Category — t. Disney’s NextGen Project and Expansion Plans

Disney released its Q2 2013 results (covering December 30, 2102 through March 30, 2013) yesterday, and discussed them with analysts.

(The earnings report and 10q are here; you can listen to the analyst call here.)

I haven’t made my way through the 10Q yet, but based on the earnings release and call, a couple of observations:

• The key component of MyMagic+, Fastpass+, may not even open this year
• MyMagic+ will indeed have special perks for guests staying at a Disney-owned and -operated resort
• I’m even more convinced we won’t see any 2013 free dining for US residents other than the September offer that will come out tomorrow

THE TIMING OF MYMAGIC+

An analyst specifically asked CEO Bob Iger when MyMagic+ would open.  Prior statements had implied it would open this spring—which has been unlikely for a while now. This time, Iger said that “the goal is to roll it out at some point this year.”  When later asked if it would have an impact on earnings “by” fiscal 14 (that is, October 2013) Iger said it would have in impact on earnings “in” fiscal 13.

I forecast more than a month ago that the earliest we’d see a general roll out of My Magic+ and Fastpass+ would be October 1.  I’m sticking by that as the earliest date, but can now easily see this date slipping to November 1 or January 5.

EXTRA MYMAGIC+ PERKS FOR WALT DISNEY WORLD RESORT HOTEL GUESTS

It’s been long assumed by thoughtful observers that MyMagic+ will provide extra perks to those staying in a Disney-owned and operated resort, for obvious business reasons.

But yesterday’s call was (so far as I can remember) the first confirmation of that.

Iger (or CFO Jay Rasulo, I forget which) said in response to an analyst’s question that MyMagic+ will continue the tradition of providing perks to on-site guests not available to off-site guests and “encourage people to stay more on property than off property.”

There’s no credible scoop on how this might unfold.  Because of the high value to Disney of people pre-planning their park visits (and hence limiting those darned spur-of-the moment choices to see Harry Potter) the offer may be more complicated than people have been predicting.

For example, the simplest approach is to offer more Fastpass+s per day (OK, what’s the right plural of Fastpass+?) to on-site guests than to off-site guests.  But this doesn’t keep them in Disney World on their off days.  Adding extra Fastpass+ to the later days of a visit based on how many earlier days are scheduled (or more simply but less effective, on how many ticket days are bought…) would both drive ticket sales and keep people on property.

Just a thought…

MORE FREE DINING IN 2013?  MY FORECAST IS STILL “NO WAY”

Disney’s domestic parks and resorts really shot out the lights this quarter.

While a big part of the improvement (about $70 million of a $161 million operating income improvement compared to a year ago) came, as I’d noted it would in my comments on the Q1 call, from differences in the timing of Christmas and Easter school breaks vs. Disney’s fiscal quarter timing, another big part came simply from increased attendance and increased spending per attendee.

There’s no way to tease out how much of this came from Disney California Adventure and a full quarter of the Disney Fantasy cruise ship, vs. Walt Disney World itself.

But Disney did note that resort hotel bookings in the current (April-June) quarter were running 7% ahead of last year, at rates comparable to last year.*  These rooms are overwhelmingly at Disney World, so they are a cue to ongoing strong performance.

This performance, and these booking levels, means that Disney simply doesn’t need to discount to bring people in the way it had to in 2007-2012.  So it won’t.

I expect we will see continuing room-rate discounts for the slower periods, but, other than the September free dining deal that will come out tomorrow, I’m even more convinced we won’t see any more Free Dining in 2013.  Free dining is just too expensive to Disney to offer—and too complicated to administer—compared to the value it creates for the company.

MORE ON THIS CALL

Jason Garcia does a nice job with the Disney World-related facts of this call here.

*When asked why rates weren’t higher and if Disney was discounting too much, Rasulo noted that Art of Animation was added to the inventory in 2012, and, as a value resort, it necessarily drives overall average realized prices down.

Not quite true. Because so much of Art of Animation is pricey Family Suites, average rack rates at the resort are well over $200.  A much bigger driver of Q3 2012 vs. 2013 rate oddities is the different timing of the Easter price season—entirely in Q3 in 2012, and only half in Q3 in 2013.

