It looks like big changes may be coming to Disneyland’s annual pass program.
Again.
We told you yesterday that Disneyland has suspended sales of all levels of its new Magic Key pass program. Magic Key replaced Disneyland’s longtime annual pass program, which the resort ended in January 2021, when its theme parks were closed by the state due to the pandemic.
Adhere reopening in April 2021, Disneyland introduced Magic Key in August. Like the Flex Pass in Disneyland’s old AP program, all levels of Magic Key required reservations to use on any specific date, with the four tiers of Magic Key each allowed to hold a different number of reservations at once, subject to different blockout calendars.
Competition for available reservation spots became fierce, and Disneyland declared the most expensive - and least restricted - Magic Key tier to be “sold out” in October. Then Disneyland closed the next most expensive level the next month.
Yesterday, Disneyland closed sales of the final two levels, including one open only to Southern California residents. That means the Magic Key program is now closed to new pass holders, less than one year after it opened.
Existing Magic Key holders will be given a renewal opportunity when their passes begin expiring this summer. But that’s where things get… unclear.
I had the opportunity to speak with a Disneyland spokesperson before publishing the Magic Key news yesterday. When I asked to confirm that Magic Key holders would be able to renew their current pass when it expires, the spokesperson could not confirm that, saying only that current Magic Key holders would have the opportunity to renew into several pass types.
Two takeaways from that: One, Disneyland has not decided yet exactly what it will be offering Magic Key holders when their passes expire, implying… Two, that Disneyland is considering, and likely leaning toward, making changes to its annual pass lineup.
The biggest change Disneyland could make to Magic Key is ditching the advance reservation requirement. But Disney has made no move toward eliminating that requirement on any ticket media in either Anaheim or at Walt Disney World in Orlando. Opening admission to all eligible pass holders on any given date would undermine Disney’s effort to use reservations to “smooth” its daily attendance levels. So as long as Disney continues to require reservations for daily tickets, I expect Disney to continue to require them in some form for passes.
Disneyland promoted a reinvention of its annual pass program when the parks reopened last year. But what we got looked a lot like four tiers of the old Flex Pass. Perhaps this time, Disneyland might consider something more transformative for its pass program.
Options could include passes with a defined number of visits during the year, or ones that allowed visits for a certain number of days during each month of the year. Or Disney could just dump the annual passes and offer Magic Key holders discounts on multi-day ticket packages when they “renew.” I welcome readers’ suggestions for Disneyland, in the comments.
Ultimately, however, Disney can do nothing to satisfy long-time annual pass holders who want Disney to return to old-school APs without reviving the attendance load problems that ultimately led Disneyland to kill that program when the pandemic provided it that chance. That likely will make any change that Disneyland implements unpopular with a significant number of its long-time fans.
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I think that’s good perspective Manny. There’s certainly a longer post to be written about Disneyland as a community asset and the inherent flaws with that perspective (it’s only ever been a community asset for those who could afford it, and it has become clear Disney is leveraging that position politically) but ultimately it might be best for Disney to make a clean break and operate as a tourist destination first.
That might cause hurt feelings, but it may be the best (or simplest, anyway) route out of this.
Unfortunately on this side of the counter, we have no idea what data Disney is looking at to guide their decision making process. As guests and fans, we can only go off of how we visit parks and observe (and read about) others' visits to the parks.
As a business and publicly traded company, Disney obviously is focused on maximizing revenue at whatever cost, and that attitude has become more intense as red ink splattered across earnings reports during the pandemic and continue to pile up today as labor and costs of goods get exponentially more expensive and unpredictable. Disney is not running a charity, but much of the company's popularity and rabid fanbase is a result of savvy business moves that typically put the customer first and kept profits restrained, but still flowing. Wall Street simply can't tolerate the notion that a company is not running full bore, and will immediately react if it's disclosed that every opportunity to generate revenue was not exploited to its full potential. Therefore, you have a conflict between managers trying to grow and generate profits like gangbusters alongside managers trying to pump the brakes to maintain customer loyalty into the future so there's room to grow 5+ years down the road.
