Spirited Spring Break News, Observations & Thoughts ...

[Goofyernmost]

If MyMagic+ was just an infrastructure upgrade analysts would not be pestering about it generating revenue on the quarterly conference calls. Disney fully intended to monetize system, increase revenue through its implementation have this accomplished before now.

I don't necessarily believe that the participants of the "conference calls" have a real grasp for what it is supposed to be doing then anyone else. If they really expected current guests to spend more money then they have available just because of MM+, then they all have their heads so far up their collective butts that they have to brush their teeth through their navels. Just my, probably over graphic, opinion.

 

[GoofGoof]

I wanted to start with this because it is a major fail on our part to not only guess at how much they have spent but, it shouldn't be reported it as fact when we have no way of knowing. Did it go over estimates? I don't see how it could not have been over especially with the problems at roll out. However, to just decide it is a failure is hardly justifiable. Everyone is looking at it like the money comes from increased sales which almost none of us could imagine how that would happen right from the beginning. It had modules that were set as an improved guest experience and from the first hand reports that I have seen from people that were willing to give it a go without any preconceived notions, it has done that as well. The main thing about the system was to connect all aspects of the theme park business into a new and very much needed IT system that enables them to better plan personnel needs and inventory requirements. That may be where the hidden return is and we will never know. Disney doesn't divulge that type of information.

I don't know that we will ever have a meaningful discussion/debate on the real price tag or the success/failure. Disney is unlikely to publicly release the price information so all we have is second hand info from biased sources and guesses. I am not an apologist or a big supporter of the project in any way and it pains me to think of what they could have done with the money instead, but taking emotion and bias away here are my thoughts on the project.

My opinion based on educated guesses is that it is somewhere over the original budget but nowhere near the $3B to $4B speculated by some people. What we do know as a fact is the project is about 6 months behind schedule. Iger and crew consistently talked about it being rolled out by the end of 2013 or earlier and it wasn't fully rolled out until recently (is it considered fully rolled out now?). If the original budget was around $1B it has to be over that just based on the timing delays unless they went way under in other areas. Is that possible? Maybe. They did cut some of the interactive queues and other technology originally rumored to be part of the project. If they saved enough on those cuts it's conceivable the project could be around the original budget. Not a popular answer, but it's possible. More likely it's over budget.

If the project really ballooned to over $3B heads would have rolled. Not just some VP like Franklin but all the way to the top. Iger would be safe since the stock is doing very well and the financial numbers look great, but I have to think maybe Staggs would be at risk. It's his division. The board would want something done if they spent triple the budget. I've worked in large corporations for a while now and there just isn't a way that that kind of epic fail would be tolerated at the board level. There would also have to be some serious bleed in the financials. Analysts would be all over the extra cash flow missing or the bloated expenses. It's unlikely that an overrun that large would go unnoticed. Again, just my thoughts based on educated guesses coming from the info available.

On the revenue side. There has to be some expected direct return on the P&R books based on increased guest spending. That number is going to be near impossible to quantify. The number thrown around is 11% but that's not a publicly disclosed number so we don't know for sure if it's legit. So far Iger and crew have not specified any return. They gave some vague BS about increased park capacity (sorry, I said no bias, but that was total BS). Since they are being pushed by analysts they will eventually quote some numbers. Most people here probably won't like them. They will probably find a way to spin increased guest spending in general as the result of the project. When they do very few people here will believe it (including me). Eventually analysts will move on to the next projects. By now I doubt anyone has significant returns from MyMagic built into a model anyway. It's too abstract.

Putting aside the direct return for a minute the other piece of the puzzle that isn't really talked about is the data mining. That info has some real value to not just P&R but to the company as a whole. I know a lot of large corporations are spending a lot of money to compile and then analyze big data. It's not just Google and Amazon looking to build a customer profile and track your behavior anymore. It's the trend in most businesses these days. This aspect of the magic bands will not likely be talked about any time soon publicly, but is an indirect benefit to TWDC. Is it valuable enough to justify the money spent? Your guess is as good as mine on how much that is worth to the company.

 

[LithiumBill]

Someone needs to tell the Universal fanbois that extended queues don't need to be themed to the gills. They're rarely used after the opening rush. The one for Gringotts is hidden away so that it doesn't disrupt the street scene.