Follow yourfirstvisit.net on Facebook!

GOODBYE TO THE AFTERNOON PARADE AT DISNEY’S HOLLYWOOD STUDIOS

The Afternoon Parade at Disney’s Hollywood Studios, Pixar Pals Countdown to Fun, had—so far as anyone knows—its last run on Saturday April 6. No explanation has been given, nor any replacement announced.

There’s not much of a loss here—this was a lame parade, especially in comparison to its immediate predecessor, the great Block Party Bash.

But it’s been a while since Disney World has closed a parade with no replacement—the last I can think of is Epcot’s Tapestry of Dreams parade, which I think was the last parade to run at Epcot, and closed in 2003.

So it’s interesting to speculate about why and about what, perhaps, is next.

WHY DISNEY WORLD MAY HAVE SHUT THIS PARADE DOWN

Disney Word shuts stuff down all the time—sometimes, because a new offering just isn’t that good, but most commonly for one of two reasons:

• To create budget or space capacity for something to be fixed or to be created new, or
• To just save money

I’ve written extensively elsewhere about the somewhat perverse characteristics of park operating economics that, to the grave annoyance of fans, can lead Disney to simply cut stuff to save money.

If saving money is the goal, a parade is a great target for elimination.

A parade at a Disney World park involves a ton of labor costs—not just the obvious ones like the wages of the parade performers, but also all the time that other park cast members have to put into tasks ranging from taping out the viewing areas, to crowd control during the parade, to putting everything away and cleaning it up, and even to running extra buses right after it ends—as many guests leave the park right after they see the parade.

Now the complexity on figuring out what come next—that is, a new parade or not– is that even when Disney adds something new, it often does something to cut costs well in advance, so that the portion of the extra development costs that can’t be capitalized are somewhat offset by the cost reductions. This lets budgets be met…but you don’t know if the goal was just to cut costs, or to create space and budget for something new, until the something new is announced…

WHAT MIGHT BE NEXT AT DISNEY’S HOLLYWOOD STUDIOS: CARS LAND?

There’s been some speculation that the Pixar Pals Countdown to Fun parade—and also the Disney Channels Rocks show, also with a lot of staff, also closed—have been shut down so that the road they stage on (Prospect Road) or begin the show on (Hollywood Boulevard) could be repaired, or puffed up with something new. Could be—I don’t know nothing one way or the other.

But my suspicion is that the afternoon parade at the Studios is gone for the foreseeable future.

I get there by noting that the massive change in 2011 from the wonderful Block Party Bash to the lame Pixar Pals Parade only made sense at the time as a cost cutting move.

The result was a lame and widely dissed offering (though I loved seeing Doug), which makes me think that what came out in 2011 was a compromise between those who wanted the parade shut for cost-saving and operational complexity reasons, and those who wanted to salvage any afternoon parade, even one that was a shadow of its predecessor.

But why then close it for good now? And what’s next? Well, a version of Disney California Adventure’s Cars Land at Hollywood Studios has been much rumored, and much wished for, especially after the move of its lead designer, Kathy Mangum, to Disney World last summer.

Given everything Disney has been saying for a couple of years now about smashing down capital spend to “routine” levels after the multi-billion investments in the Disney Cruise Line, Disney California Adventure, Art of Animation, New Fantasyland, and MyMagic+ wind down this year, it’s hard to see where the cash comes from Cars Land at the Studios…

…but there’s a couple of things that have happened since Disney first started talking about ramping down capex that makes me willing to fan the speculation.

• One is that Disney has re-learned the lesson at Disney California Adventure that great new rides, if they bring in more visits and/or relieve congestion at another park, can have a fine payback.
• Second is that Harry Potter has had a second installment announced since then…

I don’t see Avatarland being canceled to pay for Cars Land, if for no other reasons that the Animal Kingdom according to everybody’s math really needs some new “E” Ticket rides for MyMagic+ to work well there.

But in response to what it has learned about the cash flow of Cars Land and to the threat of Harry Potter 2, I can see Disney World working pretty hard to generate extra cash and to deploy more capital than it had already been planning on something like Cars Land at the Hollywood Studios, so long as it can still make the claim to the analyst community that the funds are coming from “routine capital.”

