Why China Is Too Advanced For Disney MagicBands

Considering the opening date for Shanghai Disneyland has finally been announced, we are going to take an extensive look at just how different this park will be from other Disney resorts around the world. In 2015, we found out that Disney was ditching the idea for using MagicBands in California as the roll out of My Disney Experience was announced. Reasons were not given, but cost and return on investment are two major factors. As we have talked about several times here at TPU, the customers who visit Disneyland in California and Walt Disney World in Florida are two different segments: locals versus out-of-state tourists.

Disney MagicBand

A recent article on Bloomberg confirmed that MagicBands would not be coming to Shanghai Disneyland either. While very few industry followers are surprised, the reasons listed in the article aren’t exactly comprehensive. Indeed, price is a major concern with the cost of each MagicBand being several dollars. The bands, RFID chips and batteries themselves aren’t that expensive considering the massive bulk Disney is buying. Rather, the expense comes with the fancy packaging and shipping charges associated with delivering the MagicBands prior to guests arriving.

Then you have to send along a USB drive with a video that explains everything a MagicBand can do along with the new My Disney Experience service. It’s a bit overwhelming. Educating the public takes time and money. In the case of Shanghai Disneyland, Disney needs to spend those marketing dollars letting the public know that the park is open for business and what attractions, restaurants, and hotels are there. To add MagicBands to a project that is already behind schedule is a huge undertaking.

More importantly, the Chinese people are leaps and bounds above Americans when it comes to convenient payment methods beyond the credit card. Companies like WeChat and Tencent have enabled mobile users to utilize (and trust) their cell phone as a valid form of payment. In the second quarter of 2015, the amount of money people spent in China using mobile payments was $540 billion. That’s not a number to shake a stick at.

If you think Apple Pay or Google Wallet is taking over the United States, think again. While Apple Pay may advertise that it is accepted at over 700,000 locations, this is a drop in the bucket. Most retailers have still jumped on the mobile payment bandwagon. Why? Well, Apple and Google charge around 0.15% per transaction to use their service in addition to the credit card fees Visa and others slap on. This is why over 85% of small merchants haven’t jumped on the mobile pay bandwagon. More importantly, it’s why big retailers don’t heavily advertise that they accept mobile payments. Why cut into profit margins if the customer is willing to pull out their credit card anyway?

Contrast that to China, where street vendors accept mobile payment just as easily as the big box stores like Wal-Mart do. In some areas, mobile payment has already surpassed using cash or credit. Compared to the United States where mobile payment is still barely used, it makes sense why Shanghai Disneyland is ditching the MagicBands and using cell phones instead.

My Magic Plus

Which begs the question, why still use them at Walt Disney World? The answer is infrastructure. Disney in Orlando has spent a lot of money on touch points all over the property to read RFID chips embedded into MagicBands. From turnstiles to FastPass return points to hotel rooms and payment systems, the amount of money it would take to switch over to QR code readers would be astronomically high. Love it or hate it, at least for the foreseeable future, MagicBands are here to stay at Walt Disney World. Your thoughts?

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  1. fan51
    Posted January 13, 2016 at 2:37 pm | Permalink

    Infrastructure for a new park doesn’t sound like an excuse. They can build in RFID plus other technologies at Shanghai and use whatever the guests have at the moment. They can scan QR codes, barcodes, or use RFID on phones, ticket passes, or MagicBands. MagicBands and Smartphones both have their strengths and weaknesses. I enjoyed using MagicBands when I visited Disney World. I used it pay for all my transactions, for Disney Dining, Fastpasses, and my room key. It was a useful service. If Shanghai is more advanced with smartphones, it can certainly alleviate the need to mass deliver MagicBands, but it shouldn’t replace it for on-site guests.

    Perhaps it is also time to consider upgrading MagicBand technology. There is no reason it should cost a few dollars. It should actually cost a few dimes especially with the cheap manufacturing costs in China. Another approach is a RFID on a disposable wrist band.

  2. mark_h
    Posted January 13, 2016 at 5:47 pm | Permalink

    Florida gets a lot of international tourists- they will not want to use a mobile phone based system for fear of running up a huge bill for data roaming. WiFi would be a solution but people would still be put off.

    Many guests will not want to risk losing/damaging their expensive smartphone- the RFID wristbands will be more difficult to lose and are a lot more robust.

    I would have thought that for California Magic Bands would offer a saving as guests would re-use them for their next visit. RFID chips can be powered by the reader so there is not a battery to go flat in them.

    RFID is usually read quicker than other systems (magnetic stripe, contact chip card, bar/QR code) and has more robust readers. Smartphone based systems are usually the slowest as the user has to get the phone ready before scanning- although this allows more functions to occur it would cause issues at busy attractions.

    RFID has a key advantage over app/QR code based systems in that there does not need to be real-time communication between all the readers (relatively secure information can be stored on the chip). This has led them to be used for public transport ticketing and hotel keys.

    The cost of RFID wristbands would be very low if Disney did not overpackage them. Guests staying in Disney accommodation could be issued them at reception rather than have them posted out (as happened with the old charge-cards they used to issue).

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