5 Things The Walt Disney Co's Management Wants You To Know

[John]

From The Motley Fool:

Walt Disney crushed analyst expectations on May 5, reporting positive surprises on both the top and bottom lines. Stabilized by this fine second-quarter report, Disney shares continue to ride high. Current share prices sit just below Disney's all-time highs, and the stock has more than tripled in value over the last five years.

The numbers seldom tell the whole story, though. Serious Disney investors would be wise to listen in on the company's earnings call with Wall Street analysts, when analysts were given the chance to ask probing questions and management explained the quarter in far greater detail than the simple earnings report.

The magic of MagicBands
CEO Bob Iger loves the way Disney's MagicBands have improved the visitor experience at Disney World, but he can't quite put a finger on how much the system is helping his business:

MyMagic+ has had an impact, especially as we've now sort of anniversary-ed the start-up costs that we had there. And it really is integrated into the total Walt Disney World guest experience. So it's difficult to say just how much it contributed because it's so integrated, but it clearly was a contributor to results. Roughly half of our guests now are entering the parks with MagicBands, and the response from those guests has been overwhelmingly positive. So we're very pleased with that.

MagicBands or MyMagic+ has been a driver. Going forward, it will still be a factor but perhaps not with as great an impact as we've seen in this quarter. Again, it becomes even more integrated into the base experience.

For those unfamiliar with MagicBands, they are Disney's way of dipping a toe into the trillion-dollar waters of the Internet of Things.

Disney World guests can set up their park experience days or weeks in advance, then link their plans to a smart bracelet that's worn in the park. Disney's systems always know what you like, where you are, and which of your favorite rides have the shortest lines. The bracelet nudges you in all the right directions, shortening the time spent waiting in line under the merciless Florida sun.

"Any sufficiently advanced technology is indistinguishable from magic," in the words of Arthur C. Clarke. That's the feeling Disney is aiming for here. Happy guests spend more money at the resort -- and from their perspective, the magic is real.

Despite tough currency exchange effects dampening Disney's overseas results, the parks and resorts division recorded 6% year-over-year sales growth in the second quarter. Operating profits for that segment rose a staggering 24%. According to Disney, these results sprung from higher ticket prices plus "increased food, beverage and merchandise spending."

As Iger explained, it's hard to tease out exactly how much the MagicBands lifted the average spending levels, but it's an undeniable growth driver. I would be shocked if Disney didn't roll some version of MagicBands out across all of its parks, resorts, and cruise ships over the next couple of years. As a Disney shareholder, I'd even be downright disappointed.

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[DisneyGiant]

The bracelet nudges you in all the right directions, shortening the time spent waiting in line under the merciless Florida sun.

How does the magic band "nudge" me? Don't I always have to be looking at the app to get "nudged?"

[Reedy Creek Buccaneer]

Evidently the author has never used a MagicBand, or when we get to MagicBand++++, they will magically pull us around to our favorite attractions. Maybe we will just hover? I can't wait! LOL!

[John]

Evidently the author has never used a MagicBand, or when we get to MagicBand++++, they will magically pull us around to our favorite attractions. Maybe we will just hover? I can't wait! LOL!

I do think they are considering the app with the MagicBand a integrated package... now to me, that would be more useful if the band had a screen and gave you tidbits of information like my Microsoft Band does.

However you guys are missing the best part in my eyes:

CEO Bob Iger loves the way Disney's MagicBands have improved the visitor experience at Disney World, but he can't quite put a finger on how much the system is helping his business

All I can say is WOW. A Billion dollars and they can't figure out how much it's helping the business?

[conan617]

However you guys are missing the best part in my eyes:

CEO Bob Iger loves the way Disney's MagicBands have improved the visitor experience at Disney World, but he can't quite put a finger on how much the system is helping his business

All I can say is WOW. A Billion dollars and they can't figure out how much it's helping the business?