Cars Land at the Studio would likely go into the area now occupied by Lights Motors Action and the Backlot Tour.

See the aerial photo. (Click it to enlarge it.) The bruited-about possible area for Cars Land at Disney’s Hollywood Studios is within the large red circle.

Now note how landlocked this is, because of the way World Drive, the guest entrance road from World Drive, and Buena Vista Drive hem in the park.

The only sensible point right now for construction access is from the cast entrance on Buena Vista (small orange circle). But that’s not an area of Buena Vista that can take much more traffic, and the road from there to the red circle has some turns that construction cranes and such would find awkward.

So maybe Disney’s thinking about generating a construction access point and staging area from the World Drive entrance to the Studios, somewhere around the red X. And maybe that’s the rumored “road that needs to be re-built.”

And maybe that’s why Pixar Pals Countdown to Fun and Disney Channels Rocks are gone—not only to save cash for reinvestment, but also to free up their staging and storage areas for Cars Land construction!

Just speculation…probably wrong…but still fun to dream about!

Follow yourfirstvisit.net on Facebook!

WHAT IS FASTPASS+ AND WHY DOES IT MATTER?

Disney’s MyMagic+ program has multiple elements, most tied to an RF communicator reader in either a printed plastic card or, in the works, a wristband.

Of the elements of the program, the one with the highest likely impact on first-time visitors will be Fastpass+, the ability to reserve three or so experiences per day at a park—such as major “headliner” rides, minor rides, fireworks- and parade-viewing spots, and even counter-service restaurants—months before from home.

Most people think, based on Disney World’s tests to date, on simple capacity math, and on the published terms of service, that Fastpass+ will restrict you to the ability to reserve just one or two “headliners” rides per park day, with only one ride on each of them per day.

Depending how this unfolds, it may mean that people will be able to see fewer headliners per day without major waits, especially at the Magic Kingdom, than is the case right now with a good plan and the use of the traditional FASTPASS system.

However, according to the terms of service, once Fastpass+ is operational, if you convert a paper ticket to RF, the paper ticket will be void, and neither it nor the RF device can be used in the traditional FASTPASS system.

(See the red-boxed area of the image, which is a screenshot from the March 28 version of the terms of service. Click it to enlarge it.)

This makes me think the traditional FASTPASS system will remain (at least for a while) for those who don’t or won’t use the new RF based MyMagic+ program.

If this is true, then the value of my crazy idea of buying two park tickets per day—in this case, one regular, and one MyMagic+–will SKYROCKET.

This is because you’ll have two shots at the headliners—one from Fastpass+, and one from traditional Fastpass—that is, one on each ticket.  (However, very little capacity likely will be reserved on the headliners for traditional Fastpasses…which is why relying just on a paper ticket is not a good strategy either.)

Especially at the Magic Kingdom, buying a second, paper, ticket may be in effect Disney’s backdoor way of introducing a version of Universal Express—a means to buy your way out of difficulties the parks otherwise present you.

But regardless, Fastpass+ will make major changes to the best ways to experience the parks, especially for those relying only on it for the services that have been provided by the traditional Fastpass program.

WHEN WILL FASTPASS+ BECOME OPERATIONAL?

For one big and a couple of minor reasons, I think we’ll see the first major sets of park experiences governed by Fastpass+ start October 1 or later.

First, I don’t think the systems are ready.  I’ve stayed in Disney resorts multiple times so far this year, and have had comic systems issues interfere with my experience.  This makes me think the IT behind MyMagic+ is still pretty buggy.

Second, Fastpass+ is unlikely to launch in the busy summer season.  You don’t want to do something this different and new when the infrastructure of the parks is already taxed by summer crowds.

Third, I doubt the launch date will even be announced during the peak of the summer season—e.g.  earlier than August 1.

This is because if the operational launch date is announced, many summer visitors will think it applies to them, even if the announcements are about a go-live date much later.  Anyone who runs a site like this gets a sense of how confusing Disney World is, and how many people will interpret an announcement of a future launch as an announcement of a launch right now.  Putting the announcement of launch off until August misses confusing the bulk of the summer crowds.

