How Disney Made the Gray Market in Multi-Day Passes Evaporate

Admission to the Walt Disney World theme parks in Orlando, Florida is expensive - currently, something like $40/day. Exactly how expensive depends, in part, on how long you plan to stay.

Disney sells 1-day, 3-day, 4-day, and 5-day passes. The price per day is about the same, but the more expensive passes offer added benefits: the ability to visit more than one park each day, free admission to the water parks, free admission to nightclubs, etc. In effect, Disney offers volume discounts.

As any economist will tell you, this creates the conditions for a secondary market in multi-day passes. I stumbled across this market a few years ago. We had just spent a week at Disney World and were driving back to the airport. I stopped for gas, and the attendant approached me:

SpeakerAffectWords
hercasualHi.
me casualHi.
hercasualGoing to Disney World?
me casualWe've just been; we're going home now.
herinterestedDid you buy 5-day passes?
me non-plussedYes.
hervery interestedDid you use them?
me very non-plussedYes.
herintensePunched through? All 5 days?
me catching onYes.
herdisappointedOh. Well, have a nice day.

Obviously, she was brokering unused days on multi-day passes. If I had told her I was going to Disney World, she'd have offered to sell me some. As I told her I was leaving, she was hoping to buy some from me.

And obviously, Disney wants to suppress this trade. The fine print on the back of a pass says that it is nontransferable; some warn that reselling them is a crime. You are supposed to sign your pass. Disney reserves the right to require a photo ID for admission. One year, they had a setup where they took your picture with a digital camera and then printed a low-rez—but passable—color picture of your face right on the pass.

But the fact is that every morning thousands and thousand of people went streaming through scores of turnstiles at the Disney parks, and nobody was checking signatures. Even the pictures didn't get much attention from gate attendants. The gray market flourished, in gas stations and convenience stores around Orlando.

Last year, Disney made the gray market in multi-day passes evaporate. Like a puddle in the sun—it's just not there anymore. They didn't do it with storm troopers, or lawyers, or better pictures.

It was actually very subtle. They did it by controlling information.

For many years, a Disney pass was a strip of cardboard, about 2" x 8". There were numbers printed along one edge: 1 2 3 for a 3 day pass; 1 2 3 4 for a 4 day pass; 1 2 3 4 5 for a 5 day pass. Each time you entered a park, you inserted the ticket into a turnstile and it punched out one of the numbers. When all the numbers were punched out, the pass was used up.

Now, a Disney pass is a piece of cardboard, the same size and shape as a credit card. On the back is a printed serial number and a magnetic stripe. Each time you enter a park, you feed the card into a turnstile. You pass through the turnstile and it returns the card to you.

Somewhere in the bowels of the Disney corporation is a computer. In the computer is a database. In the database are the serial numbers of all the passes, together with a count of how many times each pass has been used.

Each time a pass is inserted into a turnstile, the computer reads the serial number on the magnetic stripe, looks it up in the database, and finds out how many times it has already been used. If it is all used up, it denies entry. Otherwise, it increments the count and permits entry.

The crucial difference is where the count of used days is stored. The old passes stored the count right on the pass: anyone could look at it and see how many numbers had been punched out. The new passes store the count in a computer somewhere. Now, only Disney knows how many days a pass has been used.

This effectively destroys the gray market, because you can no longer prove to someone that a pass has any unused days on it. I could sell one to my brother, or even to my brother-in-law, but I couldn't sell one to a stranger. More to the point, I couldn't buy one from a stranger.

There will always be some trade between family and friends, but the brokers operating out of gas stations and convenience stores are out of business. Their market just...evaporated.


Notes

3-day passes
Like all good marketers, Disney incessantly rejiggers their product line: at the instant of this writing, they don't appear to be offering 3-day passes.
obviously
If people are free to buy and sell single days from multi-day passes, then they will undercut Disney's price for the more expensive single-day passes.
subtle
The subtlety becomes apparent when you consider how much time and money Disney spent printing pictures on passes, without nearly so satisfactory an outcome.
credit card
which makes them easier to carry in your wallet
computer
This is actually conjecture on my part, but it's difficult to imagine it working any other way.
count
The database probably records the times, dates and turnstiles at which each pass is used, but in principle, all it needs is a count.

Steven W. McDougall / resume / swmcd@world.std.com / 1997 June 7