Can 'Magic' scale? That's Disney's billion-dollar question
Published: November 26, 2013 at 10:59 AM
The company is spending more than a billion dollars on its NextGen initiatives in the theme parks, the largest of which is MyMagic+, a new system for visitors to manage their Walt Disney World vacations. Under the system, visitors are supposed to use Disney's website and mobile apps to book reservations times for restaurants, rides, and shows, while they'll use RFID-enabled "MagicBand" wristbands as their admission media, hotel room key and "credit card" during their stay at the resort.
MyMagic+ has led Disney to create a new ride reservation system, Fastpass+, to run in parallel with its existing Fastpass system. In addition, Diseny's had to merge this new Fastpass+ system with its existing restaurant reservation system to create MyMagic+ profiles for all participating visitors. The system also has to hook in with Disney's hotel reservation system, including managing charging privileges to visitors' resort bills from the MagicBands.
Disney's had all the pieces of this puzzle before, with Fastpass, ADRs, and Keys to the World cards. But MyMagic+ puts them all together and expands the system to all Disney World hotel visitors, some of whom might not have used all those systems together in the past. Eventually, MyMagic+ is supposed to accommodate all Walt Disney World visitors, including local annual passholders and even visitors staying off site.
As it stands now, MyMagic+ represents a massive increase in scale for Disney's vacation management and reservations systems, with another massive increase in scale to come as annual passholders and "day" visitors come into the system. And, as Disney is learning, scale is the natural enemy of information technology applications.
The federal government illustrated this lesson with its Healthcare.gov system, which was intended as a federal back-up in case a few states declined to create their own health care insurance marketplaces, but instead became the primary exchange for the majority of Americans as most states elected not to develop those marketplaces. In addition, Healthcare.gov had to service millions of low-income Americans who were supposed to have gotten health insurance through an expansion of Medicaid, but who were left without coverage when their states declined to accept federal money to pay for that coverage. (A general rule of IT is that as your audience's age gets older or its income gets lower, your user interface must get simpler.) A system that was designed for a relative handful of middle-income consumers instead had to serve millions more users across a wider economic spectrum.
That's a massive change in scale. Throw in a DDOS attack at launch and the system crumbled, forcing the government to scramble its private contractors to recode it. Fortunately, that seems to have worked, and the federal website now is enrolling people at an ever-increasing rate.
Disney would be fortunate to turn around MyMagic+ as quickly. Before MyMagic+, Disney World theme park visitors used a couple of Fastpasses a day, on average. In practice, many visitors used many more Fastpasses than that, but they were balanced by individuals who didn't use the system at all. Under MyMagic+, everyone gets three Fastpass+ reservations a day, which are assigned by the system if the visitor doesn't choose his or her own selections.
Fastpass+ also covers every attraction in the park, including parades and even some counter-service restaurants — locations that never had anything to do with Fastpass before. The old Fastpass system also didn't account for families. You stuck a ticket into a Fastpass machine, and got a return time back. Every once in a long while, you'd put, say, four tickets in a Fastpass machine and get three passes for a 3:10 return, then one for a 3:20, as the 3:10 return time "sold out" while you were submitting your ticket cards. The system didn't know that you were trying to get four times together.
MyMagic+ tries to associate multiple visitors' profiles, to help families traveling together to stay together. This starts with ensuring that people can all get into their hotel room. But it extends to managing control of kids' charging privileges and Fastpass+ times, as well. From visitors' reports, Disney's Guest Relations staff has had to accommodate thousands of park guests who've had problems with MyMagic+ not being able to manage properly the various selections and profiles of families and groups visiting the resort. It's just another layer of complexity that Disney's IT systems haven't had to manage before.
Add up all the flaws, flubs, and bugs, and Disney's not been able to expand the system on the schedule it had planned. In addition, Disney's still spending money on fixes and implementation, instead of earning money from the increased guest spending it had anticipated with a full roll-out by now. That means the Disney Parks have to make up the difference somewhere else in its budget.
MiceAge reported thais morning that's happening as Disney delays, cuts back, or cancels almost all upcoming capital expansion projects at its theme parks in the United States, Paris and Hong Kong. (Remember, the Tokyo parks are owned and operated by Oriental Land Company, which has its own budget.) That means no Monstropolis at California Adventure, and delayed Star Wars lands at Disneyland and Disney's Hollywood Studios. It's worth noting that Disney's dealing with two issues simultaneously: a reduction in planned profits due to the MyMagic+ scale issues, and a rapidly approaching deadline to get Shanghai Disneyland completed.
If MyMagic+ had been delivering the cash the company had anticipated, Disney could have dealt with Shanghai by staffing up to get that project completed on time. But under a budget crunch, the numbers work better by diverting existing staff to Shanghai instead. That means a delay in their current projects. It's not a given, however, that even if MyMagic+ had been an undisputed success that Disney would have spent that money to staff up to overcome Shanghai delays. It could have chosen to bank that cash and reassign existing staff to those projects anyway.
Of course, plans and budgets change constantly, especially in companies the size of Disney. But with more than a billion dollars on the line, Disney's facing some tough choices the longer that MyMagic+ takes to get running smoothly.