That's what I think happened with Magic Key. You had strong visceral reactions from the fanbase about the changes to the AP program that were being suggested following the reopening of the parks. Managers focused on pleasing investors wanted to exploit the "captive" audience and pent up demand to the maximum extent possible to generate the most revenue, while other managers lobbied to maintain a system similar to the old AP program to maintain the rabid fanbase and cater to locals with more limited economic means. I contest that Disney could have charged well over $500 for their lowest tier Magic Key and well over $2,000 for the upper tier passes and still generated the same amount of revenue, but in the end, they kept prices relatively unchanged from the AP program, and used Park Pass as the primary tool to limit the value of Magic Key. After all, a season pass program is all about the value compared to buying single day tickets (just like a Season Ticket to your favorite sports team).
So in the interest of making Magic Key "accessible" (in terms of cost), Disney had to compromise by limiting and restricting the ability of guests to extract maximum value from their Magic Keys beyond normal blackout calendars and used the capacity limits from the pandemic as cover. To go back to the sports analogy, it would be like the Dodgers or Yankees selling "season tickets" that gave you access to every home game, but your chance of actually getting into the stadium for the Giants or Red Sox, respectively, were left to luck and an individual's ability to reserve those tickets well ahead of time. What is being billed as a "season ticket" is actually not a ticket to every game unless you work to secure those tickets ahead of time and get lucky.
Magic Key buyers didn't expect it to be so difficult to get reservations, while Disney probably didn't expect so many holders to try to maximize their Magic Keys to the greatest extent possible. Disney never published how many Magic Keys they sold or how many Park Passes are available on a given day, so guests don't even know how many other people they're competing with, while Disney didn't seem to realize that someone paying $500 was going to try to visit at least 5 times over the course of the year to offset the cost of the Magic Key.
That's where I question where Disney got their data from, and what numbers they looked at to make their decisions. Certainly there is probably a percentage of APs and "season ticket" holders of all types that don't use every ticket they can to a park or sports team (though sports tickets give you the opportunity to sell them on an open market to recoup those losses). When it comes to APs/season passes at theme parks, I would estimate that probably 10-20% of a park's season ticket base does not offset the cost of their pass with a minimum number of visits. However, I would also estimate that probably 30-40% of the season ticket base maximize their passes to be worth at least twice (if not even more) of what they paid (for most Six Flags passes that would mean visiting 4-6 times per year, while for the lower tiers of Magic Key that would be 10-15 visits). For a park like Disneyland where capacity has become a HUGE concern, that means for every 10-20 guests that don't visit enough to make up for the cost of the pass, there are another 30-40 that visit twice as much, which more than offsets for those guests that don't bother using their passes.
That's where I think Disney completely misread their customers. They've begun treating their customers like data points instead of fans, who are incredibly loyal and dedicated to their brand. If you give them something, even at a discounted cost, they will do whatever they can to stretch it as far as it can go because they love the brand so much.
Now, while I don't think Disney should necessarily exploit this loyalty and dedication, they should have definitely gauged that loyalty a bit better by using price controls and other limiting techniques (aside from the nebulous Park Pass system) to market Magic Key. A true "All-You-Can-Eat" pass for Disneyland/DCA should have been priced at a minimum of $2,500/per/year. However, in order to offset that massive cost, it should have included other tangible perks like park discounts, special events, exclusive merchandise, and other surprises. Look at the cost of a season ticket for a premium seat for a major college or professional sports team, and you'll see $2,500 is probably on the very low end of that range.
By pricing the highest tier Magic Key at $1,399, it became a no-brainer for those with the means to purchase the Dream Key, which was deemed "sold out" in a matter of months. Then, when those Key holders with the highest status tried to make reservations only to find out that dates were sold out, they claimed "bait and switch" from Disney because they were competing with lower tier Key holders on common visiting dates (i.e. non holidays and weekends). The guests that were paying the most money were the ones getting the short end of the stick, which could have been avoided had Disney simply aggressively priced the highest tier to force more guests to buy the lower tier passes. What ended up happening is that the highest tiers sold out, leaving scraps for the consumers who took a wait and see approach to determine whether the program would actually work. Now those who saw the complaints and issues with the program and were waiting for Disney to make changes are stuck in the cold without any sort of chance to invest in the parks they've loved and visited all their lives. It's a lose, lose, lose situation that Disney now has to rectify and dig out from.
The Magic Key program has been a monumental failure, which is simply shocking given all the data they should have on visiting patterns, customer loyalty, and spending habits. In fact, while some might suggest that single day visitors spend more money per visit than APs, I would argue that if you aggregate spending over a lifetime (excluding lodging, especially considering DL's inability to keep all guests on Disney property like they can at WDW), an AP almost certainly spends more per visit when you include family/friend visits, big ticket purchases/collectibles, tours/upcharges, and other items that are geared specifically to locals/frequent visitors.
