MyMagic+ article from Fast Company magazine

[networkpro]

It seems to me that both camps can be correct, and the answer is right there in the article. Next Gen may have officially cost ~$1 billion but that's because it isn't including all the wasted money and effort from those who were internally competing with it and trying (unsuccessfully) to develop alternatives. Those numbers would not be embedded in the official cost of next gen as they are/were something else that didn't see the light of day. Obviously the "insiders" who were working on the alternatives know what the hidden costs were and that's the reason we have so much contrary feedback.

This goes back to my earlier question of what the true opportunity cost was of Next Gen.

Agreed and Greed We all need to change to X, and I must own it because I recommended it.

 

[ford91exploder]

It seems to me that both camps can be correct, and the answer is right there in the article. Next Gen may have officially cost ~$1 billion but that's because it isn't including all the wasted money and effort from those who were internally competing with it and trying (unsuccessfully) to develop alternatives. Those numbers would not be embedded in the official cost of next gen as they are/were something else that didn't see the light of day.

Very true but you report the full amount spent, many companies including mine have internal bakeoffs where two ore more teams compete for the 'final' product - but in the end the full amount is rolled up into the development costs not just the 'winning' team's product.

 

[LuvtheGoof]

One thing that most seem to be overlooking is the actual cost to upgrade the wired and wireless infrastructure across all of Disney. I'm willing to bet that cost is NOT included in MM+ costs for the numbers quoted in the article. I am also willing to bet that the "insider" numbers given out DO include this cost. That could easily make up a several hundred million dollar difference. That stuff isn't cheap when you are looking at supporting literally tens of thousands of connections all at once. So maybe that is the real difference in the numbers game. WDW needed the infrastructure improvements anyway, so most execs (I would be one of them), would NOT add that cost into the MM+ pile of money. Only what was actually needed for that project was included, not what was spent to upgrade infrastructure.

 

[ford91exploder]

Actually, that is uninformative.
Being informative would be answering the question. Not answering the question only definitively proves that he did not answer the question. It does not prove anything else. I could just as justifiably assume that Iger has developed a severe targeted hearing loss over the years where he only cannot hear the words My Magic +.

You are correct but when you are asked multiple times for MM answers and refuse to provide in a earnings call its reasonable to ask WHY?

 

[TalkingHead]

Just look, Harry Potter opened and there was a huge boom at Universal but now that boom has hit a plateau.

A plateau? You must be joking.

 

[sshindel]

You are correct but when you are asked multiple times for MM answers and refuse to provide in a earnings call its reasonable to ask WHY?

It is.

It's not reasonable to assume you know the answer though.

 

[BJones82]

A plateau? You must be joking.

I'm not, is the park busier now than it was when it opened? Is WDW busier now than when MM+ launched, is it busier now than it was a year ago? Can Universal say the same thing?

 

[TalkingHead]

I'm not, is the park busier now than it was when it opened? Is WDW busier now than when MM+ launched, is it busier now than it was a year ago? Can Universal say the same thing?

Parent of 4 billion numbers can probably quote you chapter and verse, but I'd say, yeah, Uni's business continues to grow. Plateau implies stagnation. I don't think that's what the numbers say.

 

[stretchsje]

Very true but you report the full amount spent, many companies including mine have internal bakeoffs where two ore more teams compete for the 'final' product - but in the end the full amount is rolled up into the development costs not just the 'winning' team's product.

Yes, if it is indeed a sanctioned bake-off. If someone is stubbornly working on a competitor to prove an answer to a question that was never asked (say, for example, to prove that one's job is still relevant) and multiply that by many different departments all worried about the same thing...

Secondly: if compatibility with some aspect of next gen was a requirement going forward on new park developments, except the specifications and/or requirements of next gen kept changing, that can be extremely expensive. (Us software developers hate it when the specifications and/or requirements of a project change while any more than 25% into it.) While integration with next-gen ought to be billed under next gen, that's up to the accountants, really, and in any event involves a bit of gray area. Speaking of gray stuff, I'm actually quite impressed that BoG was on time and on budget despite being pretty ambitious. The guy in charge ought to be promoted.

