Monetizing Magic: The Disney Way
Disney monetizes magic like no other thanks to the alignment of its business and operating models.
Disney is in the business of monetizing magic. This means creating unique, memorable touchpoints that make guests want to experience more of the brand, whether by returning to a park, resort, or cruise ship, watching movies, or purchasing merchandise. Disney’s operating model of hiring and empowering the right people, proactively seeking new magic, and planning for every detail is key to its position as one of the most valuable brands in the world. 1
Hiring and empowering the right people
Disney doesn’t hire employees it hires cast members – people who are passionate about being part of the show they put on for guests every day. Once hired, cast members spend time in Disney Traditions before beginning their role. This class is focused on the Disney heritage and helps new employees understand the richness of the brand and what it means to convey it.
Disney makes priorities for cast very clear through the “Four Keys Basics” started back with Walt Disney himself: safety, courtesy, show, and efficiency. They are initially trained on what this means within their role, are given examples of best practices in each, and then given wallet cards as a daily reminder of what is most important.
With these basic expectations clear, cast members are empowered to deliver magic for guests. A common interview question is “what do you do if a little girl spills her ice cream cone?” The answer is not only to get her a new one, but to offer her a new clean shirt as well. Cast benefit from a “no strings attached” program where they can bill these special guest expenses using a very simple process. Cast are also given time in their schedule where they are specifically assigned to “float” so they can proactively recognize opportunities to engage guests. They are also involved in “magical moments,” simple acts of integrating guests into daily operations in special ways. For example, a slide prince or princess is chosen each morning at the resorts to wave a wand to turn the water slide on. Cast members are also encouraged and recognized for coming up with their own “magical moments.”
Proactively seeking new magic
Innovation is a priority within the company, as the business model depends on new content. Disney is known for its large corporate strategy team, which demonstrates the priority it puts on thinking proactively about future opportunities. It is through this team that Disney in recent years has acquired Marvel and Lucas Films, to great advantage for the company. 2 Disney is also always seeking new ways to integrate into guests’ daily lives as evidenced by the new Disney Life, a digital subscription service offering Disney movies, Disney channel shows, music and movies in Europe. 3
To ensure ongoing innovation within the parks and resorts, Disney has a “Dreamer Team” called Walt Disney Imagineering tasked with consistently designing new rides and attractions, as well as a creative entertainment group focused on stage shows and other experiences. Some new attractions coming in 2016 include a new Frozen ride at EPCOT and Disney Springs, a revamped version of Downtown Disney that will double the number of shops and restaurants. 4
Planning for every detail
Disney has cultivated a culture of excellence, with a focus on the details of design and show. There is a team specifically responsible for “Show Quality Standards” who audit parks and resorts to be sure details are sufficient to uphold the Disney brand. There is also a facilities department that walks properties as a guest would to gauge improvements needed. They score details down to the level of paint quality through a consistent “vantage point index” that prioritizes potential changes based on the impact they would have on guest experience.
This attention to detail also expands to guest service recoveries. These are particularly likely during peak demand like holidays, so there is always a rigorous planning process, as well as a post-event recap to share learnings and potential improvements. Disney is very proactive at communicating potential difficulties to guests both in person and via mydisneyexperience.com. Disney has a motto for service recoveries of “seek perfection, settle for excellence”: one that can indeed be applied to the operating model of the company as a whole. 5
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Student comments on Monetizing Magic: The Disney Way
Interesting, they definitely know how to create a “magical” environment. At the same time, I also wonder why the park they opened in Paris was not nearly as successful as the ones in the US. Perhaps some of this is American culture specific and not transferable to other cultures? or perhaps it was something specific about the site in France that was not in a convenient location?
Amazing post! Disney definitely has legendary integration of all of their properties (in my last job we called it “franchise management”). One question I have is how they integrate their parks operations into their film operations – e.g. when deciding whether to greenlight a film like Frozen, do the franchise management or parks executives have involvement in the approval process? It’s a bit of a chicken/egg question – is quality film/TV content Disney’s top priority, or exploiting that content in consumer products/theme parks/etc.? Who within the corporation has more say over the creative process (and is it truly a creative process, or more of a commercial one)? Whatever Disney is doing, it is certainly working!!
I loved your post, Megan!
I especially enjoyed reading your “Proactively seeking new magic” section, which detailed Disney’s multi-faceted innovation strategy. I’d add that much of Disney’s innovative thinking is evidenced and documented by its extensive patenting activity. Disney’s recent issued patenting activity is strikingly broad in scope, ranging from humanoid robotics to kinetic flame devices (to modernize the aesthetic of theme park attractions and amusement rides) to unmanned aerial vehicles (UAVs) (or drones). 
That said, in recent months, Disney executives have been troubled by inconsistent performance in select divisions (e.g., the TV division). Although Disney continues to innovate in subscription-based offerings (as “evidenced by the new Disney Life,” per your post), the firm’s subsidiary ESPN has lost 7 million viewers over about two years due to heightened competition from rivals like Netflix.  It makes me wonder whether Disney—a massively diversified media and entertainment conglomerate with business divisions in “amusement parks, full-length movies, television production and video gaming”—is ever at risk of seeking too much magic. 
Disney may have won the hearts of millions over the years by “creat[ing] the never-before-seen.”  I question whether they’re too diversified to successfully innovate across every business division and whether they should rollout a more targeted innovation strategy.
Great post Megan!
It’s unbelievable how Disney’s detailed operating model captures the heart of not only children but also adults. I just wanted to mention that Tokyo Disneyland is making a ton of money despite the ticket price being half of Disneyland California, and I think that there are a lot of ways that Disney is capturing the value that it is creating (such as through selling souvenirs, food, drinks etc.).