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Case Assignments Is "Disney's Magic Band System". Read And Complete An Analysis Of The Attached Case. Your Analysis Must Be No Less Than 3-Double Spaced Pages, And It Must Address The Following:

Read and complete an analysis of the attached case. Your analysis must be no less than 3-double spaced pages, and it must address the following:

What specific business management problems was Disney facing?
How can the technology they were considering redress those business management problems?
How (if at all) would this technology allow Disney to improve its operational efficiencies?
How (if at all) would this technology allow Disney to improve its customer satisfaction and retention?
Is this technology risky? If so, what might Disney do to reduce the risks associated with its implementation? Is Disney doing a good job of managing risk with this project?
How much does the technology under consideration cost to implement and what is the potential cost of not implementing this technology? (Note: Your response to this question need not be entirely monetized. It can be descriptive)
What are your personal thoughts and impression with regard to this project?

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IBS Center for Management Research

Disney’s MagicBand System: Leveraging Technology to Enhance Customer Experience

This case was written by Geeta Singh, under the direction of Debapratim Purkayastha, IBS Hyderabad. It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.

 2015, IBS Center for Management Research

IBS Center for Management Research (ICMR) IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad-501 203, Telangana, INDIA. Ph: +91 9640901313 E-mail: casehelpdesk@ibsindia.org

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e info.usa@thecasecentre.org e info@thecasecentre.org case centre

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Disney’s MagicBand System: Leveraging Technology to Enhance Customer Experience

“Disney could theoretically tailor the visitor’s experience more effectively. . . MM+ is not solely for the benefit of Disney. Its intention is to simplify and enhance the visitor’s experience. So while technology of this sort certainly benefits the business side, ultimately the consumer is the intended beneficiary.”1

– James Crompton, Industry Analysts at IBIS Worlda, in 2014 “Disney’s ability to do this, do it well, and do it in a way that doesn’t jeopardize the information of guests isn’t something I’m entirely confident about. It’s also not entirely clear just what kind of data they’ll be collecting from guests, what they’ll be doing with this data, and who will have access to this data.”2

– Ingram Connorb, a Visitor of WDW, in 2013

The world-renowned Walt Disney World (Disney) in Orlando, Florida, had always been a massive tourist attraction, and it had expanded into different sectors across the globe. Its theme parks, resort hotels, and transportation system had succeeded in attracting millions of visitors annually. For Disney, the focus had always been on improving customers’ experience at its parks and its various other attractions. It believed in taking care of the minutest details to ensure the comfort and entertainment of customers and it had always updated its services to match the demands of a changing environment.

In a bid to streamline the operations of its parks and enhance customer experience, Disney launched a vacation management system, MyMagic+ (MM+) in 2013. With its components, the My Disney Experience website, a mobile app, and MagicBands, the MM+ system was expected to enhance customer experiences through technology driven devices.

For the customers, the MM+ system offered a comfortable all-in-one radio-frequency identification device, the MagicBand, which would help deliver a more enjoyable, well-planned Walt Disney World experience. The company, on its part, planned to track the visitors’ movements and get real time data on consumer behavior, which could further be used for various marketing activities. However, concerns were raised whether such a model could succeed in future. Analysts studied the pros and cons of the technology driven services and voiced their concern about the danger of the bands being cloned or of the information being retrievable by smartphones. There were also apprehensions about the privacy and security of the personal and financial information of customers. Though Disney tried to assuage such fears, the MM+ was a project in its trial phase, and its success in the future could not be guaranteed. Until 2014, Disney was just testing the MagicBand system with some preselected customers. But even as it was preparing to roll out the project on a larger scale, the question before the team was whether customers would really be able to enjoy themselves while putting sensitive data about themselves at risk.

a IBIS World is an Australia-based research company. b Ingram Connor, 25, from Casselberry, visits Disney World about twice a month.