An August 1 announcement means an “operational in the parks” launch date no earlier than October 1. This is because there will be at least 60 days notice before Fastpass+ is operational in the parks (you can infer this from the terms of service, which mention 60 days of time to reserve experiences for certain classes of ticket holders).

Finally, there’s something else special about October 1—it’s the effective date of Florida House Bill 1353—and this bill, or a variant of it, matters quite a bit…

Disney World ticket prices make the first few days of a ticket much more expensive than later days.  This means there’s a market for illegal sales of partially-used multi-day tickets, since there’s an opportunity to arbitrage the low cost of the last days to a new buyer who otherwise would have to pay much higher early day prices.

Now Disney’s terms of service make it clear that all MyMagic+ tickets in whatever form are non-transferable, so if you show up with a ticket partially used by someone else, you will be refused admission.  But Florida’s laws against resellers don’t cover non-printed tickets.  Moreover, they have “printing” requirements to signify non-transferability.  HB 1353 would resolve these issues.  And it has an effective date, if passed, of October 1…

(See the red-boxed part of the image, which is from the staff analysis.)

It’s hard for me to see Disney launching a major new ticketing program for which there are no legal penalties for resale of a partially used pass…

…so October 1, 2013 is my bet for the basic operational launch date of Fastpass+, and August 1, 60-ish days before, my bet for the announcement date.

Follow yourfirstvisit.net on Facebook!

NEW FANTASYLAND SO FAR

In 2012, two major parts of Disney World’s Fantasyland Expansion opened: Storybook Circus, which opened bit by bit over the course of the year, and major parts of the Enchanted Forest, which opened formally in December.

Still coming are the Princess Fairytale Hall, expected to open in 2013, and the Seven Dwarfs Mine Train, whose opening date–never formally announced–seems to be possibly slipping to 2014.

New Fantasyland was much hyped, and so far is a bit of a disappointment–although the only fair grade is “incomplete.”

The disappointment is partly that it doesn’t live up to the hype. For all the hoopla, so far there’s only two new attractions:

• One of them, Under the Sea ~ Journey of the Little Mermaid, is ho-hum for all but big fans of the film
• The other, Enchanted Tales with Belle, while as good as anything at Disney World, has sharply limited capacity

In totality, though, New Fantasyland is a nice achievement.

Besides the two new attractions, it includes two fine new restaurants, a fundamental and successful re-theming of the area that used to be Toontown Fair into a fun circus-themed area, and a doubling of the low-capacity Dumbo.

For first time visitors, New Fantasyland is almost entirely positive.

• While Belle and Ariel have been well-represented at Disney’s Hollywood Studios for years, they are now much more profoundly present at the Magic Kingdom where, as princesses, they fit quite well.
• Each of the new dining options comes in at the top of its class–at a park where dining quality has been an issue for decades.
• The totality of the additions will absorb thousands of people at busier times, relieving a bit congestion in other parts of the park.

For returning visitors, the grade comes closer to “incomplete.”  

While there’s much to be charmed by at what’s been achieved so far, returning visitors will be more sensitive to the mismatch between hype and achievement, and there will be some who miss Snow White’s Scary Adventures or Minnie’s House.

But it’ll be interesting to see if Princess Fairytale Hall is more like the wonderful Enchanted Tales with Belle than, say, like the so-so Ariel’s Grotto, and of course the Seven Dwarfs Mine Train has great potential.

If Seven Dwarfs is at least a “D” Ticket ride–an experience on par with, for example, Mickey’s Philharmagic–then New Fantasyland will end up being pretty special.

If it’s another “C” Ticket like Under the Sea ~ Journey of the Little Mermaid, then this expansion–the largest in the Magic Kingdom’s history–really will go down as a profoundly missed opportunity.

Follow yourfirstvisit.net on Facebook!

Try the grey stuff
It’s delicious
Don’t believe me? Ask the dishes!

(Be Our Guest, from Beauty and the Beast, music and lyrics by Howard Ashman and Alan Menken)

THE ENCHANTED FOREST: A MISSED OPPORTUNITY, BUT STILL A GREAT ACHIEVEMENT

The Enchanted Forest is one of two areas–the other being Storybook Circus–that together make up New Fantasyland at Magic Kingdom.

