Wednesday, June 22, 2011

D23: Exclusive Fan Club vs. Revenue Stream

Disney's D23 Expo is coming up pretty soon, either August or September, at the Anaheim Convention Center. Not sure of the dates - I am not a D23 member. Or care to be. Somewhere at the top of this blog it says I'm a Disney fan - TRUE - a fan of D23? - not at all. D23 was launched in March 2009 and was reported to be an "exclusive" Disney fan club with inside tracks to exclusive events, merchandise, and assorted other privileges that came with D23 membership. This is a real opportunity. This is what Walt would have wanted. This is all well an good but I was turned off by this concept from the get-go.

I don't know anything about the inner workings of the Walt Disney Company but after working for 2 large publicly held corporations for almost 30 years, I've learned that little is done for the public or "fans" unless it affects the company's bottom line profit margin. The company's only obligation is to offer quality products or services at a price people are willing to pay.  In the corporate world it's all about the stockholders and the return on their investment. If D23 makes money - great. If D23 loses money - then a lot of the expenses can probably be written off when it comes to taxes.

When thinking about D23 and the corporate decisions that brought it to life, do you think that any Disney executive dressed in business casual (they seldom wear suits anymore) was thinking, "we need to give back to our fan base. We need to make our real fans and supporters more inclusive in our company."? No, I'm willing to bet it didn't happen this way. It's more a question to executives that asks what can we do to extend our revenue streams and marketing. Someone comes up with the idea, let's set up an "exclusive" club that charges $75 for annual membership then proceeds to charge for events and merchandise under the auspices that says you're some kind of privileged insider.

In 2009, people jumped on like gangbusters but the business model really isn't sustainable, especially in this economy. The people that wanted to be D23 members were there at the beginning with Disney offering specials for those who signed up in the first year. But what about the second year, the third, the fourth. Well we leaned in the second year, the trick was to offer a membership tier at half the cost of the inaugural year (without the magazine). Going forward, I'm not sure what you can do to get new members - you just have to keep the old members renewing which currently seems problematical. People are getting wise. People are leaving.

What's the incentive for someone in Austin, TX to join D23? Most of the events are held in in Southern California, home of Disneyland, Walt Disney Studios, and Disney corporate offices or at WDW, Disney's largest theme park property. Sure, there have been D23 events in New York, Seattle, San Francisco (home of the Disney Family Museum) and other cities but these events are minor in comparison to what can be offered in the proximity of their parks. And even at that, more D23 events can be offered in Southern California because that is where the Disney firepower lives. So as knowledge becomes more evident, the potential membership base increasingly shrinks.

Now I brought my D23 issues up in assorted Disney forums from its inception and immediately got pummeled like I was some sort of communist trying to overthrow the USA but usually these were from the true Disney die-hards who have no problem whatsoever with D23 and what it has to offer. I can accept that. My prediction was that D23 couldn't last 5 years with its original business model. I'll stand by that and we'll see how it goes. 

The original D23 Expo was supposed to be annual, it isn't. The original D23 Expo was 4 days, now down to 3. The original D23 Expo had to have Disneyland castmembers brought over to the convention center to fill vacant seats for Bob Iger's opening address. The original D23 Expo had to offer severely discounted tickets (or free tickets) to Disney employees to pad the attendance numbers over the weekend.

The fallacy in all this, as CNN reported back in 2009, is the reliance that there are people willing to pay money for the opportunity to pay more money for the idea that they are some kind of Disney insider. There are people like this still out there but in 2011, probably fewer of them.

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