amity Research Centers HQ, Bangalore. All rights reserved.”
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“It’s a complete game changer… The implications for big data and for personalization are extraordinary. It could radically change interaction between customers and the company.”2
– Douglas Quinby, Vice President, Research, PhoCusWright3
ore than a year after Walt Disney World’s announcement about the MyMagic+, the full rollout of the MagicBand was due in the summer of 2014. The MagicBands which were selectively
tested among guests staying at Walt Disney World resort hotels were also being offered to annual pass holders. The MagicBand, which was tied to the new FastPass+ system, was equipped with RFID technology allowing Walt Disney World guests ‘to simply tap Mickey Mouse-emblazoned readers’ in order to gain admission to the theme parks, to hotel rooms, and to check in for rides, shows, parades, fireworks, and other attractions. The official rollout of MyMagic+ and FastPass+ was scheduled during Walt Disney World’s press event scheduled during the month of April/May 2014. Disney planned to include highly personalised attractions and character interactions in the future thus improving the overall Disney park experience. While there were concerns regarding the privacy of information that customers divulged to Disney and the efficiency of the MagicBands, Disney was confident that this technology driven new Consumer Experience Management tool would drive revenues in the months to come. Disney’s Parks & Resorts: An Overview The Walt Disney Company (Disney), which included a number of subsidiaries and affiliates, was a leading family entertainment and media enterprise. The diversified enterprise that operated across the world consisted of five business segments namely, ‘media networks, parks and resorts, studio entertainment, consumer products and interactive media’. Walt Disney opened Disneyland on July 17th 1955, ushering in a new era of family entertainment. Disneyland was a unique entertainment destination which was focused on storytelling and providing immersive experiences. More than half a century later, Walt Disney Parks and Resorts (WDP&R) had gained the status of one of the world’s leading providers of travel and leisure experiences to families. WDP&R’s core business consisted of five vacation destinations including 11 theme parks and 44 resorts in the three continents of North America, Europe and Asia. Disney had a sixth destination under construction in Shanghai.4 The operating income of Disney’s theme park division had witnessed an increase of 16%, amounting to $671 million, in the quarter ending December 2013. Sales at the division also grew by 6% to reach $3.6 billion. In the Fiscal year 2014, income for the theme park division increased by 17% to $2.2 billion. Disney’s pricing strategy for its park entry tickets was designed to promote the sales of multiday park passes. Multiday park passes lowered per-day costs, with a three-day pass amounting to $91.34 per day while a five-day pass was $60.80 per day. In total, the park entrance fee along with hotel and meals expenses resulted in a hugely expensive Disney vacation for a family. But single-day tickets were even more expensive having increased by 41% since 2005. While the price of the four- day pass had only increased by about $40 from 2004 to 2013. Disney claimed that an increase of up
2 Palmeri Christopher, “Disney Bets $1 Billion on Technology to Track Theme-Park Visitors”, http://www.businessweek.com/articles/2014-03-07/disney-bets-1-billion-on-technology-to-track-theme-park-visitors, March 7th 2014 3 A travel consulting firm. 4 “Company Overview”, http://thewaltdisneycompany.com/about-disney/company-overview
M
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to $20 did not deter customers from visiting a Disney property given the popularity that the theme parks enjoyed among children.5 MyMagic+ Magic Bands: Enhancing Customer Experience MyMagic+6 reshaped the Walt Disney World Resort vacation experience by making it more customised, more magical and more convenient for guests to create lasting memories along with their families and friends. From April 2014, guests visiting the resort using the MyMagic+ could register online at the My Disney Experience (Exhibit I) website and reserve access to some of their favorite attractions with FastPass+7. MyMagic+ also gave guests the option to purchase MagicBands on site.8 The cost of the project was expected to be between $800 million and $1 billion. MyMagic+ aimed to make the experience at Disney parks ‘less daunting and more amenable’. Tom Staggs (Tom), the Chairman of Walt Disney Parks and Resorts, felt, “If we can enhance the experience, more people will spend more of their leisure time with us.”9
Exhibit I My Disney Experience website
Source: Brigante Ricky, “Walt Disney World readies full rollout of MyMagic+ as MagicBands become available for annual passholders”, http://www.insidethemagic.net/2014/03/walt-disney-world-readies-full-
rollout-of-mymagic-as-magicbands-become-available-for-annual-passholders/, March 7th 2014
