Uni Locks Away Patent for Rainy Day

[wm49rs]

Wouldn't it be wonderful if the haters stayed home? These are people who can never be satisfied...even if Disney him have them a free stay. There would always be something to complain about. MMM+ is not a failure. It enhanced my last two trips beyond my expectations. Yes, there's going to be kinks and some may experience trouble but that's just life. Maybe if the haters would spend more time off line complaining and more time experiencing MM+ they would have a different opinion.

Or, perhaps there are those who have experienced and found the system to be less-than-glorious. Just maybe....

 

[sshindel]

And what would happen to somebody who radically undersold the cost of upgrading Office and also oversold new growth generated by the upgrade?

Happened at our company. I think the initial upgrade from windows XP to Windows 7 was a 1 year project, now rolling into year 3. I'm fairly certain the person responsible is still employed by our company.
Also, for point 2 (bolded), I still argue it's a bit early to judge that.

 

[sshindel]

Come on dude...I just took a minute break to get my mind off of work and come in here and you're spewing this incredibly accurate\insightful, but hitting too close to work jibber jabber...I think I may have just died a little.

I apologize. I need to go back to making poo jokes. If a 12 year old thread can be bumped, I think I'll go find the old Tangled Toilets thread and get some potty humor going.

 

[kittybubbles]

One thing I don't understand about the NExt Gen project at WDW is why they seem to have tried to have so much custom made for them.

To me, I would any company could do a lot of the tracking aspects just by providing an app for smart phones, they might not get all their customers to use it, but they should get enough of a population to get decent stats from those that would use the app.

Here is a link to a story I read today that shows the technology is out there and not too expensive:

http://www.forbes.com/sites/darrenh...location-driven-partnership/?partner=yahootix

 

[fillerup]

Interesting read there - thanks for posting the link.

 

[lazyboy97o]

One thing I don't understand about the NExt Gen project at WDW is why they seem to have tried to have so much custom made for them.

It is just part of how Disney operates. They used contracted vendors but except with sponsorship arrangements those vendors are almost never identified.

 

[willtravel]

My favorite part of the argument against all of this is that they spent a billion on wristbands and door locks. Not on the underlying internal IT systems that the entire company relies on. Not on any of the data analysis to try and find inefficiencies, not on any of the other thousand things that likely were a part of the project under the covers. $500 million on wristbands, $500 million on door locks. Nothing else.

Technology for technology's sake is silly. Technology to keep the systems viable into the future and to drive the business forward is not.

Makes me kinda wonder how much rooms, tickets and food will go up in 2014?

 

[wdisney9000]

I think the concern with NextGen has been just how much potential has been sold.

Excellent point. Not only to Wall Street but to the general public as well. NextGen does have its advantages but not to the effect of being the game changer that Disney execs and some WDW fans would like it to be.

 

[sshindel]

Makes me kinda wonder how much rooms, tickets and food will go up in 2014?

Since I'd guess this project has been on the books for many years now, and the budget dollars have likely been shared across many of those years, my personal guess would be no more or less than in the previous 5 years or so.

 

[wdisney9000]

Since I'd guess this project has been on the books for many years now, and the budget dollars have likely been shared across many of those years, my personal guess would be no more or less than in the previous 5 years or so.

Which will still be at a rate that outpaces inflation by far. Even if it doesn't, imagine the up - tick in revenue they could see if they dropped prices, even slightly, just to show a little customer appreciation. Won't EVER happen, just a thought

 

[omurice]

Regardless of what got thrown in under the MyMagic+ (MM+) umbrella, corporate Disney sold to Wall Street the idea that MM+ represented the future of the theme park experience. More importantly, Iger and Rasulo sold to Wall Street that MM+ would improve Parks & Resorts' bottom line significantly.

With an original budget of around $800M, it was possible to come up with internal projections showing a pretty good rate of return on this investment.

However, MM+ has blown through that budget with no end in sight. Rasulo has warned Wall Street that there are steep deprecation costs associated with MM+ infrastructure and consumables. A lot of the high tech investment has a short shelf life.