The question then becomes, what should Disney do?
Tear down and rebuild the season pass/membership program first by eliminating the lowest tiers of the AP/Magic Key program. Disney is maybe breaking even on those guests at the current costs and creating dissatisfaction with the lack of Park Pass availability. Those lowest tiers should be replaced with "memberships" that provide a certain number of points each month like a time share. If you pay monthly, you receive points each month, but if you pay for the year up front, you get all of your points at the beginning of the year. Guests then trade in points for admissions (or other rewards/perks), but the price of each date is variable and fully dynamic (but with a ceiling and floor for what an admission can cost in terms of points), and the system would show how many membership admissions were remaining for any given day in real time (like tickets to a concert/sporting event).
Let's say you get 100 points per month and got that deposited into you account today. You could visit on Tuesday, June 28 for 100 points (advanced reservation), but if you wanted to visit tomorrow (June 2) it would be 200 points (short notice), and if you wanted to visit on the Saturday of Father's Day weekend (June 18), it would be 250 points. If you didn't have enough points you could purchase points at a $1/point exchange or as a bulk purchase of say $1,000/1,500 points (kind of like chips at Dave and Buster's or other arcades). You could also earn points through loyalty (spending money in the parks/Downtown Disney) and being a long-time member, but you could also lose points for not showing up for a reserved visit without cancelling ahead of time. The tiering of the passes would provide for additional points per month, and add extra perks to your pass (Genie+, discounted/free parking, park discounts, and exclusive gifts), but the exchange of points for admission would remain dynamic and the same for ALL members.
Any unlimited pass (highest tier) would need to be priced at a truly premium level, but should also include premium benefits. Trying to have it both ways just didn't work with Magic Key, and the failure of the program is the result. Die hard Disneyland fans living in Southern California can afford $2,500 or more to have truly unlimited access to the parks, and they should be given that VIP treatment that includes free Genie+ on certain days, comped ILLs from time to time, ERT events, and other perks that don't cost Disney a dime, but deepen customer loyalty so if prices need to go even higher to keep the club exclusive, there's room to do that because those holders feel special.
Ultimately, Disney needs to better understand their customers, and how they use their passes, which was completely lost what they rolled out Magic Key. The bottom line is that locals and loyal fans want to visit the parks, and they want a system that allows them to do that with minimal fuss. However, they also want to get value from any system that requires them to pay up front or in monthly installments.
I basically agree with everything Russell said. Ultimately, as a potential customer and someone who also owns season tickets to a local sports team it’s jarring how much easier it is for me to process owning the season tickets vs. the magic key. I acknowledge much of that is now baked into the bread (I’m not competing for the view of the field with premium season ticket members) but there’s something refreshing about how simple it is to just … have tickets to the 12 home games and that be the end of it. I think that’s something my girlfriend and I will consider if/when we get a renewal notice from Disneyland.
"I can only imagine the negative feelings this may cause in longtime local fans. As an out-of-towner we pay higher prices and spend more at the parks because a day at Disneyland is a big deal planned months ahead and to see locals clog up the park for an evening trip is frustrating. But then I know if I lived in SoCal I would be one of the locals spontaneously visiting after work or whatever, upset tourists are filling up 'my' park."
The whole point of Disneyland is to be a tourist attraction.
As far as I know, buy tickets, go to park is the way it works at every park in the world…except Disney parks. Management is making it more complicated.
Simple solution
Cheap passes: reservations
Expensive passes: no reservations
It’s really not that difficult…Just get rid of the whole AP / Magic Key program / park reservations all together…
Offer discount tickets to locals…Have the amount of discount be based on the dates people want to go to the parks…Off season being a larger discount amount etc…Maybe even throw in “discount” blackouts around holidays and historically peak attendance times throughout the year…
That will make locals happy by continuing to give them discounts and allowing them to go when it’s convenient (and budget friendly) according to their needs…It’ll also taper the locals park capacity numbers during the high tourist points throughout the year so they won’t have to worry about a massively clogged up park…
I’m on the side of just getting rid of the season pass all together, but Disney won’t do that when there are crazy fans willing to dump their retirement to visit their parks year around. How about getting rid of the payment plan? If you want to be a part of this exclusive membership you have to pay the total cost upfront.