5 Bachman Justin, “Disney's Magic Kingdom Nears $100 Tickets, and the Crowds Keep Coming”, http://www.businessweek.com/articles/2014-02-25/disneys-magic-kingdom-nears-100-tickets-and-the-crowds-keep- coming, February 25th 2014 6 MyMagic+ consists of the following features: My Disney Experience mobile application and website, Disney’s MagicBand is a new waterproof RFID ticketing system, Disney FastPass+ service which allows guests to reserve access to experiences, PhotoPass Memory Maker allows guests to take unlimited photos while in the park, then download them within 45 days of picture taking. 7 Disney’s Fastpass is a virtual queuing system created by the Walt Disney Company. First introduced in late 1999 (though the idea of a ride reservation system was first introduced in world fairs), Fastpass allows guests to avoid long lines at the attractions on which the system is installed, freeing them to enjoy other attractions during their wait. The service is available at no additional charge to all park guests. FastPass+ enables visitors to skip the lines at an expanded number of attractions, including certain character greetings and other events. 8 Momdjian Cynthia, “Disney News This Week: MyMagic+ at Walt Disney World Resort, 'Maleficent' Banner, Disney's 'The Lion King' Australia Cast Sings 'Circle of Life'”, https://thewaltdisneycompany.com/blog/disney-news-week-mymagic-walt-disney-world-resort-maleficent-banner- disneys-lion-king-australia, April 4th 2014 9 Barnes Brooks, “At Disney Parks, a Bracelet Meant to Build Loyalty (and Sales)”, http://www.nytimes.com/2013/01/07/business/media/at-disney-parks-a-bracelet-meant-to-build-loyalty-and- sales.html?_r=1&, January 7th 2013
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The secure all-in-one devices, the MagicBands and cards (Exhibit II) allowed guests to access the plans and vacation choices booked by them via the My Disney Experience effortlessly. The My Disney Experience site helped guests to make day-by-day plans and also manage their vacation details. MagicBands were ‘colorful, waterproof wristbands, resembling a watch or bracelet’ (Exhibit III). The bands could be quickly and easily swiped to a sensor called a touch point (Exhibit IV). Both MagicBands and cards facilitated guests to travel lighter throughout their vacation. The card or MagicBand could be used by guests as a key to the Disney Resort hotel room, as an entry ticket to theme and water parks, to check in at FastPass+ entrances, to connect the Disney PhotoPass images to their user’s account and to link their food and merchandise purchases to their Disney Resort hotel room (in case the guest was staying at the hotel).10
Exhibit II MagicBands and Cards
Source: Brigante Ricky, “Walt Disney World readies full rollout of MyMagic+ as MagicBands become
available for annual passholders”, http://www.insidethemagic.net/2014/03/walt-disney-world-readies-full- rollout-of-mymagic-as-magicbands-become-available-for-annual-passholders/, March 7th 2014
Exhibit III
Colourful Bands
Source: Brigante Ricky, “Walt Disney World readies full rollout of MyMagic+ as MagicBands become
available for annual passholders”, http://www.insidethemagic.net/2014/03/walt-disney-world-readies-full- rollout-of-mymagic-as-magicbands-become-available-for-annual-passholders/, March 7th 2014
10 “Your Key to a More Carefree Visit”, https://disneyworld.disney.go.com/plan/my-disney-experience/bands-cards/
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Exhibit IV Touch point
Source: Staggs Tom, “MyMagic+ Now Available to Walt Disney World Resort Hotel and Day Guests”,
http://disneyparks.disney.go.com/blog/2014/04/mymagic-now-available-to-walt-disney-world-resort- hotel-and-day-guests/, April 2nd 2014
The bands were available in adult and child sizes and were equipped with both Bluetooth and RF technology which enabled long-range and short-range reading. The bands were delivered at the home of the buyer ahead of the park visit. The Fastpass tickets which were in use before the introduction of My Magic+ caused a lot of separation of family groups. Hence for visitors, Fastpass strategies were ‘a major part of their daily planning’. With the MagicBand, visitors could pre-arrange for attractions through E-tickets and for events such as character meetings, parades and fireworks shows. According to Tom, “When we decrease people’s anxiety, they have more fun at the park.” The band was specifically designed to reduce the time spent in strategising while increasing the time they spent enjoying the park.11 In case a band was stolen or lost, it could be disconnected from the user’s account remotely. Purchases were limited to $50 and for purchases above this limit a pin code was to be entered, thus helping in elimination of fraudulent activities. A band could also be programmed to not allow purchases at all as well, or could be set with a spending limit.12 The long-range Bluetooth reading would help in keeping track of traffic flowing past particular locations in the park. But tracking of individual bands was a complicated issue which brought in the ‘tricky privacy question’. Hence this was left to the user, where he/ she could opt-in for this feature. Opting in had the benefits of increased personalisation. When an attraction recognised a particular