Thirdly: if imagineering developed, say, a highly interactive ride concept (for a specific I.P. and property) that leveraged the magic band throughout the entire experience, but the ride was not approved for deployment, would that really count in the next gen budget? Why or why not? Imagineering comes up with all kinds of ideas that get shelved, so why would this one- an example of what they'll be doinig going forward- be categorized any differently? I still think there are a ton of costs that are very real but also- and reasonably- not in that $1bil total.

 

[wdisney9000]

The article is a nice read. In the end, it came across more 'pro Disney' and less objective, even contradictory at times. The 'behind the scenes' stories of arguments and quotes containing curse words are fun but they do little to tell us any more than we previously were aware of. No hard hitting questions for Staggs, though I cant fault the author for that as Im sure it was a prerequisite. Negative aspects were dismissed with the standard Disney PR type responses as well.

While it isnt a full on puff piece, it sure is chalk full of subtle, psychological propaganda which only encourages speculation on the articles true intent. A few quotes from the article:

..."working from a trailer behind Epcot, the founding five started digging into the problems that made the reality of Disney World something less than "harmonious." There were the endless lines for rides, food, and bathrooms; parents juggling maps, hotel keys, baby carriages, and bottles of SPF 75; and kids pulling families on long treks to try to visit every attraction. The park was filled with complications, such as a tiered ticketing system with wonky rules".

This is a form of extrinsic manipulation by emotionally appealing to the reader by presenting problems that plague parents at WDW and sensationalizes them by invoking images of parents juggling lotion, kids, stroller, room keys, maps, etc all at once. This sets the framing that NGE will be the solution that the "founding five" is working on in their trailer. This form of manipulation prompts the reader to focus on the imagery described in the bolded section of the quote. Does putting on a magic band eliminate the need for a stroller or prevent the kids from wanting to visit every attraction? Does the magic band squirt out SPF 75 so you dont need to keep a bottle of it handy? Does it make lines in the bathroom or quick service food locations magically shorter? What "wonky rules" were in place hat are any more "wonkyer" than what we see now? The truth is that NGE solves none of these problems but the reader is only focused on the concept of a solution.

Two more quotes from the article:

1. "an elderly couple tells me they were skeptical of the MagicBand at first ("because we’re old!"), but that they have come to love its headache-free benefits."

2. "During my return monorail ride back to the hotel one cool winter night, two exhausted parents, baby carriages in tow and a tuckered-out young girl wrapped around Dad’s neck, tell me the MagicBand is a lifesaver; they couldn’t imagine going back to the old system, with all those paper tickets and FastPasses."

These two quotes attempt to eliminate any argument that; 1. older guests will struggle with the system, and 2. that magic bands are anything but "life savers". Why not be fair and balanced and also get a quote from the dad standing in line at guest relations who is having trouble with their bands, or at least mention that it happens daily? Couldnt find any older people that had problems adapting or did not have a smart phone and ask how they felt? I talk with people like that every trip I take, theyre not hard to find. It ignores any opposing issues that many, many people have experienced and paints the system as "perfect for everybody".

This next quote is odd to me. "Shanghai is expected to have such a high proportion of guests with smartphones, he says, that there wouldn’t be any need to export the MagicBand.

Is that saying that the magic band is irrelevant? Or that there are not a high proportion of guests with smart phones in WDW? Both? Who knows. Just more mystery surrounding Shanghai, lol.

Ill await the accusations that I hate Disney or that Im a naysayer for not accepting the article as gospel. I sincerely appreciate your efforts, @AustinC for an....interesting article.

 

[JediMasterMatt]

Austin - Welcome to the forums and what an excellent article. Since you are posting this here, I'm assuming you are at least aware of (or are becoming so) the Disney Parks fan community's feelings over the MM+ project. There are a few items in the article I would like to make reference to that really hit the nail on the head for my personal thoughts on the project.

