This is a great question -- thanks so much for asking it. I totally agree, the ROI of MM+ is usually a top reason for skepticism of the nearly $1 billion program. There's a couple things to keep in mind about this:
- First, people often point to the features of the program -- unlocking hotel room doors, FP+, accessing attractions, etc. -- and wonder, How can something as intangible as added convenience create an ROI? My personal feeling is that these small conveniences add up, and if that culminates in improved "intent to return" metrics, that will be a huge help to Disney's bottom line going forward.
- Second, a lot of its features are in fact not intangible, but very tangible. Photo Pass/Memory Maker costs somewhere btwn $169 to $199; the MagicBand has become one of the top 5 best-selling SKUs across all of WDW; seamless payments have ramped up guest spend; and the 30% cut in transaction time is also significant. Re: the 5,000 additional folks into Magic Kingdom, that's a big deal, if you consider how much more revenue they can simultaneously generate for the same experience. And that doesn't include the #s at each of the other parks -- Tom Staggs told me not to multiply 5,000 by the # of parks, because the figures vary, but the point is, more guests will almost always equate to more revenue.
- Third, it's important to put that $1 billion figure into perspective. What moves the needle these days? Will spending another $100 million on another Expedition Everest set up Disney for the long term? Perhaps. But Disney is a company that plays for the long game -- that's what makes it so innovative -- and it's willing to invest big where it counts, even if it's risk, as was the case with MM+. The company simply could not go on forever, as Steve Jobs said, using paper tickets, having scant data on its consumers, and offering little by way of personalization, technology, and mobility.
Plus, as one top source told me, "Over the same period that MM+ incurred a $900M investment [in MM+], the base organization...spent $2B+ in traditional marketing m, $2B in traditional IT and $8B in labor expenses." I'd take these figures with a grain of salt, because I haven't confirmed them, but the point is, billion-dollar investments are almost table stakes for the scale at which Disney operates.
But most importantly, as multiple sources told me of MM+, it won't take much to prove the program to give a return. "You really only need a 1% or 2% change in your 'intent to return' to take care of it, because this project was about changing how everyone experienced [the park], so thus it impacted everyone's price value -- not just the people who experience a single new hotel or a single new ride," one of these sources says.
- Lastly, as I said before, Disney is a company that plays for the long game. MM+ had a ton of up-front costs, and faced a ton of criticism like any bold new experiment. But you'll start to see the fruits of this labor, hopefully, in the years ahead. And many of the upfront costs -- like tripling guest relations, a burden on its P&L -- will wind down as the system becomes more polished and consumers are more educated about its purpose.
Hope that helps!