Robert, I always find Disneyland fans interesting because I think they are much crazier than sports fans. I’ve been an Oakland A’s season ticket holder in the past and while we do have die hards and the passion is there, there are a lot of us who understand that the owner is holding Oakland hostage to build him a new stadium. We all know the A’s owner is a billionaire and should build the stadium himself, but the fans have had enough and are willing to say good bye (We have the lowest attendance this year).
However, all i heard from Disney fans is whining and complaining that its’ not fair or the magic is gone but yet they continue to shell out money year after year. I’ve seen the “I’ve had enough”, only to learn later they actually visited the park. It makes for a great study on fan addiction who say one thing but yet continue to get their fix in regardless of the price increase.
I am curious what is going to happen 15 to 20 years from now because all the complaining and moaning are fans who seems to be 40 years and up. The fans who grew up in the 80’s and 90’s who continue to go and drag their kids along because the last I check there are not a lot of 20 years old dying to visit a Disney theme park. My son just turn 7 and he knows what Disneyland is but if he had a choice he picking Legoland or Knotts Berry Farm over Disneyland. There seems to be a notion that most kids know Disney is expensive but don’t have the same passion as us who grew up in the 80’s or 90’s to make it a yearly thing or rather plot down a pile of cash doing something else. I’m sure its different for those who live near the park but i am curious to see what Disney look like when i become 60 plus and there is so much competition for your entertainment dollar. I know my son is very excited for that hot wheel theme park to open up in Arizona.
While I agree that Disneyland is technically a "tourist attraction", it still needs locals to support it to make it a viable year-round destination. Locals help to smooth out the ups and downs of the seasonality of vacations/tourism. Not even the most popular tourist destinations in the world can survive without some local support, especially a destination that is expensive to visit as a theme park.
If park operations needs to lean on locals to fill the park, they should be given some type of discounts/benefits for that continuing support, hence the idea of a season pass that rewards those who can visit many many times per year. I think completely eliminating season passes (or similar programs) would be suicide for a place like Disneyland. Yes, the parks would survive, and probably still make money, but there would be a loss of pride in the parks and the flair that locals bring as part of their visits and involvement to shape the direction of the parks.
Just giving locals some form of discount on regular daily admissions isn't enough. There has to be some type of frequent visitor/season pass program that rewards and provides value to locals who form the backbone of the daily visitor count.
Only issue with catering to locals is, and this has become painfully obvious over the past handful of years, is they they keep complaining about how Disney is pushing them to the side; all while continuing to spend huge amounts of their money for the parks…
Disney can tell them to kick rocks and they’d still pay for the privilege to get into the parks, then tweet how the “magic is gone”…Rinse and repeat…
To say that locals make up the large portion of park attendees (At least in Disneyland) isn’t an exaggeration at all…But Disney knows they’ve created a problem with the tourist segment of their park business…When Joe Schmo and his family from across the country can’t book a reservation for a trip that he’d spend multiple thousands of dollars on because that local who might stop in and maybe pick up a Spirit Jersey then the writing is on the wall…Or better yet Joe does manage to take his family on that Disney trip only to be met with crippling crowd levels because the locals wanted to stop by for a couple selfies and a ride on Pirates after work…Joe will find someplace else to deposit his money then come to the glaring realization that he SAVED a bunch of cash on his trip in comparison…How long do those huge park numbers last with a looming recession and with Joe deciding not to drop his coin on a Disney vacation?…The ~maybe I’ll buy a Sprit Jersey~ audience isn’t going to keep things in the green for very long…
But I digress…Disney needed to make changes so they did…They likely thought the up-charged and renamed AP program would cut the local sales down a bit and funnel them into those lower tier options…Problem is they misjudged the locals who were willing to continue paying them for the privilege to enter the parks so they can relentlessly complain about how much the “magic is gone”…Now Disney is in trouble because the risk losing that massive tourist coin all so locals can continue openly and publicly dragging the company through the dirt for not catering to them…
I say this as a lifelong AP holder (pre-COVID that is)…What this boils down to is the absolute fact that locals don’t want to share THEIR park…Simple as that…Disney needs to ensure the tourist dollar is there so what are they supposed to do now? The locals have proven beyond the shadow of a doubt that they’ll still pay to get in the parks…Now Disney needs to shore up those tourist numbers and that’s exactly what they’re doing…The local coin is secured no matter what, or at least that’s how it looks…Now at the cost of that blind devotion the locals will willingly take a backseat to the tourist leaning promotions and such…
But they really didn't change the AP program when they introduced Magic Key, they just repackaged it under the new name, and then required Park Pass, which they were doing for daily admission anyway. Disney kept the prices pretty much the same and tried to use Park Pass to control demand (instead of pricing controls). That's the problem, Disney never hit the pain point for any of the locals who used to have APs to wean them off the program.