visitor and that it was the adult or child’s birthday, it was possible to greet and wish them using their name and also to customise the ride according to their special wishes as a birthday treat. For instance, the ride could also offer as a special gift, a ‘Small World doll’ that the child had created online. This feature also opened up the possibility of rides like ‘Pirates of the Caribbean’ to have personalised conversations with visitors in the future. Tom added, “The things that people are requesting to reserve are not just big rides…but reserved seating for fireworks and the parade.” Once this was done visitors arrived just in time with reserved seating and thus avoided congestion at the entry points. This also allowed Disney to time the starting of events in particular locations of the park thus controlling traffic flow at these points efficiently.13
11 Panzarino Matthew, “Disney gets into wearable tech with the MagicBand”, http://thenextweb.com/insider/2013/05/29/disney-goes-into-wearable-tech-with-the-magic-band/, May 29th 2013 12 “Disney gets into wearable tech with the MagicBand”, op.cit. 13 ibid.
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The RF device of each user was unique and allowed authentication of the user as well as the benefits associated with the visitor. When a visitor used his/ her RF device at a touch point, Disney recorded the transaction. These interactions provided Disney information such as the waiting time for different rides, waiting time at restaurants and other attractions. The focus was to better understand guest behavior and make improvements to the overall guest experience.14 Guests had the option of not participating in MyMagic+ or not registering on the My Disney Experience website thus not providing any personal information. Whereas guests who chose to participate in MyMagic+ and register on My Disney Experience would be able to use the FastPass+ service and make dining reservations online. This would enable them to enjoy the convenience of having their tickets, FastPass+ selections, Resort room key and other advanced features in one place. Guests participating in MyMagic+ also had the option of using a card instead of a MagicBand. They could also decide whether they wished to use the band to make purchases at select Resort locations.15 The embedded microchip in the band allowed the wearer to use it as an admission ticket, room key as well as wallet. In addition to keeping track of FastPass+ reservations allowing visitors to pre-book rides and attractions, the bands also allowed quick and easy payments at restaurants and shops. The bands also synched the photos that Disney took of the visitors. The bands helped select character ‘meet and greets’ and book a spot on the parade route. Disney had tested the bands among the guests staying at the park’s hotels and in March 2014 the bands were also offered to Disney World’s Annual passholders. The MagicBand was very convenient when a visitor wished to pay for the many products available in the park. The guest’s credit card information was on file, so in order to buy something the guest just had to swipe the band, enter his/ her pin number for verification and the sale was completed. There was no need to carry a wallet or cash or credit cards.16 This tracking ability of the RF devices made the devices very crucial for the $14.1 billion theme park and resort business at Disney. The information collected through the bands along with the information provided by visitors voluntarily on the related My Disney Experience app and website helped Disney to make decisions regarding the number of staff to man the rides, menu at restaurants, souvenirs to be stocked and the number of employees in Disney costumes to be available on its grounds at a given time. Intelligence collected on customer preferences would also be used to design e-mails or text messages sent to guests. It would help Disney to decide whether to include information such as restaurant menu changes, reservation availability in attractions such as the ‘Space Mountain’ or the ‘Twilight Zone Tower of Terror’. The goal was to offer ‘a more immersive, more seamless, and more personal experience’. The company also felt that the probability of visitors, who had their entire Disney World schedules planned in advance using the MyMagic+ system, moving to attractions provided by competition was much lesser than those who had not. The company claimed that the MagicBands also made it ‘so easy to spend’.17 MyMagic+: A Winning Formula for Disney? Disney said that it had plans to share information about guests’ experiences at the Resort with other members of the Walt Disney Family of Companies. But the guest could always choose to opt out of receiving marketing messages from the company. Information regarding specific park experience of 14 “My Disney Experience – Frequently Asked Questions”, https://disneyworld.disney.go.com/faq/my-disney-experience/privacy-policy/ 15 ibid. 16 Gambacorta Krista, “Putting Disney MagicBands to the test”, http://www.foxnews.com/travel/2014/03/21/putting-disney-magicbands-to-test/, March 21st 2014 17 “Disney Bets $1 Billion on Technology to Track Theme-Park Visitors”, op.cit.
