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IoT, wearables enter Disney Kingdom

04 May 2016  | Brent Lorenz

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Companies are recognising the advantage of using the Internet of Things (IoT) to grow their business. Disney has invested $1 billion in IoT, aiming to analyse data from customer behaviour, improve operational efficiency in the park and enhance customer experience using a wearable—the Disney's Magic Band.

Usually when I write these blogs I focus on how various technologies and trends might impact future mergers and acquisitions (M&A) valuations and acquisition interest for my clients. What I've personally believed, which data has backed me up, is that the value in the "Internet of Things" is not in the sensors and devices themselves (which are important, but can be produced cheaply), but rather in the data that they can collect. The value is ultimately in analysing that data to:

1. Sell people more stuff, or

2. Improve efficiency of a business.

Disney is a prime example of accomplishing both very well.

After a couple of trips to Disney World in the last two years with my own family, I believe that the Disney Magic Band project is the perfect "real world" example of what IoT can do. Disney's project is something that most everyone can relate to, including those that don't have a technical background.


Figure 1: Disney's Magic Band is equipped with an RFID sensor, a Bluetooth Low-Energy chip and a two-year battery. (Source: Disney)

The company's theme parks are well known for being the industry gold standard for customer experience. Everything in the park is geared towards guests receiving great customer service. Most guests are families with children, and a result of happy guests is that they have a good time, spend money, say good things to their friends when they come home, and come back again (to spend more money and encourage their friends to do the same). Disney has 100 million visitors annually, and the data about each customer is very valuable, as well as ways to grow revenue. Each week, Disney has to pay more than 80,000 cast members and schedule 240,000 shifts, which can be a logistical nightmare getting the right people working at the right place at the right time. There are obvious enormous opportunities to grow revenue and to also reduce costs by maximising efficiency.

In 2008, Disney started the Magic Band project, which ramped up to 1,000 people by its rollout in 2014, and spent $ 1 billion by installing sensors throughout the park, RFID readers in the room keys of all of the hotels, all of the back-end software and infrastructure, and training its staff on how to use the system. For $12.99, each user gets a stylish waterproof wristband that inside is equipped with an RFID sensor, a Bluetooth Low-Energy chip, and a two-year battery. Everyone in your party will have their own band, matched to their name and parent's name if applicable, and of course, credit card with a PIN. The Magic Band acts as:

* Entry ticket to the park

* Secure ID, since the band will be matched to you by a finger-print scan

* Entry to all rides and linked to your online account of Fast Passes and special offers

* Room key

* Payment method for anything in the Disney resort (everything takes the Magic Band)

* Location tracker, both for internal park logistics planning, but also presumably helpful if your child is lost

* Link to Photo pass accounts

It's pretty obvious to see how Disney can make more revenue by selling you more stuff, because all you have to do is scan your band and type in a pin to buy anything. When I went to Disney, I literally did not bring any cash or credit card, nor my ID. All I needed was my phone and Magic Band. I have to admit that it was pretty cool to take a picture in the park, they scan your band, and it's automatically wirelessly linked to my account immediately. I was browsing photos while walking around. There was no pressure to buy them on the spot–you could buy them all later or a la carte. I eventually bought them all.

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