Oh, and it might be worth seeing what it looks like once it's open. I guess an aerial photo from a helicopter is enough evidence to start the gnashing of teeth.

how couldt hey tell what the queue looked like from the helicopter? I must have missed it from that shot. lol

 

[Goofyernmost]

Pleasure Island was NOT fine until they "took down the turnstiles." They had major problems prior to the "test" you keep talking about. I do not remember seeing you in all of those meetings at Maingate Mall giving your opinion about it. The problems came from the sales in each club NOT turnstile clicks. You may have "numbers" (wooooo) but they are wrong. Suck it up buttercup!

So then, what you are saying was that not enough people spent enough money to keep it open, cover charge or not. Doesn't sound like anything that should have been allow to continue! The demand was not there, contrary to those that did use the place but didn't really support it.

 

[71jason]

You seem to be a little confused on your Disney History there. Perhaps it's time for YOU to get your facts straight.

Sorry Unkadug, like your posts, and consider David a good friend in r/l, but you're both wrong on this one.

The Lansberry regime cut their teeth on DTD Anaheim--all 3d party--and saw Raglan, Paradiso and Cheesecake Factory were willing to pay ridiculously high rents ($1m + 1/3 of profit) to move into that real estate. This is the same time when it was vogue across property to go third party--most notably example is valet parking, but apparently there were discussions to do the same thing with security and bartenders. By all accounts of people somewhat plugged into the decision I've talked to, Lansberry really thought he could build a second Sand Lake Road in DTD charging exorbitant rent and not having to worry about the pesky business of actually running businesses.

As for crime, there were two incidents. In one, a couple claimed to be kidnapped, but later recanted when Orange County called BS on their story. (I remember this one mostly because the "victims" happened to be from my tiny home town.) And the other was reports of gang-looking "thugs" hanging around the AMC, which was technically not even PI; those reports ended up in TDO issuing an apology when one of the "thugs" turned out to be some Fortune 500 VP's son with a full-ride scholarship to FSU in the Fall, while another was a TDO exec's kid or something like that. I'm sure you can guess the kids' skin color.

 

[71jason]

It was also a complete lack of interest to reinvest and improve Pleasure Island to keep it fresh. In true blue ocean strategy, they sucked it dry until they thought third party operating participants would generate even more revenue.

This. Exactly this.

 

[71jason]

Money played a role as they took the turnstiles down in an attempt to grow street sales. They were looking to increase their margins and that backfired horribly.

But yes, looking to outsource became en vogue once they decided to try and copy city walk rather than being content with their existing profits.

I've heard it was more because West Side vendors just weren't making the money promised. But even West Side was clearly an attempt to ape CityWalk, and that seems to have been the general plan before the 3d party model was adopted.

 

[PhotoDave219]

I've heard it was more because West Side vendors just weren't making the money promised. But even West Side was clearly an attempt to ape CityWalk, and that seems to have been the general plan before the 3d party model was adopted.

So rather than removing the contained adult environment, total and utter mismanagement are to blame?

 

[PhotoDave219]

It was also a complete lack of interest to reinvest and improve Pleasure Island to keep it fresh. In true blue ocean strategy, they sucked it dry until they thought third party operating participants would generate even more revenue.

Sounds exactly like the theme parks today.

 

[lazyboy97o]

I don't necessarily believe that the participants of the "conference calls" have a real grasp for what it is supposed to be doing then anyone else. If they really expected current guests to spend more money then they have available just because of MM+, then they all have their heads so far up their collective butts that they have to brush their teeth through their navels. Just my, probably over graphic, opinion.

Those participants are responding to what they have been told by the executive leadership of The Walt Disney Company.

 

[Funmeister]

So then, what you are saying was that not enough people spent enough money to keep it open, cover charge or not. Doesn't sound like anything that should have been allow to continue! The demand was not there, contrary to those that did use the place but didn't really support it.

It wasn't about the demand not being there. It was about the "dead" money walking around taking up space. The gate problem they had was the annual pass being priced too low and expanding Cast Member nights.

The real problem was the non-drinking/non-alcohol purchasing crowds that took up space in the clubs. CW, Wild Horse/Motion, AC and 8T all became "local hangouts." People would sit or dance and not spend a dime.

During this time they were also including/selling bachelor and bachelorette parties in conjunction with Fairytale Weddings. (Don't get too excited...there was really not much to it) The bride also had an option (may still do) to have a bridal tea party and/or massage.

Was there crime? Sure there is crime everywhere but it was NEVER to the point of playing into the closure of PI. If that were the case the entire Downtown Disney complex would have been shuttered. Crime can exist at a bar on PI but not at a bar in the West Side or Marketplace?

