Magic Band Essay

Intro: This was one of 3 essays I wrote for my class, “Economics of Happiness” during my freshman year.

__________________________________________

Ashley Knipp, University Seminar

Disney and The MagicBand: Maximizing Dollars Spent and Smiles Shared

Introduction

Walt Disney World (WDW) is widely known as “the happiest place on Earth.” The Walt Disney Company, itself, capitalizes on the connection, obsession, and now socially-accepted right they have on the word “happiness.” The implementation of Disney’s MagicBand maximizes both consumer happiness and consumer spending during a Walt Disney World vacation and thus, is the quintessential symbol of WDW consumerism.

More than 30% of The Walt Disney Company’s total revenue came from their theme parks and resorts in fiscal year 2013, making $14.09 billion,1 a close second in percentage to Disney’s media networks and ahead of consumer goods (See Figure 1).2 This assures that WDW’s with its happiness-inducing reputation corresponds with high revenue.

Figure 1

magicband1

These numbers may seem surprisingly close, considering the domination of Disney films and programming present in the entertainment industry, until examining Robert H. Frank’s analysis of the effect of vacations on happiness in his book, Luxury Fever. Frank asserts “the physical and psychological benefits of period breaks in routine have long been established.”3 Therefore, for this essay, it can be assumed that by itself, a WDW vacation provides happiness to consumers. Logically, it should be noted that convenience creates happiness within consumers by saving time, saving money (because time is money), and reducing stress. With these points understood, I will proceed to argue that the MagicBand maximizes the happiness levels and consumer spending levels already established before its implementation and why it is a perfect symbol of Disney consumerism.

Marketed as “an absolute must” Disney claims that “[t]here’s never been an easier way to enjoy each magical moment with family and friends.”4 MyMagic+ and the MagicBand launched in January of 2013 in WDW with a handful of selected vacationers .5 Today, all resort guests are offered participation in the program, which is collectively about 27,000 rooms.6

Disney’s MagicBand is a rubber bracelet equipped with a computer chip that maximizes convenience for vacationers,7 while collecting consumer data for WDW.8 To put it simply, it is convenient for vacationers because all they do is touch the mickey ears on the bracelet to the mickey ears on a touch-point sensor or a cast member’s (WDW’s term for employee) tablet for any type of use.9 It achieves data collection through radio frequency technology (RFT) including short and long-range readers which can track any MagicBand and the spending habits of its owner.10 A classic staple of Disney; learning how to make maximum revenue by making consumers happier. This is obvious, for WDW is in the business of selling happiness.

Rungs Up the Ladder of Happiness and Down into the Hole of Disney Debt

In accordance with Disney’s happiness business, the MagicBand maximizes both happiness and spending with a simple analogy. A ladder simultaneously acts as the ladder up to maximum happiness and acts as the ladder down into a hole of debt. Each opportunity for convenience can be visualized as a move up a rung due to happiness, down a rung due to spending, or both, if the happiness resulting from an opportunity costs.

Rung One: Up – MyMagic+ provides control

Disney’s MagicBand is actually the physical tool that accompanies the MyMagic+ system, which begins online months before your WDW vacation.1 Frank also discusses the positive effects of power and control on an individual’s happiness, even if something “bad” is happening, like losing money. He asserts that as long as you are in control, you are happier.2

Disney has found a way to make you feel powerful and in control of your own vacation through advertising the band using the Incredibles (a Disney movie about a family of super heroes) and limited customization.3 If you register online in time, you not only get to choose from 4 color options, but you can also have your first name on the back – not very unique, but this “customization” does not fail to excite the masses.4 Purchasing the power that “allows you to tap into the magic of a Disney vacation,”5 easily becomes the power to pay.

Once you have booked your reservation in an on-property resort, you are “selected” and offered a MagicBand.6 Then, you go to the My Disney Experience website and reserve your FastPass+ options and Disney Dining Plan reservations (to be discussed), officially taking the next step up the ladder of vacation happiness while you plan to spend. 7

Rung Two: Up and down – The MagicBand as a room key

As of January 2014, you need a resort reservation to be issued a MagicBand.8 WDW on-property rooms have a wide price range from just $90 a night at the All-Star Music, All-Star Sports, and All-Star Movie resorts to the heart-stopping Yacht Club resorts which cost over $2000 per night, depending on the season.9 Contrary to natural assumption, a cheaper room does not mean a lower level of happiness. The decoration and layout of cheaper hotels are simpler; more focused on size and familiarity like guitar-shaped pools and sky-scraping statues of favorite Disney characters. The more expensive ones are more elaborate, basing their decoration on Victorian pavilions and more adult-geared amenities.