The story of MM+ ‘round these parts is that Disney Parks was at a crossroads and it is at that junction, MM+ was born. The story goes that the crossroads was very much like what you describe as the key metrics listed above – lines, costs, and frustrations. One path was heavily investing on addressing this head on the way Disney Parks use to resolve issues by reinvesting heavily on what has worked in the past – new attractions and new experiences to ease the burden on the existing infrastructure. The alternative path was to “reinvent the guest experience” using technology to get more value out of the existing infrastructure (e.g. attractions) and lessen the need for more in the future. The key driver was maximizing the ROI on the World as we currently knew it as adding "more" to the table added additional overhead costs, so the "what if" concept was adopted.

“According to multiple sources, certain key metrics, including guests’ "intent to return," were dropping; around half of first-time attendees signaled they likely would not come back because of long lines, high ticket costs, and other park pain points.”

Since the statement above was the initial genesis of the MM+ project, I’d like to take a moment to pick apart the reasons Disney Parks listed as the reasons for guest opting out of their “intent” to return.

Long lines – MM+ and it’s offspring FP+ do not alleviate long lines at rides and attractions. At best, they can “steer” crowds from popular attractions (e.g. long line) to attractions that are less popular (e.g. shorter lines) by giving them a perceived value in a shorter return time. Using practical examples, if Test Track frequently commanded lines in excess of 60 minutes – you could increase guest satisfaction if you could successfully pull some of the people out of line for the popular ride into something that isn’t, like say for example Journey into Imagination with Figment. If the perceived value was high enough for the alternative, like let’s say the option of either riding Test Track 90 minutes from now versus Imagination 10 minutes from now, then you’ve accomplished the goal of making a dent into guest satisfaction by shuffling the deck around. The unfortunate side of this, is that by doing so – the net operational capacity of the park has remained the same. Attractions can only service so many people per hour and MM+ does not bring any new operational capacity to the table. What ultimately makes an attraction popular/or have a long line is the amount of suggestive satisfaction a guest places upon it. If attractions around the resort are less popular, steering more people to attractions that have historically already shown to be low in satisfaction will ultimately drive down a guest’s intent to return no matter how short of a wait/return time they were provided.

High ticket prices – MM+ has not had any agenda to reduce ticket costs and as your article has mentioned, the implementation costs for the project alone have gone beyond expectations. Nothing planned or discussed openly about the NextGen project have directly been associated with lowering costs to a guest’s vacation – unless, the underlying data mining WDW can gather can effectively be used to reduce their costs and they plan on passing the savings along to the consumer. Since this project has begun, it’s safe to say that costs have done nothing more than increase.

Other park pain points – Nebulous at best, other pains could be the troubles in planning or opening a door. It’s probably best to say there has been success at many of the intangibles that MM+ can offer to the guest. The perceived value for this part of the project is high. I’ll come back to the concept of perceived value in a bit.

“Simultaneously, the stunningly fast adoption of social media and smartphones threatened the relevance of the parks.”

The article mentions guest technology as another driver for the birth of MM+; but, the article doesn’t reference any correlation to that being a driver to the metrics Disney gathered on the “intent to return” challenge they were facing. Did their research show that a guests intent to return ultimately hinged on their ability to use their smartphone to make a FP+ reservation? I find it hard to believe that any random survey of guests would list using more technology as an unsolicited response to why they may not consider coming back. Unfortunately, for me, this connection between technology and Disney Park vacation remains to me a nicety and not a necessity.

So, if “intent to return” was the genesis behind the project as it is currently implemented, it’s important to reflect on if it has been a success at addressing the initial drivers for the project - “long lines, high ticket costs, and other park pain points”.

Ultimately, it becomes a matter of perception and that is always a game, that when played against the Mouse, the house will be holding all the cards. The perceived value of MM+ is what the project ultimately comes down to. My guess is that when surveyed at the end of their stay, guests will likely come away with thinking that their MagicBand was their life preserver and a key driver of why they enjoyed their vacation so much. Unfortunately, that guest may not have known at what cost (financial and otherwise) that Band cost them.

What did we all give up to become married to the wristband?