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BACKGROUND NOTE

As of 2014, Disney was the second largest media conglomerate in the world with its business split up into four major divisions –Studio Entertainment, Parks & Resorts, Consumer Products, and Media Networks. This massive company was world-renowned for its theme parks, welcoming characters, its attractions, and exceptional customer service. (Refer to Exhibit I for revenues of the Walt Disney Company, and to Exhibit II for the World Disney World facilities at Orlando)

In 1964, Walt Disney (Walt) purchased 27, 433 acres of swampland in Central Florida.3 During a press conference, Walt described about his dreams of building a unique entertainment and vacation center. Disney also initiated a project called EPCOT –Experimental Prototype Community Of Tomorrowc. In 1965, Walt Disney announced plans for building a theme park in Central Florida.4 In October 1971, the Magic Kingdom Park was opened with two resort hotels.5 The opening ceremony featured a parade of Disney characters and 76 trombones. From the moment the first guest walked in, the Walt Disney World Resort was considered an iconic destination, attracting millions of families around the world every year.6 For the next few years, many adventures were added in the Magic Kingdom. In 1973, the Golf Resort Hotel (later renamed as Shades of Green) was opened. In 1976, Disney’s first water park, River Country, was opened.

In 1982, the EPCOT center was opened, featuring attractions like Spaceship Earth, The American Adventure, Universe of Energy, and Kitchen Kabaret. With the addition of EPCOT, the total investment at The Disney Resort doubled, and the number of visitors crossed the 100-million mark.7

Soon, the first 4-D film of the park, Captain EO, made its debut at EPCOT. In 1988, Mickey’s Birthdayland was opened at the Magic Kingdom to coincide with the 60th birthday of the iconic Disney character, Mickey Mouse,.8 The Disney-MGM Studios and Pleasure Island were opened on May 1, 1989. In 1989, two new resorts, the Walt Disney World Dolphin and the Walt Disney World Swan, were opened at the Walt Disney World Resort near EPCOT.9 The following year, the name of Mickey’s Birthdayland was changed to Mickey’s Starland.

To celebrate the 20th anniversary of the Magic Kingdom Park, a new daily procession called the Surprise Celebration Parade was launched in 1991. In 1996, on the occasion of the 25th anniversary of the park, the front of the Cinderella Castle was turned into an 18-story birthday cake. Disney World thus thought up new ways to celebrate different occasions and delighted its visitors.

By 1998, the Disney’s Animal Kingdom Theme Park was opened themed entirely around animal conservation.

In order to make its operations more efficient, Disney launched the Fastpass service in 1999. The FastPass system was a type of line-skipping system, which allowed guests to reserve a time to visit an attraction. However, in 2002, the River Country was closed down because it caused death of an 11-year old boy from amoebas in the non-chemically treated water of the water park in 1980 and since then, there was considerable fall in the visitors’ attendance.10 In the same year, new attractions like the Buzz Lightyear Space Ranger Spin ride and The Many Adventures of Winnie the Pooh ride were added at the Magic Kingdom. In 2003, a baby boy elephant, Tufani, was born in Disney’s Animal Kingdom Theme Park.11 Another famous Disney World character, Donald Duck, started accompanying the guests on an adventure at the Mickey’s Philhar Magic. By 2006, some new features like the new Audio-Animatronics of Jack Sparrow and Captain Barbossa, were added in the existing adventures based on fantasy swashbuckler films ‘Pirates of the Caribbean’. In January 2008, the name, Disney-MGM Studios was changed to Disney’s Hollywood Studios.12

Working on an expansion strategy, the Disney management team announced the expansion of Fantasyland at Magic Kingdom Park in 2009. The expansion was expected to almost double the existing area, adding new attractions based on ‘Beauty and the Beast,’ ‘Snow White’, and ‘The c EPCOT is the second of four theme parks built at Walt Disney World in Florida, near the city of Orlando.

