MagicBands Used by Half of Disney World Guests

Walt Disney Co.'s experiment in payment-capable wearables can probably be declared a success, with the company reporting that about half of Walt Disney World guests sport MagicBands.

The wristbands can be used for contactless payments, park admission and as hotel keys. Disney's third quarter, which ended June 28, was the first full quarter in which MagicBands were available to all of the park's patrons, including walk-up guests and single-day ticket buyers, said Robert A. Iger, the company's chairman and chief executive, in a conference call to discuss earnings.

Ninety percent of MagicBand users rate the experience as excellent to very good, Iger said.

Payments are an optional feature of MagicBands, and Iger did not specify how many theme park patrons link a credit or debit card to their wristbands to make contactless payments on Disney properties.

The wristbands use a digital token to identify the wearer and do not store card account data. The bands also pair with a mobile app, allowing users to access the Fastpass system to skip lines at certain rides by agreeing to ride at a particular time.

The success of Disney's program is in stark contrast to similar projects such as a wristband payment system introduced in 2011 at Hersheypark. Hershey shuttered the program the following year, citing low demand.

MagicBand's performance is another indication that consumers are willing to adopt mobile and wearable payment systems if the payment capabilities are paired with other useful functions. Starbucks, which accepts 15% of its U.S. in-store payments through its mobile app, attributes the success of this program in part to the strength of its loyalty program, which is also accessible from the Starbucks app.

Disney's overall revenue rose 8%, to $12.5 billion, in the third quarter from a year earlier. Its net income rose 22%, to $2.25 billion.

The company cited the cost of rolling out its MyMagic+ program, which includes the MagicBand system, as offsetting positive trends in its Parks and Resorts business line. That business benefited from higher ticket prices and higher spending on food, beverage and merchandise at parks and cruises. Parks and resort revenue rose 8%, to $4.0 billion, in the third quarter and its operating income rose 23%, to $848 million.