Beyond that is the additional hiring needed to staff the cursed thing. MM+ is not just grossly overrunning its initial R&D budget, but also looking to be at risk of torpedoing WDW's opex budget for years to come.

Wall Street is nervous about what's happening at WDW right now. They are not stupid. They hear about cost overruns, see that MM+ has been in "testing" for over a year, already have been guided by Rasulo not to expect any financial improvement in FY2014, recall the recent John Carter & The Lone Ranger flops, and are worried.

Wall Street is very worried about MM+.

The thing is, The Walt Disney Company is one of the most financially secure corporations out there. Iger & co. have delivered results year after year. Wall Street thinks Disney hit it out of the park with Cars Land. They are comfortable with P&R moves in the Far East and in DCL. They see the Lucas and Marvel acquisitions as good fits. If Iger & Rasulo say that MM+ is the future, then Wall Street is ready to play along.

All of this is important when considering Uni's next move.

No one on Wall Street is questioning Universal's strategy to build new attractions and hotels. Uni's strategy represents old-school thinking and, given the recent successes at WWOHP and Cars Land, Wall Street is very comfortable with Uni's approach of building relatively inexpensive lands based on popular IPs.

Whether it's Comcast or Disney, spending a few million so an R&D team can dream up new ride reservation system is chump-change. It does position Uni to move on it quickly, if needed.

However, Universal will not move forward with an expensive new system until they see how MM+ plays out.

Disney is the one taking the financial risk. There is no good business reason for Uni to jump into the fray until their completion demonstrates that it's worth it.

Sometimes in business it pays not to be the leader but a fast follower.

I think most of what you're saying is spot on. But DIS stock was at $49 end of 2012, and is at $76 today one year later a hike of over 50% in 12 months. Who on Wall Street is nervous about Disney?
I think it's mainly we fans (including me) that are nervous about the direction that Parks and Resorts has taken. Wall Street would seem to be fine with how Studios is doing, in spite of Jon Carter and Lone Ranger, and must be indifferent to how many headliner attractions were built at WDW the last 5 years (I think sadly that number is ZERO since TSMM opened in May, 2008!).

 

[wdisney9000]

I think most of what you're saying is spot on. But DIS stock was at $49 end of 2012, and is at $76 today one year later a hike of over 50% in 12 months. Who on Wall Street is nervous about Disney?
I think it's mainly we fans (including me) that are nervous about the direction that Parks and Resorts has taken. Wall Street would seem to be fine with how Studios is doing, in spite of Jon Carter and Lone Ranger, and must be indifferent to how many headliner attractions were built at WDW the last 5 years (I think sadly that number is ZERO since TSMM opened in May, 2008!).

Wall Street pays far more attention to the future and less on the current state of affairs.

 

[ParentsOf4]

Since I'd guess this project has been on the books for many years now, and the budget dollars have likely been shared across many of those years, my personal guess would be no more or less than in the previous 5 years or so.

The cost of NextGen has no direct bearing on WDW prices.

Disney has employed a strategy called "price leveraging" for some time. As used within Disney, this basically means "how big of a price increase can we get away with this year?"

All this is typical business stuff. Disney is by no means unique.

Iger really has amped this up over the last few years. I'll use the price of a 7-day MYW base ticket to illustrate:

2005: $199
2006: $210 (5.5% increase)
2007: $219 (4.1%)
2008: $228 (4.1%)
2009: $234 (2.6%)
2010: $247 (5.6%)
2011: $267 (8.1%)
2012: $288 (7.9%)
2013: $309 (7.3%)

The one that always gets me is when a Disney PR representative is asked about increases, the inevitable answer is: "Our guests tell us Walt Disney World is an excellent value."

So, to all you folks who say that you love WDW so much that you'd pay any price, corporate Disney is listening!

P.S. By the way, as several know here, I bought a stack of WDW tickets back in 2005 and still have a bunch of days left. I dread the next time I have to buy a WDW ticket.