The variety across the themes of Disney’s 35 resort hotels offers the aforementioned freedom of choice and also leaves plenty of different happiness-inducing hotel experiences for you to pay for on your next trip, as is consistent with WDW returning-consumer goals.10

Rung Three: Up and down – The MagicBand as park tickets

The parks are the reason for a trip to Disney World and your MagicBand holds your ticket information. Guests simply tap “mickey to mickey,” scan a finger to ensure customer account security, and enter the park.11 To clarify costs, Magic Kingdom’s non-discount, one-day ticket price is $95, being the most famous park on property, while one-day tickets to Epcot, Hollywood Studios, and Animal Kingdom non-discount tickets cost $90.12 A park-hopper allows vacationers to visit several parks per day, an additional $59 per one-day ticket.13

I could fill a plethora of books with each park’s breadth of happiness-inducing vacationer experiences, but for the purposes of this paper, it is assumed that a consumer would not book a WDW trip at all, MagicBand or no MagicBand, if he did not consider the parks fun and full of potential happiness.

Rung Four: Up – The MagicBand as your FastPass+ holder

Arguably the most successful element of MyMagic+, FastPass plus allows to you to reserve your 3 free FastPasses online up to 60 days before use, so there is no chance your happiness levels will fall while waiting in a an over 2 hour line for the new Toy Story Mania ride at Hollywood Studios, which was the norm this past winter break.14 FastPass+ allows you to go through a shorter line for chosen rides and shows, or gives you access to exclusive, prime fireworks-viewing areas.15 The My Disney Experience mobile app allows guests to switch FastPass+ times or attractions at will, given that there is space (the system caps the number of total FastPasses allowed per ride per time slot).16

Bob Iger, Chairman and Chief Executive Officer of the Walt Disney Company, spoke highly of the success of the MagicBand in connection with FastPass+ on the Walt Disney Company’s first quarter fiscal year 2014 conference call: “I can’t quantify it from a financial perspective yet. It’s still early…the biggest impact is one, being able to accommodate more people… and secondly, enabling guests to have a substantially better experience because they’re doing more.”17

An estimated 3,000 more people were accommodated during this past holiday season due to increased participation in FastPass+ and the MagicBand.18 The MagicBand’s brilliance lies in its simplicity. If FastPass+ is faster and easier to set up, guests use the service more often, lines are shorter, and people have more time to buy. More people with more time means more money and the maximization of daily total consumer spending.

Rung 5: Up and down – The MagicBand as your MemoryMaker account

MemoryMaker an additional $150 amenity included in your MagicBand.19 WDW photographers are placed strategically at the best photo-op locations in the parks as well as with character cast members. Tap a band to his or her tablet and the photo is saved onto your account.

This MagicBand opportunity’s happiness-potential is harbored in an individual’s yearning for inclusion, for humans are social beings.20 Without MemoryMaker, either guests are pushed out of their comfort zone to ask a random stranger to take their family photo, or one family member is excluded. These options are both happiness-reducing. In an article in the Journal of Economic Perspectives, Daniel Kahneman and Alan B. Krueger define happiness as “the sum of the momentary utilities over [a] time period” which includes a distinction between experienced utility and remembered utility.21 What better way to ensure high levels of remembered utility than a photo? Moreover, a convenient option to have a professional photo taken with the choice to buy or not saved until later.

It is not difficult to say consumers want what is best. Scholars now argue that today’s consumers expect what is best, that happiness is now considered an expected, “natural state.”22 Any form of exclusion now causes unhappiness to the point of below contentment, the expected.

Rung Six: Up and down – The MagicBand as your Disney Dining Plan organizer

If you buy a Disney Dining Plan package, the credits are organized and stored on your MagicBand. The cheapest dining plan is $60 per night for a standard package while the most expensive is the platinum package for $254 a night including tickets to Cirque du Soleil and other amenities that probably have food nearby, but Disney clearly takes advantage of a human’s need for sustenance.23

However, the more reasonable plans do offer more experienced utility and maintain a high level of happiness. Buying a package gives guests an excuse to eat at more expensive restaurants and enjoy a wider variety of choice in food. The dining plans eliminate the doubt before each meal, “could I save more money and opt out?” because you have a quota to reach in order to take advantage of the package. If a family budgeted wisely, this is the happier choice.

