Monday, June 03, 2013

Money, Money, Money

Let's talk about money for a minute.

Three decades ago, Disney built EPCOT Center for $1 billion, and the cost of a one-day pass to EPCOT Center or The Magic Kingdom was $15, a 13% increase over ticket prices just one year earlier.  The cost of admission for a family of four (adult tickets) to visit a Walt Disney World theme park was $60 a day.  With a 1982 median household income of $18,642, four adult admissions represented about 22% of weekly gross pay.

Thirty-one years later, Disney is spending $1 billion on Walt Disney World again, but this time, that billon dollars isn't buying an entire theme park, it's buying a technology-driven marketing tool to roll out at its Florida parks.  The cost of admission for a family of four (adult one-day tickets) to visit a Walt Disney World theme park is $380.  With a 2012 median household income of $50,054, four adult admissions represent about 39.5% of weekly gross pay.

The question that most grates at me is whether the ticket price increase announced just today is one that makes a lot of sense, especially in light of what it "buys" the average guest.

A walk around EPCOT is pretty revealing.  The seldom-used Future World stage area is falling apart.  The Wonders of Life pavilion is just an empty shell of a building.  The upstairs area of the Imagination pavilion is shuttered.  There hasn't been a new country pavilion added to World Showcase in twenty-five years (Norway opened on June 3, 1988 -- happy quarter century!).

EPCOT, the subject of this blog, has certainly seen many better days.  Disney has long argued that EPCOT is reliant on sponsorships, and without sponsors it can't significantly upgrade or add attractions.  But ... it has more than $1 billion to implement a guest-tracking program?

MyMagic+ is a program designed, Disney's own Jay Rasulo freely admits, to keep guests from going to other theme parks.  "We get a bigger share of their wallet," he told media and analysts on a recent conference call.  "Spend more money" is the primary goal of the program, he says.

MyMagic+ gives some people the heebie jeebies, and I'm not sure I'm not among them.  I haven't experienced it yet, but it's a valid question whether I'm comfortable going on vacation knowing every move I make is being tracked.  Some people have said they'll feel more comfortable knowing their kids are easier to find, and that may well be a solid argument.  But certainly there must be better ways to satisfy that concern than to unapologetically turn every single guest into a marketing data point?

Of course, there are ways to opt out of MyMagic+, and I'm just not the sort of person who cares a whole lot about whether Mickey Mouse knows my name when I meet him.  (Hey, if he really wants to know, he can ask, just the way everyone else does.)  Will shaving another 15 minutes off my attraction wait time really justify letting a company know everything they could possibly know about me, including where I am and where I'm going?

The bigger issue to me, though, is that Disney has become so blatantly marketing-driven.  Like the rest of The Walt Disney Company, today's Disney is not about creating entertainment, it's about managing what it's got.  And nothing points that out more than MyMagic+.

Instead of investing $1 billion to make its theme parks better than they've ever been, they've poured a billion dollars into getting more money out of guests.  You already know the weak spots of EPCOT, which could be fixed for a lot less than $1 billion -- but what about Tomorrowland at The Magic Kingdom?  What about the lack of focus and vision at Disney's Hollywood Studios?  (I imagine the visual rights to the Chinese Theater, allegedly the reason the Sorcerer's Hat was built in the first place, would be only a fraction of that $1 billion.)

Equally important: If Disney can spend $1 billion and still make billions and billions of dollars in profit, why does it need to pass the cost on to the consumer?  In essence, the extra money you pay to Disney for admission goes to funding a program designed to get you to spend even more money.

There's little doubt in my mind it will work.  Most guests will see MyMagic+ as a great opportunity to create an even better Disney experience, where "better" means devoid of spontaneity and carefully designed to keep you from venturing to Universal Studios or Sea World.  It's a heck of a lot better for Disney, that's for sure.

But when the average guest is spending more than one-third of his or her weekly income just to get in to the park, this new development is a perplexing one for a longtime EPCOT fan.  It's the kind of impressive technology that EPCOT used to showcase as part of our future ... implemented not for the common good, but for the increased profits of a single company.


David Landon said...

Completely agreed. Universal is spending money to draw people to its parks, and Disney is spending money on an electronic leash to keep people from leaving.

Anonymous said...

Absolutely appalling.

Unknown said...

Once again, David Koenig is proven right: "Everyone knows Disney is a business. They just don't like it when it acts that way."

BillNYC said...

Programs like My Magic+would generally be ok if the company used a healthy portion of the incremental cash it took in from guests b/c of the program and funneled it back into the reason visitors are going there in the first place ... attractions and attention to detail.

riprussell said...

Terrific analysis. A Florida local Season Passholder just shared with me her recent beta experience with MyMagic+. According to her, even infants are given these tracking wristbands. Additionally, the bands are long-range readable throughout the entire resort property. She requested a Disney concierge remove or deactivate the uncomfortable, hard plastic wristband. Seems they discouraged trying to deactivate the wristband with the poorly-designed (purposely?)Disney iPhone portal.

Clearly Disney has lost its original vision of creating unique, inspirational, spontaneous and personal experiences for guests. Now the concept of a "perfect Disney experience" is being defined corporately. This begs the question, what's the solution? Are the patrons so numbed/dumbed-down by the subtle herding by Disney's marketing tactics that they don't even realize they're being manipulated for far-reaching futire marketing ploys?

Anonymous said...

There are a lot of business principals at work here, though not necessarily ones that mesh. I'm reminded of the most efficient method of managing a property if you're landlord: invest the minimum while charging the maximum. Obvious enough, but starkly contrasted with how one would invest in their own home. Hardwood floors aren't a necessity, but they sure are nice. Too good for a rental property when builder-grade carpet is a buck a foot; but no forest is safe if it means I can put some nice natural wood through my own home.

Disney, oddly, doesn't seem to treat its parks like they own them!


Anonymous said...

I just got back from Disney World where I was presented a band upon check in. The box it came in was the size of a shoebox and each shoebox contains one band (think of the paper waste.) Then there is the comfort of the thing... it's annoying at best. It opens your hotel room door. It's your credit card. It's your park pass. And it's creepy. I sat with a Disney Cast member who was a park developer /higher up cast member at Biergarten who was eating with his visiting family and I told him my thoughts. He somewhat agreed without coming right out and saying it's a bad idea. We both agreed that it's simply a way to get people to spend more and more money. I usually buy my tickets in bulk and have them on a card that's swiped upon entering a park. This is not outmoded and outdated. When I asked him how I would buy tickets in bulk in the future.. he of course could not answer and I was referred to the place I hate most. Guest relations.

Anonymous said...

Correction! The card I have with multiple tickets on it is now outdated. The bracelets have replaced them.

Critifur said...

The completely turns me off to even going to the Disney Property. So is there no other option anymore? No more cards? I will not wear a bracelet to go to a park. EVER.