Why Disney won't be taking magic wristbands to China

[LOS ANGELES] MagicBands, the colorful electronic bracelets used by millions of customers at Walt Disney Co resorts in Orlando, Florida, won't be making it to the company's newest theme park in China.

Guests at the US$5.5 billion Shanghai Disney Resort, scheduled to open this spring, will be able to use their mobile devices to enter the park, purchase merchandise and likely access rides and attractions. Visitors in Orlando already do those things with the wristbands, which rolled out in Florida with great fanfare in 2013.

Disney spent US$1 billion and several years developing MagicBands and making other technology upgrades to its Orlando resorts. But technology moves fast. Today, Disney may be able to achieve more with guests just using their smartphone.

"When Disney was first making their investment in Orlando, the mobile revolution was still at a very early stage," said Douglas Quinby, a vice president of research at the consulting firm Phocuswright in Atlanta. "Nobody knew how all these technologies were going to shake out." Phocuswright predicts that this year, China will become the first market where the majority of online travel purchases will be made on mobile devices. In Shanghai, Disney will use them to send direct alerts about park conditions and attractions.

"What you'll see in Shanghai is a park that from a technological perspective is more advanced than anything we've ever built," chairman and chief executive Officer Bob Iger said in Dec 21 interview on Bloomberg TV.

"The consumer will be able to buy their tickets, use their mobile devices in far more advanced, compelling ways than any other place from a theme park perspective than we are today." Disney, the world's biggest theme-park operator, says the bands have been a big success - not only because the company can funnel more people through its parks each day and sell more merchandise, but also because its guests really like them.

By leaving the bracelets in Florida, however, the company will save the cost of making the devices, which are mailed to season-pass buyers and guests at the company's 18 Orlando hotels.

Disney's MagicBand initiative was begun by the then head of its parks division, Jay Rasulo, around the time when the iPhone had just made its debut in 2007. It was championed by his successor, Thomas Staggs, who is now Disney's chief operating officer.

The wristbands were unveiled in January 2013 as part of a technology upgrade of Disney's Orlando properties, which include four theme parks and about 26,000 hotel rooms. More than 13 million guests have used them. Disney even sells decorative bands with "Star Wars" Stormtroopers and other characters on them for as much as US$30.

The company has said the bands, which tie into an online system for making reservations for rides, meals and other activities, have increased attendance and scored highly in customer satisfaction surveys.

Profits at the parks division, its second-largest after television, rose 14 per cent to US$3 billion last year, due in part to greater visitation and guest spending at the domestic resorts. Disney said last year that the wristbands would not be coming to its two theme parks in California.

At a company event in October, Mr Staggs said the bands were just one part of a broader program that gave the company more information about guests in Orlando, and gave customers more tools to enjoy the resorts.

"If they move this same type of application and do it on the customer's devices, that would be a cheaper way to do it," said Robin Diedrich, an analyst at Edward Jones & Co. in Des Peres, Missouri. "It would be more seamless and get into more people's hands."

BLOOMBERG