Rung seven: Up and down – The MagicBand as your credit card

I described the metaphorical ladder in a “hole of debt” because all expenses on your MagicBand are connected to the credit card you used to pay for your hotel room.24 Debit cards can be used instead, but for the purposes of this argument we assume that most people choose to use a credit card for hefty WDW expenses.

To maximize spending, Disney encourages guests to sign up for a Disney credit card, which earns you a $100 gift card reward for every $500 you spend within 3 months of beginning your account.25 So one can use the flimsy excuse that spending more earns you more rewards, so there is no reason to fret. But where are you most likely to spend such a sum on credit in so short a time? Walt Disney World theme parks and resorts, of course.

Because of the MagicBand’s convenience, it is entirely possible for time to pass too quickly for you to feel yourself falling into debt, a sort of “magical” free-fall, if you will. What’s worse, your 12-year-old daughter can use your credit card any time, no questions asked, as long as she can remember 4 digits in succession. This can maximize happiness, unless the ease of impulse buying overtakes the customer, which would then maximize spending.

The Final Rung: Up and down – The MagicBand and the young consumer

Countless mothers hearing “mama, mama, can I have this?” can satiate their stress levels and child’s excitement by answering, “Go ahead and buy it. You remember the numbers.” As long as the family budgets for souvenirs, the MagicBand increases the levels of Kahneman and Krueger’s experienced utility in the moment,26 and remembered utility when looking at the bill after vacation. This maximizes happiness if budgeted safely.

The MagicBand is a perfect agent for data collection on childish impulses, though it is important to note that guests only release as much information as they want.27 Parents can release information about their child’s name so that when Goofy’s RFT senses Cody coming toward him in Magic Kingdom, he can address him by name.28 This may be creepy to adults, but is an enjoyable, happiness-inducing experience to a child who thinks that the cartoon has come to life.

In her book Born to Buy, Juliet Schor discusses the commercialization of childhood, stating that “[c]ontemporary American tweens and teens have emerged as the most brand-oriented, consumer-involved and materialistic generations in history” (Schor 13). Therefore, the MagicBand acts as a symbol of Disney consumerism in its availability and compatibility with its primary audience – the young, and increasingly spending-oriented consumers.

Gravity: Social Norms and Expectations for a “Happy” Vacation

No Disney vacationer is forced to participate in MyMagic+ or My Disney Experience or wear a MagicBand.1 No one has to sign up for the Disney Dining Plan or MemoryMaker. Disney does not required that you stay on an on-property resort for you to enjoy the parks. Downtown Disney does not even cost for admission; it’s just an outdoor mall. People could bring their own groceries to a nearby hotel and save thousands of dollars, and could still enjoy the parks.

However, this is not how Disney is done. This is why the MagicBand works.

The average length-of-stay at WDW is about eight days,2 and if you are not a Floridian annual pass holder, any vacation less than five days elicits strange glares and tense tones. People will ask, “which resort did you stay at?” and your answer will be awkward. No one wants to eat peanut butter and jelly sandwiches while on vacation. Most importantly, the whole experience might as well be a farce if someone fails to come home with a set of Mickey Ears.

The bottom line is that there are social expectations for a Disney vacation, and those expectations are the gravity that pulls you down the ladder into the hole of debt. Karl Marx stated the effect of social norms, expectations and comparisons as such, “a house may be large or small; as long as the surrounding houses are equally small it satisfies all social demands for a dwelling. Buf if a palace rises beside the little house, the little house shrinks into a hut.”3

WDW is a completely atypical environment revolving around fun and happiness and money. By no means do you have to pay for a full Disney experience, but you are absolutely expected to. If you choose to opt out of any of the rungs on the paradoxical ladder, you feel as if you are missing out. In his book, “Happiness: Lessons From A New Science,” Richard Layard says “wants are based on what others have and what we’re accustomed to” (Layard 7). While through multiple hypotheticals, Frank discovers that we always want more than our neighbor, no matter how much or how little he has.4

This is why it is important to explain the happiness acquired on each rung. Comparing yourself to the other vacationers will lower your happiness level if you fail to comply with Disney’s social norms. Without the full experience, both experienced and remembered utility drops with every comparison that results in you on the losing end.

Moreover, many happiness-educated scholars refer to a “hedonic treadmill” which describes the vicious cycle of adaptation and want the typical human suffers.5 Once we have what we want, we get used to it and then we want more.

For example, on our family vacation, we opted out of the Disney Dining Plan this time and saved roughly $2000, but we were limited to the four quick-service food options offered nearly everywhere in the park: pizza, meatball sub, Caesar salad, hot dog. It only took a few days to look over at the Disney Dining Plan package and wish we could be enjoying table-service at fancy, themed restaurants.