It contains two attractions–Under the Sea ~ Journey of the Little Mermaid and Enchanted Tales with Belle, two dining spots–Be Our Guest and Gaston’s Tavern, and Ariel’s Grotto, a meet and greet opportunity.

Under the Sea is too slight for the opportunity this expansion presented, and that casts a sense of disappointment over all of the Enchanted Forest.

But Enchanted Tales with Belle is as good as anything Disney World has opened since 2005.

Moreover, although both Be Our Guest and Gaston’s Tavern have menu issues (Gaston’s is too limited, Be Our Guest is scarce on simple options for little kids), Be Our Guest is overall by far the best table service restaurant in the Magic Kingdom (and the first legit “date night” option there ever)–while Gaston’s is the most charming counter service option in the park.

Add to this the fact that the Enchanted Forest is incomplete, with the Seven Dwarfs Mine Train still to open (I had thought this would be in 2013, but it’s now looking like 2014), and what you’ve got is a work in process that despite the disappointment of Under the Sea, has already demonstrated greatness, with the potential for more greatness to come.

REVIEW: THE ENCHANTED FOREST IN NEW FANTASYLAND AT THE MAGIC KINGDOM [Read more →]

FASTPASS+ AND THE APOCALYPSE

There’s been a ton of reaction to Tom Stagg’s Disney Parks Blog post on “MyMagic+” and “FastPass+” and to prior and subsequent press.

There’s not much new in any of this, other than the beginning of rollout—February; the length of rollout—all year; and the order of rollout– starting with Walt Disney World resort hotel guests, probably BoardWalk Inn guests at first, with the program expanded slowly to others.

But oh my, there’s been a lot of noise!

In general, any noise about this is good—I’ll come back to that in a bit—but the general tone out there is that the new program will be either a cataclysm, or the best thing since the forward pass.

LET’S ALL STAY CALM…THERE’S NOT MUCH TO SEE HERE

Well maybe it will be one or the other, but I doubt it; it’ll end up somewhere between, as do most human endeavors.

Moreover, there’s some key facts that just aren’t out yet, and some emergent behavior to observe that we’re all just gonna have to wait for.

The key missing facts are

1. How many daily FastPasses will be available to all guests, and
2. How these will be divided between those reserved for those who book them ahead and those that are available to anyone on the day of visit, just like today.

The answer to these questions will make a huge difference to the overall guest satisfaction with the program, especially for those who don’t, or don’t want to, reserve their rides ahead of time. (See this for more.)

Stay calm on this point, since as the link notes, Disney World could be on the way toward daily FastPass capacity triple what it offers today…plenty for advance reservation users and “unplanned” users too!

The behavioral question is will the “schedule from home” system lead more people to get up early if the only time they can reserve Space Mountain is at 9.15a? And if so, does that mean the time-honored strategy of getting to the parks at rope drop to beat the crowds will no longer work so well?

Stay calm on this too…mostly because we won’t know for a while, and in the meantime it’s best to bet on human nature, and thus tens of thousands still sleeping in…

Much of the cataclysmic thinking about FASTPASS+ comes from either those with privacy concerns (who, if this remains an issue for them, will need to opt out) or experienced Disney World visitors who have an approach that works for them, and are worried that the new system will get in the way of something they understand and are happy with.

I have a lot of sympathy with this latter group–as I’m in it too!—but that’s not what I’ve got my eye on.

Since I started thinking about this site, I’ve had one example family sharply in my mind’s eye:

They’ve been in line for Peter Pan’s ride for hours in the Magic Kingdom on an early July afternoon. They didn’t know that July was a bad time to go, they didn’t know that not sleeping in but rather hitting the park at opening was the best way to see Peter Pan without much of a wait, and they didn’t know that FastPasses are free with their ticket, and so don’t use them.

I want this family to have a great time, and FastPass+, if it lives up to its promise, can help them see great stuff without waiting so long…even on a July afternoon.

And that’s the reason I like the noise. The more noise, the more likely this family will find out how best to do Walt Disney World—however the new best way to do it emerges to be!

Follow yourfirstvisit.net on Facebook!