The Magic's Just Starting With Disney's MagicBands

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Disney (DIS) reportedly spent $1 billion to get its new theme park technology off the ground, and the combination of the MyMagic+ platform and the MagicBand bracelets that make the "magic" happen are starting to pay off.

"The early returns we are seeing from MyMagic+ are encouraging," CFO Jay Rasulo said during last week's earnings call.

He credits MyMagic+ -- the technology that lets folks do everything from enter its theme parks to reserve access to expedited ride queues -- as contributing to Disney's year-over-year increase in operating profit at its theme park division. There's no way to tell how much of the 4 percent increase in attendance at Walt Disney World and the 6 percent uptick in per capita spending at its domestic parks can be attributed to the rollout of MyMagic+ and the growing popularity of the MagicBand bracelets, but the early signs indicate that Disney's big gamble was the right wager.

Wrist and Reward

It's been a little over a year since Disney began mailing out MagicBand bracelets to guests with reservations to stay at its resort hotels. The colorful rubber wristbands mask RFID chips that identify guests so they can enter theme parks, enter FastPass lines and pay for purchases if their hotel stays have charging privileges on their cards.

MagicBands began rolling out to annual pass holders earlier this year, followed by a springtime rollout of retail availability for day guests. The technology has been generally well received by guests, and rival theme parks that can't afford the investment or don't have the kind of destination-travel gravitas to make it worthwhile are naturally envious.

Things are really just getting started. Last month Disney tied MagicBands to the on-ride photos. Instead of having to purchase the digital snapshots right away, riders can scan their MagicBands over the photo monitors at the end of the attraction and buy them later. It's the latest brilliant move by Disney to extend its reach into patrons' pockets long after they've left the park -- and Disney's apparently just getting started.

Rasulo was asked by an analyst about how to model the roughly $300 million to $400 million that Disney expects to spend to get Shanghai Disneyland up to speed, with a good chunk of that coming in the year ahead. Rasulo talked up MyMagic+ "ramp[ing] up in terms of overall new initiatives" to help offset the incremental costs of opening the new park in China.

Bracelets Are Forever

A MagicBand in cahoots with the My Disney Experience smartphone app already lets guests reserve access to three FastPass queues a day, and those reservations can be made weeks ahead of time. It's easy to see why that is encouraging guests to visit the designated park instead of straying to rival neighboring attractions. Disney also offers a wide array of MagicBands displaying its growing arsenal of characters, making the wristbands fashion statements that guests proudly show off at the parks.

%VIRTUAL-pullquote-Disney could send personalized smartphone alerts of short lines or flash-sale opportunities.%Where can Disney go from there? It was originally suggested that the MagicBand could be used to pull up guest info that the family entertainment giant could use to enhance the experience. Characters would be able to identify guests by name, if the guests opted in, of course. Armed with info about their favorite rides, restaurants and even characters, Disney could send personalized smartphone alerts of short lines or flash-sale opportunities when guests are in the park.

There's a fine line between enhancing a park outing and being creepy, but arming guests with the power to decide how immersive they want their experiences to be will go a long way toward silencing any privacy concerns.

It also wouldn't be a surprise if MagicBand options themselves grow in the future. There are already limited-edition character wristbands, but what about designer models? What about Disney watches with RFID chips? What about fitness trackers, feeding off my earlier suggestion of a Run Disney MagicBand that takes advantage of its growing competitive running slate to roll out a fitness-tracking MagicBand?

Getting folks to start wearing these bracelets outside of the theme park could also open up possibilities for not just Disney Store interactions but possibly even a digital wallet along the lines of Apple (AAPL) Pay or an unlocking mechanism for digital goodies at movie theaters and beyond. Disney really is just scratching the surface here. One can only imagine what will be possible in another year or two.

Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool recommends and owns shares of Apple and Walt Disney. Try any of our Foolish newsletter services free for 30 days. Interested in Apple's new bracelet? Check outour free report on the Apple Watchto learn where the real money is to be made for early investors.