Escapist and Immersive, therefore Euphoric

Disney movies and television are meant to be an escapist medium. Disney defines their brand as magical, full of fantasy, the unreal, and the untouchable. With talking animals and amazing adventures, Disney delivers the happy endings a viewer could never experience in life.

WDW expands on this escapist strategy, not meant to be manipulative, but genuinely enjoyable, in an immersive theme park experience. Impossible experiences like meeting a mermaid or riding through a haunted mansion are realized, given that you possess some reality-bending imagination.

The immersive experience is what we pay for because it is based on the idea of “flow,” the third level of happiness discussed by multiple scholars. Layard describes the experience of flow when you lose yourself in the fulfillment you gain from an experience.1 Though you may not experience true flow by walking through a WDW Park, the fantastical, immersive environment is meant to mimic that higher-level, immersive happiness.

In terms of the MagicBand, that is also why we are in debt free-fall. Convenience is key to achieving escapist euphoria. Without worrying about losing room keys, theme park tickets, paper FastPasses, photo link cards, credit cards, or keeping track of dining plan credits, the Disney experience has minimal distractions and stresses. The extra seconds to dig for different items in a purse combine quickly and are traded for extra time for happiness and/or spending. WDW is not the real world. You are paying for a crown near Cinderella’s castle, not Walmart. You pay for LaFou Brew in Gaston’s Tavern, not the bar down the street.

WDW capitalizes on the happiness we feel as a result of their films, and extend our happiness to euphoria by providing an immersive experience that brings our imaginations to life while the MagicBand prevents any sort of reminder or distraction from the WDW experience. The MagicBand is the tool necessary to experience a full, flow-like Disney experience and therefore represents the culmination of each layer of WDW consumerism.

Early Evidence of the MagicBand’s Maximization of Consumer Spending

I have discussed why the MagicBand maximizes happiness and acts as a symbol of consumerism. Even though MyMagic+ has not even been fully rolled-out yet, there is evidence of its future success in maximizing consumer spending. At the UBS Global Media and Communications Conference, Jay Rasulo, Senior Executive Vice President and Chief Financial Officer, of The Walt Disney Company described the first half of the MagicBand’s purpose as increasing consumer/producer interaction in enhancing the experience, while the other half, “of course, economically in terms of upselling.”1

Figure 2

magicband-2

From the Walt Disney Company’s 2013 Fiscal Year report, “the increase in selling, general, administrative and other costs was primarily due to information technology spending related to MyMagic+” (seen in Figure 2 above).2 Considering all past data, they should see a high return on their investment. Improvement from the gradual rollout of MyMagic+ is already evident. Revenue growth of 10% within the past year at domestic park operations reflected a 5% increase from higher average guest spending and a 4% increase from volume.3 We saw in Figure 1 that Disney’s parks and resorts earns the second highest revenue out of the 5 main segments of the Walt Disney Company, so their investment is clearly well-placed. It will be interesting to track its progress moving forward.

Conclusion: Disney Consumerism

“Keep moving forward” is one of Walt Disney’s most famous quotes and a mission of The Walt Disney Company,1 and I have argued that the MagicBand symbolizes this mission as an effective tool in increasing revenue and enhancing consumer happiness. Considering that the only complaint anyone seems to have about the MagicBand is the fact that you sometimes have to twist your arm awkwardly to make it work,2 the product’s future looks bright.

The value of a vacation lies in the individual consumer’s personal evaluation of the opportunity-costs. Notice that every single “rung” in the metaphorical ladder describing the MagicBand’s uses represented a step “up,” while not all of them represented a step “down.” The idea is that the benefits will outweigh the costs, that the combination of experienced and remembered utility outweighs the loss of cash or accumulation of debt. A vacationer understands that a Disney vacation will cost and additional amenities will cost extra, and the MagicBand attempts to elicit the response “it was worth it.”

Disney consumerism is about paying for utility and increasing happiness. Disney wants you to own its brand as part of your childhood and as part of your personal brand. They cannot achieve this by simply conning people out of their money, or they would be found out. They are in the business of personal happiness for kids of all ages, 0 – 110, but it is still a business. This explains why, on vacation, I saw t-shirts reading “I’m with the Band” and Disney-themed charms to fit into the holes used to adjust the band’s size – comical consumer options, if you ask me.

Ultimately, the MagicBand represents Disney as the organizational, customizable tool that connects all that is included in a full WDW experience, every dollar and every smile.