For starters, we gave up on addressing the first named complaint on a guests intent to return – long lines.

The costs for the MM+ project have meant that for the last several years, the WDW parks have gotten very little budget in terms of adding new capacity. Fantasyland came online; but, beyond that – it’s been more or less a shuffling of the deck with some attractions coming online, some going off and some getting “plussed”. What has happened has certainly not kept of natively with the increases in attendance the Resort has seen. The Resort isn’t treading water with capacity, it’s actively sinking. With the majority of all attractions now with FP+, it’s rare to find any attraction with a minimal wait. Also apparent is the increase in guest volume in the streets throughout the parks. With more FP+ times available, fewer people are waiting in standby and those people increase the impression of “long lines” at every facility or just general congestion. Now, before some claim that capacity will come in the form of Toy Story Midway Mania and Soarin’s new found capacity – a word of caution: adding increased to those attractions alone will not fix the issues with the overall resort. The parks that those attractions are in need to keep people satisfied for the entire day and not heading for the Magic Kingdom when they are done with their respective bill of attractions. There is nothing wrong with steering crowds around; but, steering them to attractions that didn’t pull a line before is just foolish. If operational expenses are so crucial in Orlando (we can’t have more than X number of attractions online at a time in a park), then budget should be placed on pruning away the unpopular and replacing it with something that is.

Other costs that can be associated with MM+ are also related to the decrease in “Show” quality throughout the resort. Attractions don’t get the necessary maintenance due to budget or due to the need for FP+ times needing to be kept in the system. Staffing has been reduced along with entertainment options. Inside word is again, these are due to budget overruns from the MM+ project.

Non-tangible costs for guests are also apparent. The loss of the spontaneous event is one of the greatest losses. So much of what happens at WDW these days occurs like clockwork. Guests have to micromanage their time to get from one preplanned event to the next that the chance encounter with “random” Disney magic has less opportunity to occur. No longer can you afford to stop and watch a street performer (assuming they weren’t part of the budget cuts) as you rush to your next FP+. Much like Hook from Peter Pan, the Croc is chasing ever after us with MM+. Tick tock, tick tock.

So, from this Disney Parks fan – while I can appreciate everything that MM+ can do currently and can theoretically do in the future, I can’t abide by what it has cost to give us so little. The Resort is in far worse shape today than it was when the project began.

I would’ve much rather seen the resort at the crossroad ante up on what was tried and true and working all along – continue to offer exciting and new experiences with world class service and attention to detail. Had the WDW done something similar to what Disneyland Resort did when it was at its crossroads of deciding what to do when it was faced with how to keep Disneyland park from getting overrun. They decided that California Adventure wasn’t pulling enough of its weight and needed to keep guests captive their all day in lieu of crossing the Esplanade to the original magic kingdom. They gave it a budget worthy of the quoted MM+ rollout and it has been successful for the last several years at pulling its weight. Had WDW done something similar… who knows what we’d be talking about now? The future at WDW bring Pandora and Star Wars land. Let’s hope those offerings bring enough to the table to offset the increases in attendance they will natively bring or else we may end up back where we started.

I would argue that California Adventure’s Fun Wheel Challenge comes as close as possible to marrying the “smartphone relevance threat” to the Disney Parks experience as anything does at WDW.

 

[hopemax]

To clarify...

If I show up at Epcot at 10 am and I want a FP for Soarin'...I'm less likely to get a decent time because the planners booked up all or most of the times two months prior. My option is then to either take the leftovers or go wait in the long Standby line. Can I get a FP? Probably, but not as good as before.

On Monday, my Dad and I decided at 10:30 to go to Epcot. I decided to try and set up FP. Turned out, very little was available before 5PM, and we knew we wouldn't be staying that long. We weren't interested in Soarin or Test Track. Just wanted a reasonable time for Spaceship Earth. I could get Living with the Land, for earlier times, but not SE or Nemo (was just a throwaway FP anyway). When we got there, SE line was 30 min, when we left it was 15 but physically looked longer than the 30 min line from earlier, so we questioned how accurate it was, or if the time was soon to update to a longer time. We ended up spending 3 hours in the park, and didn't ride a thing.