Disney tried to have their cake and eat it too, and produced an utterly worthless product that Magic Key holders will keep buying because they're afraid that even this iteration of APs is better than what Disney will introduce next.
My point exactly…Disney gave them a lesser version of the AP program with more restricted park access hurdle in the form of reservations…What did the local customers do? Ate it up while complaining about it every step of the way…The local money is essentially secured…If they’ll stick with the parks through the Magic Key / park reservations nonsense then they’ll stick with them through anything…This is Disney’s move to secure the tourist money…
I still say Disneyland should abandon any sort of unlimited access pass and go for multi-visit tickets, where guests purchase a set number of visits that are good for 12 months from the first visit date. Something like five visits for $~500, ten for $~900, fifteen for $~1,200, and twenty for $~1,400 would probably be reasonable, as that would be a discount per visit without providing unlimited access. Base tickets would be one park per day and valid Mon-Thu, with upcharges to add hopping and weekend visits (which could be added for the whole ticket up front or on a day by day basis as needed). For payment plans, guests would pay the value of the first visit up front, then would unlock additional visits as payments were made, with the option to pay in advance if they don't want to wait for their next day to become available. If a guest needed more days, they could add them one by one at the per day rate of the ticket, or just buy a new ticket after using up their old one. This would also be admission only...no discounts or freebies on things that are upcharges for other guests.
This would be a huge win for Disney, as it would 1. Encourage locals to visit regularly but not excessively, 2. Discourage short visits due to the high cost per visit, 3. Increase the revenue from frequent visitors, and 4. Decrease the crowd levels at the park so the experience is more enjoyable. Would it frustrate people who have become accustomed to passes? Absolutely, but those who care enough to visit will adapt and those who don't likely would have left anyway. Besides, a true year-round vacation destination shouldn't need frequent local visits to remain stable, and there's always the option of short term discounts to boost the least popular months.
@AJ - I think your concept would work to achieve Disney's goals of keeping locals from mobbing the parks. However, I think they'll loose a lot of loyalty if it's packaged as essentially a discounted multi-day admission booklet. That's why I think they should create a system like a timeshare where guests purchase points with park visits costing different amounts of points depending upon what day they want to visit and how far in advance they book their tickets. If they still allowed guests to pay monthly, they can deposit points on a monthly basis that gives incentives to those who can pay for the year up front.
I also strongly feel that Disney can still provide unlimited admission passes (with no blackouts or other hoops), they just need to price it at a level that sufficiently discourages casual fans from purchasing it, and only those who will actually use and extract value from the pass will even consider buying it.
Russell, my main argument against the timeshare model that you proposed is that it would be way too complicated for most to manage. Even before everything changed, there were more than a handful who didn't even understand the concept of a blockout date, so adding more and more complexity is likely to create nothing but headaches for both Disney and the guests who are supposed to be enjoying their visit to the resort. Any change needs to simplify things from the guest's end, not add more barriers to entry.
As for an unlimited pass, I think you may underestimate how rabid locals are for Disney. A fair few passholders were willing to take out second mortgages to maintain their APs, and when I was in college I'd say about half those who had an AP were giving up basic essentials to keep it. If Disneyland were to offer an unlimited pass, it would need to either be astronomically expensive (think $~4,000) or need to have a really low cap (think ~100,000 passes) in order to not overwhelm the parks.
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This is a complicated issue. As a tourist who has to drive for a half a day to get to Anaheim, not having the parks mobbed by AP's is welcoming news. But at the same time I can only imagine the negative feelings this may cause in longtime local fans. As an out-of-towner we pay higher prices and spend more at the parks because a day at Disneyland is a big deal planned months ahead and to see locals clog up the park for an evening trip is frustrating. But then I know if I lived in SoCal I would be one of the locals spontaneously visiting after work or whatever, upset tourists are filling up "my" park. And then obviously you add the whole reservation thing and controversy there.
Complicated stuff, we'll see what Disney decides, appreciate the coverage here.