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visitors collected automatically when the MagicBand was read by long-range readers would not be shared with Walt Disney Family of Companies unless the visitor gave permission for the company to do so. Only information collected automatically when the MagicBand was read by long-range readers would be shared with third parties for their marketing uses, if the visitor gave permission for the company to do so. Guests who participated in MyMagic+ were allowed to have a role in how information collected about their experience would be used for marketing purposes. They could also opt out of receiving any marketing communications from Disney. Guests were also given the option of requesting for information regarding offers and tips during their visit to Disney World. The company also gave the assurance that the information collected in connection with MyMagic+ would not be used to target children under the age of 13.18 In spite of these assurances, the MyMagic+ project moved Disney ‘deeper into the hotly debated terrain of personal data collection’.19 Disney offered another convenient feature called Ticket Tag at the entrance of most of its theme parks and water parks. Ticket Tag helped in facilitating easy re-entry into parks and in preventing fraud. To use Ticket Tag, one had to place a finger on a biometric reader. The reader took an image of the finger and converted it into a unique numerical value while discarding the image. When Ticket Tag was used for re-entry or to visit some other Park, the numerical value was recalled. Ticket Tag did not store fingerprints. If a guest did not wish to use Ticket Tag, he/she could use a photo ID that matched the name used for purchase of the ticket. The security, integrity and confidentiality of information collected from its visitors were very important to Disney. The company had implemented measures to protect this information from unauthorised access. Disney also reviewed its security procedures frequently to ensure that it did not miss out on relevant new technology and methods.20 Personal information about the user ‘does not sit on the band’. Hence there were no security issues even when the band was misplaced or lost. Disney bands also could not ‘track’ the location of a guest as they moved about the theme park.21 Despite such concerns regarding the safety and privacy of the information disclosed by the customers to the company and the tracking power of the devices, Disney’s Chief Financial Officer, Jay Rasulo was upbeat about the initiative. He commented during a November 2014 investor call, “When you make [the logistics] easier, people tend to spend more time on entertainment and more time on consumables – be that food and beverage, merchandise, etc.. We do expect this to be a growingly positive impact on our business in the years to come.”22
Duncan Dickson, who taught theme-park management at the University of Central Florida said, “Because it is a reservation system, it is a game changer. Now you can plan your vacation and your ride sequence well ahead of your trip.” He also added that Disney would have, “… some very robust data to use in understanding guest behavior and desires. It is a marketing dream.” An industry analyst23 said, “Disney could theoretically tailor the visitor’s experience more effectively. MM+ is not solely for the benefit of Disney. It’s intention is to simplify and enhance the visitor’s experience. So while technology of this sort certainly benefits the business side, ultimately the consumer is the intended beneficiary. Data security is going to be paramount in its success.” Tom assured those concerned with safety and privacy involving the usage of the tracking system, “These bands don’t
18 “My Disney Experience – Frequently Asked Questions”, op.cit. 19 “At Disney Parks, a Bracelet Meant to Build Loyalty (and Sales)”, op.cit. 20 “My Disney Experience – Frequently Asked Questions”, op.cit. 21 “Putting Disney MagicBands to the test”, op.cit. 22 “Disney Bets $1 Billion on Technology to Track Theme-Park Visitors”, op.cit. 23 James Crompton, at IBISWorld.