This is where I wonder how effective all of this really is. Since we were using a Maingate CM pass, not riding anything isn't that big of a deal, we were mostly going because my Dad didn't do F&G yet. But if a park like Epcot, can become so unfriendly to last minute decisions, does that translate into people choosing other options?

As for the article, my primary takeaway is that Disney has a culture problem. Something I don't disagree with. So what happens if you take something with as many complexities, and moving parts as MDE, and stick it in the middle of a bad culture? Well, the article doesn't really answer that. Intentions only get you so far, implementation matters just as much, and if you suck at implementation you don't end up better off, and you've just wasted a lot of money in the process.

I don't disagree that Disney is severely behind the eight ball in terms of technology, data mining, and how they can be used to improve experiences for both company and consumer. But as the article points out, groups within Disney are not used to working together, and steam rolling them is not going to help. For instance, take the implementation for Annual Passholders. Disney took the cards away, in favor of Magic Bands, but no one along the line realized that AP's needed those cards not only to get into a park, but to prove that they were eligible for discounts. MBs are not integrated within the retail environment in THAT way, so a card was replaced with a MB and a card. So it comes off feeling like a failure, because 1. it's not a fully integrated system, 2. No one even considering that AP's use their cards for discounts, or thinking it didn't matter that much, so what else didn't anyone consider. Then you get stuff like wi-fi expansion, and ride expansion (TSMM, Soarin) coming AFTER deployment, instead of before.

The article mentions the awareness training given to 70,000 CMs. My Mom went through that, and my Dad and I were excited to hear what she learned because details were so sparse about what was happening. She came home and the only concrete new information she could give was how much retail space her shop would have to devote to selling Magic Bands. People would ask lots of questions, and the answer that kept being repeated was "We don't know that yet." So is that really training? But as the article also points out, at Disney the "Theater of the Presentation" is what matters. And Disney, as of yet, has very good presentation skills. So she said there was lots of buzz words, and pretty graphics, but they didn't learn anything more than what they already knew...there would be magic bands and they would get you into the gate, and use them for charging, etc. CM's already knew the "what's" they were looking for "how's" and there were no forthcoming.

Want to say more, but trouble getting away from rambling. But basically, the basic idea behind this, isn't the problem...it's the lack of capacity, the lack of properly trained CM's, the lack of supportive and helpful management, the lack of problem solving, the lack of understanding how the parks run operationally (like the AP discount scenario) combined with a customer base who is ignorant of most things other than Disney is the pinnacle of customer service, and they don't want to miss anything or wait for anything.

Disney sees BOG as a "success," I see BOG as proof that Disney has no understanding of what people are looking for in a dining establishment, I question the front and back of house efficiency (is the kitchen/staff sufficient size, are tables bused and reset...go to the IHOP on 535, and then watch what Disney does...or doesn't do), and in the years it's been open I've seen no improvements in other locations in terms of how fast food comes out of the kitchen, or menu variety, etc.

 

[DDLand]

Parent of 4 billion numbers can probably quote you chapter and verse, but I'd say, yeah, Uni's business continues to grow. Plateau implies stagnation. I don't think that's what the numbers say.

If he was talking specifically about IOA, then that theme park grew at the same 2% rate as DAK and DHS I believe. If he was talking about USF, then that's a different story. That theme park was the second fastest growing park by volume in the Orlando area. Remarkable.

These are in attendance.

Update: @dotNetInternt apologies, these are for the latest reported attendance numbers of 2013. Anything past that is more or less unknown. We can make educated guesses though. Recent Profit and revenue numbers would suggest Universal is still riding the wave of DA well. I thought you were referring to to original HP back several years ago that opened at IOA. Universal is still expanding much faster then Disney in percentage terms.

That's not to discredit your point of future and sustained growth however. Disney has invested its money well into these improvements.

 

[Master Yoda]

Disneyland serves a completely different market, its main customers are locals. Disneyworld and Orlando are destinations with a more global market.