Closing PI was strictly a business decision based on the value of the space and the amount of money it was not making by people hanging out.

Did you see what is replacing the venues at PI? (Of course not they have not made any announcements) But in general we know it is for the most part shops and restaurants. Revenue centers.

 

[GoofGoof]

It wasn't about the demand not being there. It was about the "dead" money walking around taking up space. The gate problem they had was the annual pass being priced too low and expanding Cast Member nights.

The real problem was the non-drinking/non-alcohol purchasing crowds that took up space in the clubs. CW, Wild Horse/Motion, AC and 8T all became "local hangouts." People would sit or dance and not spend a dime.

During this time they were also including/selling bachelor and bachelorette parties in conjunction with Fairytale Weddings. (Don't get too excited...there was really not much to it) The bride also had an option (may still do) to have a bridal tea party and/or massage.

Was there crime? Sure there is crime everywhere but it was NEVER to the point of playing into the closure of PI. If that were the case the entire Downtown Disney complex would have been shuttered. Crime can exist at a bar on PI but not at a bar in the West Side or Marketplace?

Closing PI was strictly a business decision based on the value of the space and the amount of money it was not making by people hanging out.

Did you see what is replacing the venues at PI? (Of course not they have not made any announcements) But in general we know it is for the most part shops and restaurants. Revenue centers.

It's too bad. I always spent my fair share of cash after I turned 21, but I did spend some time hanging there between 18 and 21 where I really spent next to nothing, but enjoyed the heck out of the place. Why not raise the cover but include a few free drinks.

To me allowing CMs in was like large clubs letting women in for free. A crowd draws a crowd. The CMs came and partied and it made the experience that much better for the tourists.

 

[Goofyernmost]

It wasn't about the demand not being there. It was about the "dead" money walking around taking up space. The gate problem they had was the annual pass being priced too low and expanding Cast Member nights.

The real problem was the non-drinking/non-alcohol purchasing crowds that took up space in the clubs. CW, Wild Horse/Motion, AC and 8T all became "local hangouts." People would sit or dance and not spend a dime.

During this time they were also including/selling bachelor and bachelorette parties in conjunction with Fairytale Weddings. (Don't get too excited...there was really not much to it) The bride also had an option (may still do) to have a bridal tea party and/or massage.

Was there crime? Sure there is crime everywhere but it was NEVER to the point of playing into the closure of PI. If that were the case the entire Downtown Disney complex would have been shuttered. Crime can exist at a bar on PI but not at a bar in the West Side or Marketplace?

Closing PI was strictly a business decision based on the value of the space and the amount of money it was not making by people hanging out.

Did you see what is replacing the venues at PI? (Of course not they have not made any announcements) But in general we know it is for the most part shops and restaurants. Revenue centers.

I believe that this is what we all have been saying. Not enough income to support it. At least before they got rid of the turnstiles they had that income. After that... nothing! If it wasn't the cause it certainly added fuel to the fire.

It's too bad. I always spent my fair share of cash after I turned 21, but I did spend some time hanging there between 18 and 21 where I really spent next to nothing, but enjoyed the heck out of the place. Why not raise the cover but include a few free drinks.

To me allowing CMs in was like large clubs letting women in for free. A crowd draws a crowd. The CMs came and partied and it made the experience that much better for the tourists.

That is the problem. Disney doesn't exist to just give people a free place to hang out. And I think that your vision of a bunch of drunken CM's making it that much better for the tourists might be slightly tainted by how you were seeing things at the time. (being one of the CM's) I'm sure you were a fun group, but, that is not necessarily what tourists are there to witness. Desperate drunken Women, I can relate too and even encourage, but, CM's... not so much.

 

[rael ramone]

Oh, they "care" about nostalgia .... as long as it suits their purposes.

Nostalgia exists in their minds to enhance Tshirt sales...

 

[GoofGoof]

That is the problem. Disney doesn't exist to just give people a free place to hang out. And I think that your vision of a bunch of drunken CM's making it that much better for the tourists might be slightly tainted by how you were seeing things at the time. (being one of the CM's) I'm sure you were a fun group, but, that is not necessarily what tourists are there to witness. Desperate drunken Women, I can relate too and even encourage, but, CM's... not so much.

It wasn't a free place to hang out. There was a cover charge. You paid money to be there just like you pay money to be in a theme park.