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Little Mermaid’. By 2011, the guests were allowed to use their Fastpass tickets to watch Mickey Mouse at the Magic Park. The same year, a new 3-D version of Star Tours, ‘Star Tours – The Adventure Continues’ was opened at the Disney’s Hollywood Studios.13

In 2011, in order to manage the huge footfall of visitors across its theme parks, Disney announced the launch of a billion-dollar high-technology project, ‘NextGen’. At an investors’ conference, Thomas O. Staggs (Staggs), Chairman, Walt Disney Parks and Resorts, announced in 2011 some major changes and said, “Guests will be able to reserve times for their favorite attractions and character interactions…secure seats at our shows and spectaculars…make dining reservations… and pre-book many other favorite guest experiences -- all before even leaving their house.”14

Scott Smith, a former Disney employee who later on started teaching theme park management at the University of Central Florida, said, “NextGen’s goal is to eliminate the wait time, streamline the experience for guests --and more importantly for Disney to make money.”15 As a part of the NextGen project, there was a plan to develop wristbands embedded with radio-frequency identification (RFID) microchips. Moreover, at EPCOT, Disney was already experimenting with RFID technology.

By 2012, the Disney’s Toontown Fair was closed down following the expansion of Fantasyland. The following year, the Villas were opened at the Grand Floridian Resort.

The Walt Disney Resort contained 4 theme parks, 2 water parks, 5 golf courses, 26 owned-and- operated resorts, and hundreds of merchandise and dining experiences. The cast members represented more than 80 nationalities and could speak more than 50 languages.16 As of 2014, the Walt Disney World was the largest single-site employer in the United States, and the resort was still undergoing a massive expansion project.

MYMAGIC+ SYSTEM

Companies across the globe had been leveraging technologies to add efficiency to their business operations and thereby increase revenues. Similarly, Disney had continuously used updated technologies to enhance its operations and had delivered revolutionary attractions.

In 2013, Disney World introduced a vacation management system called MyMagic+ (MM+) to create a more magical atmosphere at Disney parks. Using this system, the company tried to recreate and enhance the visitors’ vacation experience. Through wireless technology, Disney introduced the MM+ system, ending many traditional practices. The system allowed users to select FastPassesd and book their tickets through a website and mobile application ‘My Disney Experience’. After more than five years of development, the MM+ was finally launched in January 2013.17 The system was developed initially using 1,000 testers.

The initiative was aligned with modern consumer behavior and the company believed that “happier customers would spend more money”. Staggs opined, “If we can enhance the experience, more people will spend more of their leisure time with us.”18 He further believed that MyMagic+ could prove ‘transformational’ for Disney.

John Padgett (Padgett), vice president of experience development for Walt Disney Parks and Resorts in Lake Buena Vista, Florida, who had been engaged in enhancing customer experience by creating next-level new business models focused on guest-experience, was working on this radio frequency technology backed new project of MagicBands.

This completely new range of technology with an online presence, My Disney Experience, blended the already existing FastPass system with MagicBands. Although the MM+ system included an updated My Disney Experience website and mobile app, the MagicBands were the d FastPass is a service that reduces the waiting time in line for rides and facilitates reservation of seats for

attractions like fireworks, parade viewing, shows, and character greetings.

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highlight of the system. The website and the app allowed users to preselect their rides and VIP seats for fireworks & parades. They could also opt for the character by whom they wanted to be met and greeted.19 The Disney parks in Orlando offered free Wi-Fi access to its visitors, which along with smartphone applications, enhanced the customized Disney experience.20 The phone app enabled users to explore reservations for meals, rides, etc. Users also received text messages for ride openings.21

The Great Wolf Resortse, another vacation company, had pioneered the use of RFID chips driven wristbands in 2006, but for Disney World, this was a huge project. For Disney’s huge global operations, with 121.4 million admissions per year and revenue of almost US$12.9 billion being generated, the RFID technology would be a huge investment.22 Disney planned to utilize the maximum share of its visitors’ time by introducing this system.23

MAGIC BANDS

The MagicBands were the centerpiece of Disney’s expansive program for changing visitors’ experience dramatically at the Florida resort. These wristbands were at the heart of Disney’s MM+ technology. Disney believed that the MagicBands could create deeper and more unforgettable memories for its customers.

