BUY vs. BUILD
This Wall Street Journal article lays out one of the most perplexing things about how established companies, leaders in their industries, behave with an incumbent's mind-set. Titled, "Fans resist end of Virtual Disneyland", the piece explains:
"For Walt Disney Co., the task of opening a virtual version of Disneyland on the Web was relatively easy. Closing it, though, is proving to be quite a bit more difficult, thanks to the wrath of obsessive fans of Disney's theme parks.
Virtual Magic Kingdom This screen allows Virtual Magic Kingdom's gamers to build an avatar they can play with.
In conjunction with the 50th anniversary of Disneyland in 2005, Walt Disney launched a free online game called Virtual Magic Kingdom whose look and layout mimics Disneyland's. Users created avatars and explored the online park's various regions, such as Tomorrowland and Main Street; chatted with other users; and participated in online promotions that crossed over into real-life activities at the company's resorts in California and Florida.
Disney's notoriously obsessive fans got deeply into this. Using their online personas, fans of Virtual Magic Kingdom -- VMK to aficionados -- accumulated points by playing games and completing tasks inside the world. These points could then be used to buy in-game objects like animated hats, pins and furniture to decorate their virtual private rooms. Points could also be accumulated in the real world through purchases of Disney movie DVDs and the like.
When players tired of the online world, they could keep playing VMK as they visited Disney's theme parks. There, they could go on scavenger hunts tailored specifically to them -- and use their rewards to purchase special Virtual Magic Kingdom items that increased their status among fellow gamers.
On Wednesday night, however, Disney plans to throw everyone out of VMK and lock the gates -- erasing their online profiles, lives and collections of virtual trinkets and real estate. Disney says it never intended the 50th-anniversary promotion to run this long, but money is also a factor: Virtual Magic Kingdom is free, and full access to Disney's other online game sites -- like Club Penguin and Toontown -- costs as much as $9.95 a month in the case of Toontown."
The closing apparently has raised hue and cry from some Disney faithful, both online and off. The 18 month promotional experiment did however manage to garner quite a few "sticky eyeballs", as we say in the online business:
"The situation shows how sticky things can get when free, nonrevenue-generating gimmicks blossom into hits. In 2006, Disney boasted that one million avatars had been created inside VMK, though the company declines to say how many users the site actually has (individuals can create multiple characters). The site, which operates from 7 a.m. until 10 p.m. Pacific time, still boasts a few thousand daily users."
Couple of remarkable takeaways from this little quote.
1. Disney managed to get a million folks to translate their off-line affinity for Disney parks into some online activity. It fizzled in growing users from there of course, since the whole thing was designed just as a short-term "promotion" for the perennial off-line properties.
2. Disney actually had off-line operating hours for an online site, which presumably can be accessed 24/7, from anywhere in the world.
Some of these questions popped into my mind reading this saga:
1. How much does it cost to keep the site running? How does that cost compare to other promotional initiatives by Disney for it's off-line properties that last for years or indefinitely?
2. What are the pros and cons of moving the site from it's marketing/promotional departments, to the operational side? What if this were turned over to some in-house employees with a "start-up mentality", and ask them to see how something like this could be turned into a sustainable virtual presence of Disney's real-world properties? Could it be morphed into being both a permanent promotional and an entertaining online property in it's own right? And of course, could that be turned into a profitable operation in the long-term?
3. Would an effort like this cost anywhere near the $700 million it cost Disney to buy Club Penguin last year from outside entrepreneurs with the right "startup mentality"?
4. Or is buying third-party online properties, the only real strategy for a leading incumbent like Disney to get it's online game?
I'm sure there are some questions and issues I'm missing in why closing the promotional site and not doing anything else with the latent opportunity is a real good idea. Just saying.