From Disney Parks To Carnival Cruises: The Petri Dishes of DFC and IoT?

Theme parks and resorts are emblematic of an encroaching future, a future without keys, wallets, tickets and - dare the thought - maybe even without smartphones. The Internet of Things (IoT), including location-based services, paired with Big Data and Artificial Intelligence (AI), renders experiences more seamless and enjoyable for users, while boosting retailers’ revenues. These connected closed-loop ecosystems are a testing ground for technology, 'Petri dishes' that have Silicon Valley salivating. But, these Petri dishes have larger consequences, and closed, connected ecosystems are the first intellectual exercise in a series of steps which will eventually inform digital finance innovation in the outside world and Smart Cities.

Taking 'The Experience' To The Next Level



In 2013, Disney World introduced the MagicBand, a $1 billion project which features a wristband equipped with a RFID chip and radio technology, thereby connecting the user to a system of sensors around the park. The wristbands minimize paper and hassle by allowing users to board a park-bound airport shuttle and check into their hotel, where luggage is automatically directed as each piece was tagged previously at the departure airport. The band is then used as a park entry ticket, fast pass, room key, reservation facilitator and payment instrument.

Carnival ships will soon adopt similar offerings. Through the Ocean Compass application, in combination with a smart medallion, travelers will be pampered with expedited check-in, electronic door access, or ordering friction-less poolside cocktails. But friction-less travel and payment are not particularly new or inventive concepts, instead the Compass app will embrace a new level of utility: responsive. In fact, testimonials emphasize the location-specific and personalized experience it delivers.

Compass app in hand, I could see that the options for nearby entertainment would shift as I walked across the room, as the servers crunched new data about what was closed, and what I had chosen. It was almost like a right click for the real world. And no matter where I was, I could order what I wanted—there would be no waiting in line, no waiting for a server. Cliff Kuang, Co.Design

The lessons derived from closed-ecosystems will, first and foremost, shake up brick-and-mortar retail as relevance expands to more real-world use cases. Amazon is the first to trial such technology and dismantle the orthodoxy of retail. Late in 2016, the E-Commerce powerhouse launched a store that is bare of both credit card machines and cash registers, a reality powered by IoT and AI advancements.

In order to participate, users must register within the applicable smartphone app and then present the generated barcode to a sensor. Through the unique barcode scan, along with other sensor technology, Amazon tracks the user perusing throughout the store and then identifies and catalogs any products selected. Once a shopper has had his fill, he is free to leave though the turnstile doors.

By leveraging sophisticated AI tools and machine learning, Amazon can detect the location of a product in varying circumstances - from missing off a shelf, in the hands of customer, sitting in a bag to even under a shirt. In all likelihood, Amazon will not invest in their own brick-and-mortar stores, but rather might sell the solution to enterprise customers as they do with Amazon Web Services.

Benefits All Around



IoT and AI technology is currently used by theme parks, resorts, cruise ships, museums and, tentatively, retail shops to enhance user experience, increase security, and gain incredible insight into the habits of their customers.

Contactless wristbands add to the user experience on multiple levels. Perks available to customers might combine options to pre-book rides or restaurants, skip ticket lines (or all together in the case of fast passes), access exclusive / VIP events, receive coupons & discounts, transact seamless payments, or even gamble.

Big data promises to further complement the benefits associated with contactless wristbands. Analytics - which deconstruct users’ behavior and preferences - could supply individualized recommendations that would cut down wasted time and align with the interests of a customer. Location-based services, too, would communicate the most pertinent information at any given place and time. Theme parks, for one, often exploit this technology to publicize wait times for rides. Or, park cartoon characters, princesses and ghouls alike, could consult geo-location, preference and data inputs to interact with visitors in a more meaningful way, like, say, birthday wishes and anniversaries.

Museums, too, are brimming with comparable potential. Users could be served up personalized content about a specific item in a museum’s collection while meandering through an exhibit or guided toward attractions that have similar appeal. Augmented reality is the next logical step to weave into the presentation, with sites rising from ashed ruins or historical figures animating before the eyes of audiences.

IoT and AI, together, have the ability to whittle down what can seem like an overwhelming number of options. While Netflix and Amazon have empowered the consumer, without personalized recommendations or reviews, committing to one choice with certainty is a daunting task. Too many options hinder consumer decision-making, but companies can employ IoT and AI solutions to create personalized experiences, content and recommendations, which will ultimately improve a business's bottom line and promote efficient advertising. That said, there is a fine line between helpful and invasive, and as this technology develops enterprises must 'feel out' the delicate balance.

However, it is not just revenue that is at stake, but also business costs. Personnel could be monitored and better deployed as changes in human capital requirements, whether that be security or first responders, become obvious instantaneously.

Beyond The Band



In the end, Disney decided to abandon the MagicBand, outside of Orlando, and instead move forward with a smartphone-based solution. In the Shanghai park, guests will be able to replicate the advantages of the MagicBand with their smartphones.

This functionality could be also be extended to personal wearables. As it is not sound logic for someone to carry more than one wearable - especially as the industry matures and more people invest in their own wearable and related services - enterprises will have to strategize to leverage new technology within this context. That might mean integration with wearables, but it also might mean integration with smartphones, as smartphones tentatively become the center point in device management. And of course, merchants must be ready to connect to and accept payments from these devices.

Shoppers who invest in the technology will certainly expect plenty of opportunities to use it. Retailers can start by adopting Point-of-Sale (PoS) infrastructure that’s able to process NFC payments… In order for wearables to expand their reach, there will also need to be more alignment between the myriad of players. Phil Pomford, General Manager for Asia Pac, Global eCom, Worldpay


The Magic Is Behind the Scenes



Bringing such expansive programs to life is not only about user devices, but also about what lies behind the scenes. The environment in these closed ecosystems is laden with sensors to discern who and where you are. The actual wristbands and personal devices are one small piece of the puzzle. Providers must retrofit locations, ships, parks, resorts, museums, and re-train employees on a massive scale, not to mention all the back-end analytics. MyMagic+, alone, cost Disney over a billion dollars, and that is only in the Orlando Parks.

Theme parks and resorts are rays of light that will help illuminate the path forward to a future with friction-less commerce in the form of a cashless payments. That, mixed with communicating data will let us arrive to more pleasant experiences informed by, supposedly, better choices.

However, that future is mind-boggling expensive if it is to be implemented at a high-level. If cities are ever to materialize similar, all-encompassing technology, one party might be able to act as a unifying and propelling force, but partnerships across the private-public sphere will have to coordinate. On the payment side, payment processors, banks, card brands and retailers must also work together. Growth in connectivity, sensors and data analytics will aid in a piece-meal approach that eventually splashes out to an open ecosystem as well.

© Mondato 2017


Image courtesy of Adrien Sifre.

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Mondato is a boutique management consulting firm specializing in strategic, commercial and operational support for the Digital Finance & Commerce (DFC) industry.
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