For approval of these wireless wristbands, Disney filed paperwork in October 2012 with the Federal Communications Commission (FCC). The bands were actually digital IDs, which visitors would wear throughout their Disney trip.

The MagicBands were thick rubberized plastic bracelets, which were expected to upgrade Disney’s management while enhancing customer experience. These bands looked like accessories, but were actually developed on radio-frequency identification (RFID) transmitters. They could transmit data on the 2.4GHz spectrum. Microchips installed in these wristbands, would read the radio frequency identification.24 At the Disney resorts, the bands could be read by short and long- range readers. (Refer to Exhibit III for Working of Magic Bands)

The MagicBands were durable and comfortable, with ridges on the inside to facilitate air circulation between the band and the wrist. The bands came in a universal fit that could be adapted for use by all the guests, with an adjustable peel-away layer to make it smaller for children. In addition, the guests could choose one of the seven colors available (pink, red, blue, orange, green, yellow, and gray) and could personalize the band with their encrypted name or nickname, as they wished. The bands were priced at US$12.95 plus tax, and various character-related bling and colorful accessories were sold at various Disney parks to customize these MagicBands.25 (Refer to Exhibit IV for the cost of MagicBands and where it could be purchased)

The bands could be purchased at Walt Disney World theme parks and the Downtown Disney area. Initially, they were available to visitors who were either Walt Disney World annual passholders or were staying at the Disney Resort hotels.26 In case the bookings were made in advance, the bands were mailed to the visitor’s home or else they were handed over at check-in points at the Disney resort.27 The bands were linked to the customer’s Disney account and were non-transferable. However, they could be re-used.28 (Refer to Exhibit II for details of obtaining MagicBands)

Using MagicBands was simple; one only needed to touch the band against a sensor, called a touch point at places like resort room doors, theme parks, water park entrances, etc.29 (Refer to Exhibit V for an image of the MagicBand and the touchpoint). While purchasing the MagicBand, the guests were required to enter a PIN code as their unique identity code. The bands were operational all the time and did not have an on/off switch.

In case the band was lost, it could be deactivated at the website ‘My Disney Experience’. This would unlink the band from tickets and other entitlements.

e Great Wolf Resorts is an operator of 11 water parks in North America.

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Additionally, as of August 2014, the MagicBands were available as stand-alone item at the selected parks, Downtown Disney, Disney's Art of Animation Resort, Disney’s Contemporary Resort, Disney's Pop Century Resort, and Disney's Port Orleans Resort.

A WIN-WIN TECHNOLOGY

The technology driven theme parks were expected to modernize the old Disney system. Under the traditional process, visitors had to purchase paper tickets, wait in line for their favorite rides, and buy merchandise either through cash or credit cards.30 The new system was designed to offer an enhanced experience to visitors.

The bands would serve as tamper-proof, waterproof tickets. Earlier, there had been the real possibility of losing tokens, like the room keys, park admission ticket, photo pass, Fastpass tickets, or even individual credit/debit cards. The bands would eliminate the chances of the tickets getting lost or wet as all the different tickets would be clubbed in the plastic band worn on the wrist. The program enabled the visitors to have paperless access to hotels and various attractions of the Disney Park; also, it provided hassle-free pre-trip reservations with an additional option of a wireless payment system. Being all-in-one devices, the MagicBands would free the visitors from having to carry multiple paper tickets or cash while enjoying the rides, so they could travel lighter. The bands would allow check-in at FastPass+ locations and the Disney PhotoPass card.31 Highlighting the multi-purpose features of the bands, Staggs said, “The MagicBand gives you all the entitlements of the park, without having to carry 10 to 15 different pieces of paper. This also allows us to unlock more special things for you.”32 The RFID equipped bands were expected to create a paperless environment for the Disney parks.

Staggs emphasized the fact that while collecting Fastpasses tickets, many family groups became separated. The advance online booking through MM+ would help them stay together during the whole trip while having more time for enjoyment.33 From travelling, staying together to enjoying the various Disney attractions, the MagicBands would help all the family members and groups enjoy keep together and enjoy themselves.