There is plenty of spending these days in the theme park industry.
NBCUniversal, the company which owns the Universal Studios parks in California and Florida, has budgeted $1.1 billion on new spending in their parks this year. It seems they will get a lot for their money: In Florida they will add a second Harry Potter land, a new section dedicated to The Simpsons, and a new Transformers attraction. In California, they will add a Despicable Me attraction.
Yes, these are some huge budgets. Reports state that the entire project to build Epcot (then known as EPCOT Center) was budgeted at $600 million but came in at more than double that cost at $1.4 billion. Keep in mind, that kind of money provided Disney an additional theme park.
Now Disney is spending nearly as much for a technology upgrade. Of course, this technology upgrade is far reaching: new bracelets called MagicBands will act as a combination credit card, room key, and Disney theme park ticket. Plus, visitors get to schedule three or four attractions or events in advance allowing them to get on their favorite rides with little or no wait.
Some think that it is the holy grail of theme park planning: all the fun with no lines.
Others think that Disney is spending a huge sum of money on something that will actually reduce fun and eliminate spontaneity – especially for those folks who aren’t big planners.
How Disney Benefits
Disney expects their investment to in MyMagic+ to pay off in many different ways:
MagicBands make purchases easier: Because you will be able to buy food or souvenirs by just touching your MagicBand to a payment terminal and the entering a PIN, buying stuff is easy. Very easy. When it is easy to buy, people tend to buy more.
Disney can collect personal data: With the RFID technology built into the MagicBands, Disney will be able to collect huge amounts of new data about visitors. What attractions do they like or visit multiple times? What is their favorite character? When do they come and go? This information is valuable. Disney will be able to monitor traffic flow and make adjustments to smooth out their operations. They will also be able to create special offers: Today, it might not be worth creating special merchandise for the Tomorrowland Transit Authority / PeopleMover, since there is no gift shop directly connected to that attraction, but what if Disney knows you are a PepoleMover fan (based on data they collected from your MagicBand) and they send you a special merchandise offer when you get home?
Visitors spend more time on property: Disney’s research shows that when people plan in advance to spend their time on Disney’s property, they don’t tend to leave. Today, many people add a day trip to another away-from-Disney attraction. They might go to Universal Studios, Sea World, Wet N Wild, or one of the many shopping areas around Orlando that are not controlled by Disney. Each time that happens, someone else, not Disney, gets the profit. When Disney locks you into plans to stay on their property, in advance, they get more of your spending.
Perhaps it doesn’t seem like Disney is winning the arms race of theme park spending against Universal Studios. Since Universal spends a billion or so on their much smaller property, it makes a bigger impact. Because Disney is so much larger than Universal, $1 billion doesn’t seem to buy as much.