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track people through the park; they are not GPS bands. We designed this with privacy in mind from the get go. Walt Disney World Parks and Resort’s vision is simple, it’s to be the most trusted provider of shared family travel and leisure experiences throughout the world. The key word there is trusted. We won’t betray that trust.”24 This ambitious $1 billion rollout took over a year and was planned to increase profitability at Disney World by making its 30 million guests happier. The implementation of this multifaceted system included complex aspects such as training its 70,000 employees, installing RF readers in 28,000 hotel room doors and encouraging guests to wear data-collecting electronic wristbands. Disney started to market MyMagic+ via national TV ads and ‘quirky online videos’ as it prepared for the peak summer season25 (Exhibit V). On March 31st 2014, Disney allowed all visitors to use the system which was one of its most important initiatives. Theme parks had emerged as a growth business even during the economic recession. Hence Disney felt the need to use technology to augment its offerings while younger consumers were also clamouring for latest technology driven initiatives. Tom revealed that about 3.5 million visitors had participated in tests for the new system. He claimed that early feedback was ‘fantastic’.26
Exhibit V Quirky Online Videos Promoting MyMagic+
Source: Frost John, “FastPass+ and MyMagic+ takeover Disney World – Part 3: The Marketing Push Begins”,
http://thedisneyblog.com/2014/01/21/fastpass-and-mymagic-takeover-disney-world-part-3-the-marketing- push-begins/, January 21st 2014
24 Sekula Sarah, “Disney gets personal with new MyMagic+ system http://www.usatoday.com/story/dispatches/2014/01/27/disney-mymagic-vacation-planning/4582957/, February 25th 2014 25 Barnes Brooks, “A Billion-Dollar Bracelet Is the Key to a Disney Park”, http://www.nytimes.com/2014/04/02/business/billion-dollar-bracelet-is-key-to-magical-kingdom.html?_r=0, April 1st 2014 26 “A Billion-Dollar Bracelet Is the Key to a Disney Park”, op.cit.
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The findings showed that the MyMagic+ system reduced the time taken at the park entry by 25%. It also helped Disney to take in 3,000 additional guests per day during the peak Christmas season at the Magic Kingdom park. Usage of the new FastPass reservation system increased by 40% compared to the usage of the old one. The FastPass+ reduced the time guests spent in standing in queues and increased the number of experiences they were able to enjoy. Investors eagerly awaited proof for the profitability of the $1 billion investment in MyMagic+. Disney’s parks business had fared well with operating profit increasing by 17% in 2013 to $2.33 billion. In spite of this, the spending on the project had made a dent on its margins at the flagship property.27 MyMagic+ aimed to increase the utilisation rates of attractions and entertainment in addition to increased personalisation. Guest satisfaction along with how much time visitors spend in the parks were key indicators of whether customers would come back.28 Steve Brown (Steve), Chief Operating Officer for Lo-Q29 commented, “If Disney can drive more value from existing infrastructure by layering on technology, that is extremely powerful. They can’t just compete by building new rides; it’s already a theme-park arms race out there.” Disney anticipated that MagicBands would grow into a big business of its own. The company had plans to facilitate this by introducing collectible versions of MagicBand accessories and charms.30 A guest, Jayne Townsley (Jayne) wrote on StitchKingdom.com, “Although I know this type of technology is making its way into every facet of life, it still makes me feel a bit creeped out.” So there was the danger of some customers like Jayne, totally rejecting this new initiative. Disney was fully cognizant of the privacy concerns involved especially those concerning children. The plan was introduced during a sensitive period when the federal government was involved in strengthening online privacy protections. Hence experts felt that it could turn out to be troublesome for Disney, which was already considered by some consumers as being ‘too controlling’. But Disney was committed to MyMagic+ and felt that it was essential. The company was set on aggressively building new technology into its parks while not changing ‘the sense of nostalgia’ the whole experience was built on. Disney also did not want to risk ‘becoming irrelevant to future generations’. From a business point of view, MyMagic+ was expected to be transformational. This prompted Steve to comment, “When Disney makes a move, it moves the culture.”31 With the MyMagic+ system in its initial stage of introduction, industry analysts were waiting with bated breath to see the impact of the project on the entertainment giant’s fortunes.
27 “A Billion-Dollar Bracelet Is the Key to a Disney Park”, op.cit. 28 Schaal Dennis, “Disney’s ‘magic’ bracelets are driving more people to its parks”, http://qz.com/174644/disneys-magic-bracelets-are-driving-more-people-to-its-parks/, February 6th 2014 29 A British company which provided line management and ticketing systems at theme parks and zoos. 30 “At Disney Parks, a Bracelet Meant to Build Loyalty (and Sales)”, op.cit. 31 ibid.
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