Call me a skeptic, but when I read that statement I thought - Yeah right, a mulibillion dollar company that can't figure out to the penny the return on its investment? Heads would roll and jobs would be lost if that was the case.

I figured Bob was choosing to keep the secret sauce under wraps a little longer until the rest of the plan comes together.

[WiltonJohn]

I figured Bob was choosing to keep the secret sauce under wraps a little longer until the rest of the plan comes together.

That's my thought too.

best,

............john

[NewDVCowner]

I may be way off on this, but there was an article posted on the LA Times website dated yesterday that quoted Mary Niven, vice president for Disneyland Park saying that Disneyland does not plan to offer the write bands at the park anytime soon. She went onto say that the wrist band wouldn't work for Disneyland's guest demographics and that 'many visitors are local residents who do not stay for long periods at the nearby hotels, where the bands would be used heavily.'

It almost sounds like they feel that they're most used to unlock doors at hotels.

I thought from the beginning it would be a hard sell to use them at Disneyland with pre-booking fastpasses. So many of the guests at Disneyland are locals with annual passes that are certainly not going to be booking rides 60 or even 30 days ahead of time.

[Priority Four]

I figured Bob was choosing to keep the secret sauce under wraps a little longer until the rest of the plan comes together.

Agreed. He was not going to say "Yep. We're making a killing on it right now and you can expect it to continue."

The buzz from people sharing photos of Magic Bands on social media is worth a fortune.

[John]

Agreed. He was not going to say "Yep. We're making a killing on it right now and you can expect it to continue."





The buzz from people sharing photos of Magic Bands on social media is worth a fortune.

And what if they aren't... What if they haven't lived up to the billion dolls investment. The way I read it was we spent a lot of money on upfront costs where we weren't sure of the payoff. Now that we are integrating it into the business, we'll see. He can't promise results he doesn't know they can deliver and mislead shareholders. The tone sounded cautiously optimistic at best.

[WiltonJohn]

I think the "add-ons" that I saw in the parks for the Magic Bands on a lot of people told a part of the "acceptance" story with the public, at least at WDW. People BUYING doo-dads to add to the bands, people BUYING fancy bands, and so on. (Think about it... BUYING fancy non-essential, non-functional, over-priced holders or decorations for your room key and/or your credit card!)

I think that a lot of the people who don't like the Magic Bands and the FP+ business are the people who frequent places like Intercot and the other Disney related forums. I think Disney's main market is not the repeat, repeat, repeat, totally-addicted guests....... it is the newer families who are going for their first few times.

And I think for those folks...... the Magic bands and the ability to pre-plan likely are looked at as "good things".

Personally... I found the Magic Bands kinda' "handy". (But I'd never buy any of the 'fancy stuff' for them! Crazy.)

The accessibility limits and long range planning imposed by FastPass + however......... not so much. I predict that aspect will change a bit in the near future.

best,

................john

[Cinderelley]

I liked the magic band in some ways. I enjoyed not having to carry around my room key, park ticket, credit card, and driver's license. I hated the fastpass+ aspect. It may be hard to quantify due to some people liking part but not all of it.

[Tekneek]

It almost sounds like they feel that they're most used to unlock doors at hotels.

That was the single best feature when we used them. The ability to open the door with something you are already wearing that does not have to be removed in order to be inserted into the door is a winner (same for the use as park ticket media as well). The rest of it was meh at best.

[RunDMV]

I do think they are considering the app with the MagicBand a integrated package... now to me, that would be more useful if the band had a screen and gave you tidbits of information like my Microsoft Band does.

However you guys are missing the best part in my eyes:

CEO Bob Iger loves the way Disney's MagicBands have improved the visitor experience at Disney World, but he can't quite put a finger on how much the system is helping his business

All I can say is WOW. A Billion dollars and they can't figure out how much it's helping the business?

Because it is a tacit admission that it is not helping the business. I am not alone in vowing that as long as FP+ exists, I'll never set foot in the parks. There are basically two kinds of guests, now. One and done visitors and the Disney die hard never going to criticize the mouse visitor.