 

[ShookieJones]

I apologize. I need to go back to making poo jokes. If a 12 year old thread can be bumped, I think I'll go find the old Tangled Toilets thread and get some potty humor going.

potty humor now that's something I can get behind.......

 

[ParentsOf4]

I think most of what you're saying is spot on. But DIS stock was at $49 end of 2012, and is at $76 today one year later a hike of over 50% in 12 months. Who on Wall Street is nervous about Disney?

Wall Street specifically is nervous about MyMagic+. It doesn't fit neatly into the traditional amusement park mode and they can't figure out how it's going to make money. (Try thinking about WDW's 28,000 onsite rooms and that might help.)

The following public exchange from the Q2 earnings call is typical:

Q: "Bob, if you could talk about the timing of the rollout of My Magic Plus. Is there any way to give us a sense of the potential impact from that initiative? It's not the easiest thing for us to model."

A: "In terms of what we can expect from it return-wise, you're right; it's somewhat -- although we've modeled it -- it's somewhat difficult to be specific about. You can expect that it will create a better experience, and with that we believe people will spend more time at our parks and ultimately deliver more business per guest."

I wish I could have been there for a follow-up question:

Q: "So Bob, could you be a bit more specific? Or, are you saying that up till now, all your other initiatives were not designed to create a better experience?"

Fans on forums such as these are not the only ones questioning MyMagic+ and asking why Walt Disney World isn't building lots of new attractions like Universal. Privately, analysts at some investment firms still can't figure out MyMagic+ financially. We're not the only ones hearing about cost overruns and schedule delays.

At the most recent earnings call, when asked:

Q: "And just a follow-up question on the domestic parks. I think in the past, you've sort of called out some incremental expense that we may see in different initiatives. I guess is there something incremental we should look out for in fiscal 2014? I guess, where are you on the spending around Magic+? And then on Magic+ when we might see, I guess, some signs or data points of how it's impacting the business?"

CFO Jay Rasulo replied with:

A: "Alexia, let me take the back-end of your question first on MyMagic+. So, the situation we're in right now is that we basically are continuing to roll forward with making this benefit available to more and more of our guests. And at this point, if you are staying on property at one of our hotels, you're basically a beneficiary of MyMagic+. And, you know, we've talked about the benefits in two basic categories, in terms of the financials of the company.

"The first, as it greatly improves the experience at Walt Disney World, we expect that -- as we have with everything else we've done to improve the experience at our parks -- to have an underlying increase in business. Whether that's more individuals coming to the resort every year, or those individuals who come down to Orlando, spending more time with us and having a better time. That tends to reverberate throughout our business in a very positive way. And then, sort of easing some of the, let's say, logistics of getting around the property -- paying for things, entering the parks, getting in and out of the resort hotels -- when you make that easier, people tend to spend more time on entertainment, more time on consumables, be that food and beverage, merchandise, et cetera. So, as we are still very much in the early days of rollout, we haven't been characterizing that impact, but we do expect this to be a net positive and growingly positive impact on our business in the years to come.

"Relative to the front-end of your question on spending, continued spending and ramp-up of new initiatives in Florida -- and that's not only MyMagic+, which, you know, the operating portion, of course, the costs are kicking in, and we're now seeing, as we put the assets in place, some of the depreciation that comes with that project being reflected in our expenses. But if you look at it on an overall basis, those new initiatives are accretive -- were accretive in 2013 -- continue to be accretive in 2014. I said in my comments that the margin impact of that in fiscal 2013 was about 30 basis points on our overall margins. And this year, we're looking at about a $300 million expense item, and more or less the same amount on the revenue side. So, you know, we'll continue to see accretion into 2014 and ramping upward beyond that."

Basically, MyMagic+ represents a lot of money spent with nothing financially to show for it so far.

Just recall the observation, "It's not the easiest thing for us to model."

Compare MyMagic+ to, for example, WWOHP or Cars Land. The financial impact of those were immediate and impressive.

However, Iger has delivered results year-after-year. Iger commands tremendous respect on Wall Street.

