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Disneyland makes surveillance palatable - and profitable

Jul 15 2019 13:29
Austin Carr

We’re in the heat of the summer blockbuster season, when Walt Disney is taking over theaters with releases like Toy Story 4 and live-action versions of Aladdin and Lion King. There’s another aspect of the season Disney is effectively capturing: summer vacations — and reams of data on the things you do inside its amusement parks.

With the recent opening of the Star Wars: Galaxy’s Edge theme park at California’s Disneyland, the company continues to mine its portfolio of franchises and boost its $20 billion resorts business. Last week, Disney announced the opening of another extension at Disney World in Orlando, Florida, a follow up to its massive Avatar annex. And next on the schedule is a slate of Marvel comics-themed attractions from Hong Kong to Paris.

As families float through It’s a Small World, run from Stormtroopers or snap a picture with Buzz Lightyear, Disney is watching their every move. It’s remarkable how much data Disney can collect in the process — and how willing people are to authorise such behavior. At a time when Facebook, Google and myriad other technology companies are getting hammered over consumer privacy issues, Disney is running the happiest police state on earth.

To keep the parks running with extreme efficiency and learn ever-more about guests, Disney monitors usage of its smartphone apps and electronic wrist-worn MagicBand. The resulting data could include the rides families frequent, the characters kids and parents are most drawn to and the television and film merchandise into which their dollars are funneled.

It wasn’t always this way, of course. Just a decade ago, Disney relied on paper tickets and old-school turnstiles, and, for the most part, didn’t know that much more about resort customers than those who came to the park’s opening 64 years ago this week. Finally recognising the growth of social media and mobile phones in the late aughts, the company embarked on a $1 billion digital transformation of Disney World with the MagicBand, a gizmo that can hold your place in line, make payments and even unlock a hotel room door.

This journey has been fraught at times — and not just because Disney overspent on a wearable device that was quickly displaced by phones. In 2013, in the early days of the MagicBand, Disney Chief Executive Officer Bob Iger was at loggerheads with Congressman Ed Markey of Massachusetts — the privacy advocate who recently introduced an internet bill of rights — over how the system would monitor children’s whereabouts and interests within Disney World. (In a letter that presaged the current privacy debate, Iger argued the program was entirely opt-in and that location data was only collected in aggregate. Iger called Markey’s privacy concerns “ludicrous and utterly ill-informed.”) Even Facebook’s Sheryl Sandberg, a Disney board member at the time, once questioned whether the MagicBand could track her own kids.

Despite these familial concerns, Disney’s data mining never faced the sort of scrutiny that Silicon Valley has. The reason is fairly simple: Disney World is the real-world manifestation of a walled garden, a family-friendly environment without a perceived risk of children being exposed to inappropriate content like on YouTube or Twitch. Wired once called this data-driven customer relationship “exactly the type of thing Apple, Facebook and Google are trying to build. Except Disney World isn’t just an app or a phone — it’s both, wrapped in an idealised vision of life that’s as safely self-contained as a snow globe.”

Unfettered access to customer data has helped Disney streamline its park logistics. The company has suggested the MagicBand enabled it to slash turnstile transaction times by 30% while increasing park capacity. At Disneyland, a new virtual reservation system, the first in the park’s history, has prevented overcrowding and reduced wait times. Even in the early weeks of its highly anticipated Star Wars-themed land, the line for the signature attraction, the Millennium Falcon ride, was a mere 25 minutes. Longer term, Disney’s “Imagineers” have suggested they want to leverage such guest data for more personalisation and crowd-flow management.

At a higher level, this surveillance gives Disney insight into the value of its creative capital. The enthusiasm of patrons for certain physical attractions can signal which movie franchises are rising or falling in popularity. That could inform whether the Avengers can sustain more sequels, help promote the upcoming Disney+ streaming service or is in need of a refresh.

Whereas data-mining efforts have harmed the reputations of tech companies, Disney’s parks division is booming, with operating profit up 18% last year, to $4.5 billion. Perhaps this explains why Disney is reportedly investing more into its theme parks than it spent to acquire Pixar, Marvel and Lucasfilm, combined.

And here’s what you need to know in global technology news:

US regulators approved a $5 billion fine on Facebook stemming from the Cambridge Analytica scandal. The FTC settlement was approved by a vote of 3-2 and caps a lengthy investigation into the company’s data policies. The Trump administration isn’t done with Facebook, though. The president criticised social media companies for their perceived biases and said he’d call them to the White House this month, Reuters reported.

Peter Thiel says the US should now investigate Google for “seemingly treasonous” acts. The Facebook director and billionaire Trump supporter urged the FBI and CIA to look into the search company at an event in Washington on Sunday.

A federal judge cleared the way for Amazon and Microsoft to battle for a US cloud contract. It’s the result of a court case Oracle lost over a $10 billion Pentagon contract.

Amazon is working on a high-quality Echo speaker. It plans to release the product by next year and is also refining prototypes of an Alexa-controlled home robot on wheels.

Juul and other e-cigarette makers have 10 months to file for regulatory approval. A federal judge ruled that the vaporizer companies have until May to submit paperwork to the FDA.

Walmart is primed to pick a new leader for its US online shopping business. The company is searching for a chief revenue officer to map out a battle plan to take on Amazon. Walmart.com is currently holding a sale to compete with Prime Day, which starts today.

A tax loophole is helping Silicon Valley workers save millions. Startup employees who receive stock compensation can use a tax code provision to exclude $10 million or 10 times an investment. “This is just an incredible way to exclude a large amount of income,” one tax expert told the New York Times.

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