1. Business

Billion dollar bracelet is key to Disney World

Guests use MagicBands to access a Fastpass line at Epcot. The smartband changes how visitors do everything at Disney parks.
Published Apr. 4, 2014


Walt Disney World has spent more than a year rolling out a $1 billion system that changes how visitors do everything from enter their hotel rooms to ride Space Mountain. But a few weeks ago a front desk agent at one of Disney's marquee hotels was still wrestling with the technology.

"Behave, you naughty thing," a Wilderness Lodge reservations clerk muttered at the malfunctioning management system. Scolding didn't work, but a computer reboot finally did.

So it has gone with MyMagic+, an ambitious effort to make Disney World more profitable by making its 30 million annual visitors happier. The multifaceted system has taken longer to introduce than expected as Disney has confronted daunting complexities: training 70,000 employees, equipping 28,000 hotel room doors with radio frequency readers, prompting guests to wear data-collecting electronic wristbands.

Disney has been vague about when investors can expect returns — to the frustration of a few analysts — but there are signs the system is finally ready to roll. As it prepares for the peak summer season, Disney is marketing the service with national TV ads and quirky online videos. Last week, Disney began letting all visitors use the system; previously, only its hotel guests and annual pass holders had access.

Among other perks, the system provides a service called FastPass+, which lets visitors prebook front-of-the-line access to three rides, parades or character meet-and-greets. The system also strives to make it easier for guests to buy food and merchandise — just stand at the register and swipe your wristband, called a MagicBand, which also functions as room key, park ticket and VIP access. Disney thinks people will spend more money and time at the 40-square-mile megaresort if they find it easier to navigate.

"We are pretty transparently upping our promise to our guests, and that is why we're being so deliberate about this test-and-adjust period," said Thomas O. Staggs, Disney's parks and resorts chairman.

For Disney, a $143 billion entertainment conglomerate, the new system is one of its most important initiatives. Aside from the project's sheer scale, theme parks have emerged as a growth business even in a bumpy economy, and Disney feels an urgency to use technology to improve its offerings, particularly as younger consumers come to demand it.

Disney wants to keep people from visiting competing Central Florida parks, including Comcast's Universal Orlando Resort, and it thinks preplanning is one answer. Disney guests will be urged to use a website called My Disney Experience to begin locking in the particulars of their visits long before they arrive. (Adjustments can be made during the visit using a related smartphone app.)

If Disney gets it right, the smartband technology could ripple through the leisure industry. And there's an added element of pressure for Staggs. Disney is to name a new chief executive in 2016, and he is one of several leading candidates. Successfully completing the project would be an important feather in his cap.

Staggs said about 3.5 million people participated in tests of the new system, and early feedback has been "fantastic." Among the findings: Because guests don't have to present paper tickets at turnstiles, the system has reduced park entry time by 25 percent.

The technology allowed Disney to accommodate 3,000 additional daily guests at Magic Kingdom over Christmas. Staggs said use of the new FastPass reservation system has increased 40 percent over the old one, freeing people from standing in line and increasing the number of experiences they have.

Still, investors have been keenly waiting for financial evidence that the $1 billion investment is paying off. Disney's parks business lately has been a good one — operating profit climbed 17 percent last year, to $2.33 billion — but the company's spending on the project has dented margins at its flagship property here. Underscoring its importance to the company, analysts have peppered Disney executives with questions about the system in recent conference calls.

"We have a positive view of the project, and technology this complex always takes longer than you expect to roll out," said Michael Nathanson, an analyst at the research firm MoffettNathanson. "But we're still trying to figure out how to measure the return on what is a rather large investment."

Robert A. Iger, Disney's chief executive, has encouraged patience. "This is still a very new product, so we are not even close to being able to quantify it," he told analysts in February.

The dearth of information has let rumors flourish. Coursing through the many blogs that track Disney's parks are reports that the system is over budget. Some armchair analysts have speculated that Jack Dorsey, a Twitter co-founder and chief executive of Square, the mobile payments company, recently joined the Disney board to offer MagicBand help.

Staggs dismissed such chatter. He said the initiative has stayed within budget. He also said a faster-than-expected consumer shift to mobile devices has saved money; most guests use their smartphones to gain access to the system while inside the parks, reducing the need for Disney to install costly kiosks.

Staggs emphasized that a longer-than-expected testing period had resulted in multiple enhancements, with more on the way.

Some of the bigger Disney fan sites give the system high marks.

"Nobody is confused about what this is about — more money coming out of more wallets — but a supervast majority of people like it," said John Frost, publisher of the independent Disney Blog. "Most people think it adds to the fun."


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