Disney’s Magical Big Data Transformation (Source: Harvard.

edu)
By investing in digital technology and big data, Walt Disney World Resort was able to increase
attendance despite rising prices while maintaining the magical, personal experience that
visitors have come to expect.

In 2013, Disney augmented its physical resort experience with data analytics in order to better
personalize guest visits by understanding individual consumer preferences and broader trends.
The overall program of big data at Disney Parks and Resorts was part the MyMagic+
technology suite, while the linchpin of this new initiative was a digital wristband Disney
dubbed “MagicBands”. By investing in digital technology and big data, Walt Disney World
Resort was able to increase attendance despite rising prices while maintaining the magical,
personal experience that visitors have come to expect.

For customers, the RFID enabled MagicBands allow visitors to unlock their rooms, check in
for attractions, and even pay for items. In addition, they gain from personalized benefits that
Disney can unlock based on collected data. For example, park staff can greet visitors by name
and Disney can recommend rides or activities based on previous habits. The wristbands also
act as wearable credit cards, ensuring folks are less likely to pull out their wallets (or their
phones) which can lead to a more immersive experience, allowing Disney World to deliver on
its magical value proposition.

On Disney’s side, there are a number of benefits to collecting individual level data. First,
Disney can now track movement through the park by monitoring which customers go on what
rides and when. This data, especially when paired with additional demographic and
psychographic information, can be used to target repeat visitors with more personalized
marketing. It can also be extremely useful to increase overall park efficiency and monitor
crowd control. For example, one 2016 report quoted Disney CEO Bob Iger saying that
operational improvements from MagicBand data have enabled them to support around 3k more
daily visitors during the winter holidays by “alleviating congestion and helping Disney allocate
staff in critical areas.” As of EOY22, Disney World had not yet recovered to annual attendance
levels seen before the pandemic. However, with 17 million reported visitors that year, it’s still
crucial to manage occupancy and wait times to ensure a good customer experience.

Investments in data analytics are not cheap, particularly when companies need to pay for both
the data collection and analysis. MagicBands are said to have been around a $1B investment.
This was a significant cost given the Parks and Resorts revenue for 2012 (at the time of
wristband development) was only ~12.9B.6 In fact, Disney’s FY13 earnings report calls out
that a portion of Parks’ and Resorts’ “[h]igher costs [in FY2013] were due to spending on
MyMagic+.”
In addition to this upfront investment, Disney had a number of challenges to overcome before
being able to realize the full benefits of the data. Firstly, Disney had to ensure that park visitors
actually used the bands the way they were intended. Wearables was still a relatively nascent
market in 2013 (Apple didn’t launch the Apple Watch until 2014). MagicBands were said to be
glitchy at first and people had to remember to charge them every night (each full charge only
lasts approximately 8 hours). Secondly, once Disney had the data, they needed the right people
and infrastructure to analyse it, draw conclusions, and implement subsequent
recommendations. It’s not unbelievable that data analysis at this scale could require further
investment in compute and storage capabilities. Addressing any talent gaps could involve
hiring and training a new team (which takes time) or shifting employees from other areas of
the business (which could disrupt ongoing operations).

While these are real challenges, it’s clear that Disney found a way to overcome them; park
attendance grew from approximately 18.5M guests in 2013 to 20.96M guests in 2019, despite
ticket prices rising from $95 to about $125. But Disney’s big data story is not yet over as the
world around the park continues to evolve. Future challenges that Disney could face with
regards to their MagicBands and data initiatives are no less daunting than the ones that have
been overcome. With the release of the Apple Watch (and other smart watches), Disney now is
competing for wrist space. In addition, the MagicBands are no longer complementary for guests
and cost an extra $15-$39 depending on the model. If Disney were to leverage existing
technology like smartphones or smart wearables to collect data, they would likely need to
collaborate closely with manufacturers and maintain multiple software versions to ensure
coverage. Finally, data privacy continues to be consideration as individuals better understand
the value of their personal data; Disney might see a drop off in willingness to participate if this
concern grows.