I think you misunderstood what I was saying. I never worked at WDW. The CMs I am talking about were off duty. Disney wasn't paying the people to drink, party and have fun they were doing it on their night off. It enhanced the experience for the tourists because it created a vibe and filled the clubs with fun, young people looking to have a good time too. The clubs were pretty big so you needed a bunch of people to fill the place out. CMs and local residents to an extent provided the base of "regulars" any good club needs to be successful.

 

[ParentsOf4]

I don't know that we will ever have a meaningful discussion/debate on the real price tag or the success/failure.

The simplest way to judge the success of MyMagic+ will be to compare baseline financial metrics from the previous 3 years with the next 4 quarters:

Baseline

- Domestic Attendance: 3% growth per annum
- Domestic Per Capita Guest Spending: 8% growth per annum
- Domestic Occupancy: 81% average
- Domestic Per Room Guest Spending: 6% growth per annum
- Parks & Resorts Revenue: 10% growth per annum
- Parks & Resorts Gross Operating Income: 19% growth per annum​

MyMagic+'s biggest challenge will be outperforming recent aggressive domestic price increases that seem to have achieved much of the gain that MyMagic+ was supposed to realize.

 

[Goofyernmost]

It wasn't a free place to hang out. There was a cover charge. You paid money to be there just like you pay money to be in a theme park.

I think you misunderstood what I was saying. I never worked at WDW. The CMs I am talking about were off duty. Disney wasn't paying the people to drink, party and have fun they were doing it on their night off. It enhanced the experience for the tourists because it created a vibe and filled the clubs with fun, young people looking to have a good time too. The clubs were pretty big so you needed a bunch of people to fill the place out. CMs and local residents to an extent provided the base of "regulars" any good club needs to be successful.

No, I didn't misunderstand what you were saying about the CM's. I know that they were there off duty. I was just having a little joke with you about how partying CM's might look different to the tourist then they would to themselves or others familiar with them.

As for the cover charge it is helpful, but, not able to pay the bills. Theme Park admittance isn't able to cover all of the cost of operation, but, if someone goes there and doesn't spend anything else, the profit comes from shear volume of people. PI was not able to draw enough people, or for that matter, could even hold enough people to make up the difference. I always felt that places like the Adventurer's Club that was filled every night with 100's that weren't buying much of anything, but, were there to watch the fun show was a very good example of that. That show had many performing CM's and without a huge amount of liquid refreshment being sold during that time, the cover was not doing it and it was losing Disney money everyday. Then everyone was sitting around shaking their heads and wondering why Disney would close down a wonderful place like that.

It is also worthy of thinking about the idea that unlike the CM's, the purpose of the tourist visit there was completely different. The tourist would probably go there to have a couple of drinks, maybe dance, grab a meal, watch a comedy show or AC. In other words their agenda didn't include a morning hangover, covering face plants with makeup or releasing frustrations. They were there on vacation and had another theme park to visit the next day. Doing that with a hangover can really take away a lot of the magic. What the CM (on or off duty) might find to be a release, would easily have been an annoyance to a tourist, I'm thinking!

 

[Rodan75]

It's amazing how important nostalgia is. Even for something new like Cars Land, it has a lot of elements to it that sparks nostalgia for a lot of people. For Harry Potter, the journey has been such a long one through all the books and the movies that it has become a journey of nostalgia as well. One cannot say that is true of every IP.

Epcot unfortunately had a built-in self-destruct mechanism when it came to nostalgia. The very idea that it gets continually updated flies in the face of nostalgia and a sense of permanence. Trying to preserve it means that it never evolves. It's a very difficult line to walk as one needs to be able to make the improvements that guests expect while maintaining those specific elements that resonated with people.

Your last line pretty much sums it up though -- people need to feel that those in charge actually do care. It's the primary goal of customer service.

Really like your thoughts on Epcot. It is the park that will always be hardest to successfully update.

It will be interesting if Uni starts to see this reaction as they continue to reinvest in their parks. The Jaws reaction was surprisingly quiet.

 

[71jason]

So rather than removing the contained adult environment, total and utter mismanagement are to blame?

And a failure to recognize the Orlando and Anaheim markets are completely different beasts. Or what made PI attractive to 3d party restaurants to begin with.

 

[71jason]

I believe that this is what we all have been saying. Not enough income to support it. At least before they got rid of the turnstiles they had that income.

And that's where I'm saying you all are completely wrong if that's truly what you are saying. Only two bars were not profitable up until the very end. Also, you realize there were still cover charges even after the turnstiles came down, correct?