Remember, MyMagic+ is just one small piece of a bigger financial picture. Disney had what probably were the 2 biggest box office bombs in the last 2 years and sailed through those with barely a scratch.

ESPN and P&R are money in the bank. Disney is incredibly financially sound, a safe place to park some spare cash.

Getting back to the point of this thread, I expect Universal to jump on the MM+ bandwagon if and when it becomes financially successful at WDW. Until then, I expect every Uni executive to say how stupid MM+ is.

Oh, and it doesn't hurt Uni to spend a few bucks to file a patent "just in case".

 

[luv]

That's basically...

Q: it looks like you've poured a billion dollars down the drain. Can you explain how this will make money?
A: No.

Q: You guys haven't cut your losses. Are you going to keep spending? Can you explain, specifically, how this will make money?
A: Yup, we're going to keep spending. It might increase hotel occupancy.

They weren't even tough questions. The guy really should run for office. He wants to spend like crazy, not be accountable for it and dodge questions about whether it's necessary.

 

[pmaljr]

So, the real questions are these: What are Disney's true goals for the system? Does it matter what anyone thinks of it in year one? Do they have a 5 year goal or a 10 year goal, or are they themselves expecting immediate results? If it's a dismal failure and little changes in regards to profits, will Disney abandon it? If profits so exceed anything that exists today due to this technology, will they become so big-headed that they don't even care what anyone on here thinks?

This conversation has become tiresome. Now's the time on WDWMagic when we dance!

 

[wdisney9000]

Honestly, I'd rather be booking some sort of reservation than staring at the touchscreen show on how my "future" is going to go for the umpteenth time.

If it's your umpteenth time and you are tired of it what makes any other attraction different? Same places on Soarin, same spinning around on Dumbo, same drops on Space Mtn. Should I just be on my smart phone for all that? Difference is that Disney used to build rides from the viewpoint that it WAS somebodies umpteenth time riding and they made the attractions stand the test of time without an IP behind it. Now it's just shock and awe and what's sad is the shock and awe isn't even for attractions. It's for smart phones and convenience of reservations. What's next? reservations to be able to make reservations?

 

[khale1970]

Defensive patents basically are lawsuit insurance, So if UNI does a virtual tip board, Disney can't come along and sue them for it because MDE also has wait times. Just how regulatory capitalism works.

I readily admit that this area is way out of my frame of reference, so forgive me for my ignorance. But wouldn't the need for a defensive patent mean that you had some intention (no matter how remote) of in some way utilizing the stuff in the patent and didn't want to get sued? Using your example of a virtual tip board, if UNI thinks that might be a good idea down the line, you apply for a defensive patent. But if UNI was of the opinion that an app allowing a guest to schedule ride reservations is a bad idea and never going to happen or that mining guest data is not in their interest and they wouldn't do it, what's the need for a defensive patent? Why defend against what you would never consider doing?

 

[sshindel]

If it's your umpteenth time and you are tired of it what makes any other attraction different? Same places on Soarin, same spinning around on Dumbo, same drops on Space Mtn. Should I just be on my smart phone for all that? Difference is that Disney used to build rides from the viewpoint that it WAS somebodies umpteenth time riding and they made the attractions stand the test of time without an IP behind it. Now it's just shock and awe and what's sad is the shock and awe isn't even for attractions. It's for smart phones and convenience of reservations. What's next? reservations to be able to make reservations?

So, this talks more about making attractions with re-ride-ability (that's kinda a word). I think most of the attractions they've made recently succeed at this much more than some of the older rides. TT2.0, Star Tours, ToT, TSMM, etc. I was using the decent on SSE as an example of a poorly executed design. And IP doesn't enter into it in my mind at all. It's either a good attraction, with or without IP, or it isnt. I have no more love for PoTC (pre movies) than I do for TSMM based on the fact that one was IP or one was not. They are both great attractions, regardless of if they had IP attached to them. Some of Disney's best work in terms of re-ride-ability has been done in their most recent efforts. I still have nothing that makes me believe that will change.