 

 

 

Endnotes

The MagicBand: The Magical Exploitation of Happiness by Walt Disney World Theme Parks

  1. (“Fiscal Year 2013 Annual Financial Report And Shareholder Letter” January 2014)
  2. (“Revenue of the Walt Disney Company in the fiscal year 2013, by operating segment (in billion U.S. dollars)” 2014)
  3. (Frank 88)
  4. (“Let My Disney Experience Be Your Guide”)
  5. (“Fiscal Year 2013 Annual Financial Report And Shareholder Letter” January 2014)
  6. (“UBS Global Media and Communications Conference ” December 10, 2013)
  7. (Quirk 2014)
  8. (Barnes 2013)
  9. (“MagicBand & Cards – Frequently Asked Questions”)
  10. (“MagicBand & Cards – Frequently Asked Questions”)

 

Rungs Up the Ladder of Happiness and Down into the Hole of Disney Debt

  1. (“Fiscal Year 2013 Annual Financial Report And Shareholder Letter” January 2014)
  2. (Frank 82)
  3. (“Unlock a New Dimension of Disney Magic with MyMagic “)
  4. (“Unlock the Magic”)
  5. (“Unlock a New Dimension of Disney Magic with MyMagic “)
  6. (“Unlock the Magic”)
  7. (“Let My Disney Experience Be Your Guide” )
  8. (“Walt Disney Company Q1 FY14 Earnings Conference Call ” February 05, 2014)
  9. (wdwinfo.com)
  10. (“Walt Disney World in Brief”)
  11. (“MagicBand & Cards – Frequently Asked Questions”)
  12. (wdwinfo.com)
  13. (wdwinfo.com)
  14. (“For the First Time Ever, Reserve Attractions in Advance with FastPass “)
  15. (“For the First Time Ever, Reserve Attractions in Advance with FastPass “)
  16. (Barnes 2013)
  17. (“Walt Disney Company Q1 FY14 Earnings Conference Call ” February 05, 2014)
  18. (“Walt Disney Company Q1 FY14 Earnings Conference Call ” February 05, 2014)
  19. (wdwinfo.com)
  20. (Layard 63)
  21. (Kahneman et al. 2006)
  22. (McMahon 2006)
  23. (wdwinfo.com)
  24. (“Unlock the Magic”)
  25. (“Apply for the Disney Premier Visa Card” )
  26. (Kahneman et al. 2006)
  27. (Brigante 2014)
  28. (Brigante 2014)

 

Gravity: Social Norms and Expectations for a “Happy” Vacation

  1. (Brigante 2014)
  2. (“UBS Global Media and Communications Conference ” December 10, 2013)
  3. (Easterlin 1995)
  4. (Frank 84-93)
  5. (Layard 48-49)

 

Escapist and Immersive, therefore Euphoric

  1. (Layard 22)

 

Early Evidence of the MagicBand’s Maximization of Consumer Spending

  1. (“Fiscal Year 2013 Annual Financial Report And Shareholder Letter” January 2014)
  2. (“Fiscal Year 2013 Annual Financial Report And Shareholder Letter” January 2014)
  3. (“UBS Global Media and Communications Conference ” December 10, 2013)

 

Conclusion

  1. (Anderson 2007)
  2. (Wood 2013)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Walt Disney World, “Let My Disney Experience Be Your Guide.” Accessed February 15, 2014. https://disneyworld.disney.go.com/plan/my-disney-experience/.

Walt Disney World, “MagicBand & Cards – Frequently Asked Questions.” Accessed February 13, 2014. https://disneyworld.disney.go.com/faq/bands-cards/understanding-magic-band/.

Walt Disney World, “Unlock a New Dimension of Disney Magic with MyMagic .” Accessed February 13, 2014. https://disneyworld.disney.go.com/plan/my-disney-experience/my-magic-plus/?CMP=KNC-WDW_FY14_DOM_NGE_MDX_BR_Brand|G|4141321.NG.AM.01.01&keyword_id=sS3lrTv4P_dc|mymagic+ disney world|47497267768|e|15402cl14044.

Walt Disney World, “Walt Disney World in Brief.” Accessed February 13, 2014. http://wdwnews.com/fact-sheets/2013/03/01/walt-disney-world-overview-world-in-brief/.

Walt Disney World, Accessed February 15, 2014. http://www.wdwinfo.com/wdwinfo/tickets.htm

Wood, Chris. “Using Disne’ys Magic Bands.” The Disney Blog (blog), September 18, 2013. http://thedisneyblog.com/2013/09/18/using-disneys-magic-bands/ (accessed February 13, 2014).

 

 

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