The publish date of the article is the reason for the embargo.... May issue of Fastcompany

Exactly. It is a fact many people either don't know about or, in some cases, refuse to acknowledge.

 

[ParentsOf4]

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.

I do not know what Disney spends on "traditional IT". However, the "traditional marketing" and "labor expenses" you mention appear to be reasonable numbers, depending on the start and end dates.

Disney's Parks & Resorts budgets are enormous. In 2014, labor was a good portion (perhaps $2B) of the $9.1B spent on operating expenses while marketing made up an appreciable amount (perhaps $500M) of the nearly $1.9B spent on Selling, General, Administrative, & Other. Again, these numbers are for only 2014. Spread these expenses out over a few years and it would seem fairly straightforward to get to the numbers you were told.

Since companies typically invest a portion of revenue back into product development, another number to consider is revenue generated by Disney's Parks & Resorts since 2008. (In your article, you give 2008 as the kickoff date.)

Since 2008, Disney's Parks & Resorts segment has generated over $90B in revenue.

 

[ChrisFL]

the quote "as a tiered ticketing system with wonky rules" sounds like the current state of FP+ to me and I don't see how it related to previous incarnations of tickets before MyMagic+

 

[sshindel]

Disney sees BOG as a "success," I see BOG as proof that Disney has no understanding of what people are looking for in a dining establishment, I question the front and back of house efficiency (is the kitchen/staff sufficient size, are tables bused and reset...go to the IHOP on 535, and then watch what Disney does...or doesn't do), and in the years it's been open I've seen no improvements in other locations in terms of how fast food comes out of the kitchen, or menu variety, etc.

BoG. The restaurant that is booked 180+ days in advance in the slowest of seasons? The one with lines out the door for QS lunch so much so that they actually had to start booking FPs for it? No understanding of what people want in dining establishments, or no understanding of what you want in a dining establishment?
It's sheer popularity at the moment deems it a success. If it will hold onto that in the future is an unknowable question (but the analytics that Disney is collecting with NGE sure might help them predict it), but currently I'd say that it's proof that Disney knows what people are looking for. If they didn't, people would not go to the restaurant.

 

[GrumpyFan]

I'm not, is the park busier now than it was when it opened? Is WDW busier now than when MM+ launched, is it busier now than it was a year ago? Can Universal say the same thing?

The numbers show that Universal as a whole grew more than 30% in attendance in the last 4 years, since adding the boy wizard, while Disney (World) in the same period, only grew attendance by about 7%. The physical numbers for them are 5 million for Universal, and 2.6 million for Disney. I haven't been to Uni (ever), but 5 million more people would seem like it would make it a lot busier.

I'll grant you that WDW does seem busier in the last year or so, but I (and many others here) would probably question how much of that can be attributed to MM+ and MagicBands.

 

[BJones82]

Parent of 4 billion numbers can probably quote you chapter and verse, but I'd say, yeah, Uni's business continues to grow. Plateau implies stagnation. I don't think that's what the numbers say.

Correct I was being to vague it is not growing at the same rate it did when the area opened though it is still growing...

If he was talking specifically about IOA, then that theme park grew at the same 2% rate as DAK and DHS I believe. If he was talking about USF, then that's a different story. That theme park was the second fastest growing park by volume in the Orlando area. Remarkable.

These are in attendance.

Over what time? I am assuming 2014 the year that Harry Opened it's newest area which gave a boost in attendance. My statement was that that boom happened but is no longer happening. When 2015 numbers come out for growth they will not be the same as the numbers for 2014... I feel that all the technological upgrades that came with MM+ put USF at a disadvantage because they are years behind on just catching up let alone exceeding what WDW now has in place...

 

[sshindel]

the quote "as a tiered ticketing system with wonky rules" sounds like the current state of FP+ to me and I don't see how it related to previous incarnations of tickets before MyMagic+

I'd say that the rules as to when you could get your next FP are what is being referred to. I could never remember what the rule was, always had to dig the thing out to see when I could get my next FP by looking at the ticket and then hope I'm near an attraction I want to get my second one for.