I'd love to see the stats on long term, repeat guests who gave up after FP+.

[joonyer]

Because it is a tacit admission that it is not helping the business. I am not alone in vowing that as long as FP+ exists, I'll never set foot in the parks. There are basically two kinds of guests, now. One and done visitors and the Disney die hard never going to criticize the mouse visitor.

I'd love to see the stats on long term, repeat guests who gave up after FP+.

I can understand your frustration. And I agree that voting with your wallet the the best way to have your vote heard.

On the other hand, I don't expect much to change. Disney has no reason to care if they are losing long-term repeat guests so long as the parks are at near capacity, rooms are being rented, and DVC units are being sold as fast as they can build them. Until a LOT more people vote NO with their wallets Disney is going to keep on keeping on this same course of action.

[RunDMV]

I can understand your frustration. And I agree that voting with your wallet the the best way to have your vote heard.

On the other hand, I don't expect much to change. Disney has no reason to care if they are losing long-term repeat guests so long as the parks are at near capacity, rooms are being rented, and DVC units are being sold as fast as they can build them. Until a LOT more people vote NO with their wallets Disney is going to keep on keeping on this same course of action.

I am afraid I agree with you.

[baldburke]

I can understand your frustration. And I agree that voting with your wallet the the best way to have your vote heard.

On the other hand, I don't expect much to change. Disney has no reason to care if they are losing long-term repeat guests so long as the parks are at near capacity, rooms are being rented, and DVC units are being sold as fast as they can build them. Until a LOT more people vote NO with their wallets Disney is going to keep on keeping on this same course of action.

We don't have the numbers, but I'd be willing to bet the number of people abstaining from WDW due to FP+ are few and far between. If you don't like WDW with FP+ now then you probably weren't much of a fan before.

I may be way off on this, but there was an article posted on the LA Times website dated yesterday that quoted Mary Niven, vice president for Disneyland Park saying that Disneyland does not plan to offer the write bands at the park anytime soon. She went onto say that the wrist band wouldn't work for Disneyland's guest demographics and that 'many visitors are local residents who do not stay for long periods at the nearby hotels, where the bands would be used heavily.'

It almost sounds like they feel that they're most used to unlock doors at hotels.

I thought from the beginning it would be a hard sell to use them at Disneyland with pre-booking fastpasses. So many of the guests at Disneyland are locals with annual passes that are certainly not going to be booking rides 60 or even 30 days ahead of time.

Never say never. I'd be willing to bet that your smart phone could easily be a Magic Band alternative for either DL or WDW in the near future.

[Cinderelley]

We don't have the numbers, but I'd be willing to bet the number of people abstaining from WDW due to FP+ are few and far between. If you don't like WDW with FP+ now then you probably weren't much of a fan before.

I don't know what your definition of "much of a fan" is, but I used to go every year. Now you can put me in your "few and far between" category.

[NJGIRL]

I don't know what your definition of "much of a fan" is, but I used to go every year. Now you can put me in your "few and far between" category.

I think a lot of people are feeling the same as you are....I know we have cut back our visits and the number of days of each visit....and it's only because of the stress of FP+ and all of the pre-planning and frustration that comes along with all of the new rules.

[RunDMV]

I don't know what your definition of "much of a fan" is, but I used to go every year. Now you can put me in your "few and far between" category.

Ditto. At least once a year from 1988 to 2012. But according to that poster, I wasn't much of a fan.

I think some people suffer from Stockholm Syndrome... and Mickey is the hostage taker.

[Butters]

I agree with the posters above, since FP+ our trips have become a burden with the planning, and also longer lines. Our September trip is going to be our last for a few years at least, and that's saying a lot since we are DVC owners who have been averaging 2 trips a year since our kids were born.

I will admit I love the magic bands, but I'm sick of FP+, and there inability to add substance to the parks. They keep adding meet and greeting, gift shops and restaurants but no attractions. And when they announce an attraction it takes 3+ years to build.