Riding Radio Waves

By Larry Dignan Print this article Print

Are radio frequency identification tags good just for cutting costs in the supply chain? Not hardly. Theme park operators think they can boost sales.

As project leaders ponder pilots of radio frequency identification systems this summer, in the rush to meet the mandates from Wal-Mart, Target, the Department of Defense and others, the real action may be at the theme parks where they'll take their kids.

A series of pilots are set to begin at regional and national theme parks. Baseline has learned that Walt Disney Co. is planning to use radio waves to track assets such as laundry, beverages and bus shuttles that ferry visitors around its parks. The Disney pilots are in the early stages—the company in some cases hasn't even selected a tag vendor yet—but the company does plan to use radio frequency identification (RFID) tagging throughout its parks.

Disney would not comment, and details about pilots by the company and other theme park operators are sketchy. Oklahoma City-based Six Flags Inc., however, did confirm that Memorial Day will kick off pilots at four of its water parks in Atlanta, Los Angeles, Dallas and Jackson, N.J. Six Flags plans to give patrons wristbands with chips that emit radio waves. The wristbands can be loaded up with the digital equivalent of cash. Instead of digging through wet dollar bills, park visitors swipe their wristband past a reader and have an amount deducted from their stash.

This summer will mark the first time RFID pilots are widely deployed in theme parks, one of the sectors on the frontier of using radio-wave tagging for consumer applications. Analysts expect RFID to be commonplace within the next three years.

"The wristbands make it convenient to buy things," says Debbie Nauser, vice president of public relations for Six Flags. "It's a guest satisfaction thing."

And that's the difference between the theme park pilots and the efforts by consumer goods makers to comply with the product-tagging requirements of big discount retailers such as Wal-Mart and Target, beginning in January 2005. Where those retailers are trying to drive down costs, the theme park operators are trying to drive up revenue.

Many of this summer's theme park pilots will be similar to what Six Flags is planning, say industry experts. The goal is to make it easier to pay for food, beverages and souvenirs—an issue at theme parks where children may be separated from their parents' wallets and cash can be difficult to handle if it's wet from a water slide.

Aside from the payment benefits, theme park managers will have a better idea where people go once in the park. Theme park officials will know where a person buys popcorn, gets on a ride and how long it takes to get across the facility to grab dinner. Some pilots also plan to include demographic data to determine if a patron is of age to order an alcoholic beverage.

Tom Manning, vice president at consulting firm Bain & Co., says the data provided by tagging could help park managers understand the behavior of customers. Often, says Manning, visitors enter a theme park, get overwhelmed by rides and other attractions, and wander aimlessly or not at all—and sometimes don't buy anything. "Kids are random variables," says Manning. "The ultimate benefit will be to monitor the randomness and eliminate downtime."

Ultimately, parks could provide personal itineraries and use the same yield management techniques as the airlines to populate rides and target demographic groups such as boys 10 to 16 years old, says Manning. The best park managers will use this data to document customer behavior such as how customers enter a park and what they do once inside.

Nauser says Six Flags isn't sure what it will discover about its visitors and their purchasing habits since the company hasn't had the means to track this information before. Six Flags wouldn't comment on the back-end system it plans to use to analyze data.

Here is how the RFID pilots likely will work, according to San Fernando, Calif.-based Precision Dynamics, a systems integrator that makes identification tags for theme parks, hospitals and law enforcement agencies.

A visitor to a theme park gets a unique wristband with a chip embedded. On that chip, customers can load debits or purchase prepaid plans, say, three soft drinks, a hot dog and an ice cream cone. The wristbands can also be used to pay for a locker to store items, and money can be added to the tag at kiosks or cashiers.

The money on the tag is then used wherever there is a reader and point-of-sale terminal. Working on the 13.56 MHz frequency, a radio wave ricochets off the chip, picking up a code that identifies the bearer. That information is then sent to a central server that can deduct the amount of the transaction or the item from the person's account.

Collected data such as account-holder demographics and whereabouts in the park can be exported to a database for analysis, or to something as simple as an Excel spreadsheet for manual perusal.

If a visitor buys one more $3 Coca-Cola at the park because of the RFID wristbands, it will go a long way toward paying for the project. Each wristband costs $1 to $1.25 depending on volume, according to Precision Dynamics.

Other necessary items include printers to program the wristbands at roughly $1,600 each, according to barcode and RFID printer maker Zebra Technologies. Tag readers run about $500 each and ride shotgun with point-of-sale terminals. For a theme park running a 50,000-wristband pilot with three printers and 25 readers, the tally comes to $67,300. If a pilot leads to just $1.35 worth of additional Coke per patron, the installation pays for itself.

That calculation omits the analytic software needed to get the most bang out of the data provided by the radio-wave tags. Victor LaRossa, RFID manager at Precision Dynamics, says many theme parks don't include the software component in a pilot because the data can plug directly into their point-of-sale software and then connect to their financial systems. Smaller theme parks can export the pilot data into a spreadsheet.

A larger implementation of tags at amusement parks may require more investment depending on what business intelligence software is already in place, says Frank S. Smith III, vice president of mobility and infrastructure services at Capgemini.

Smith, who can't disclose his theme park clients, says the data analysis will become increasingly important as theme parks move behind their current pilots and eye full implementations across all parks, and potentially millions of visitors. First, a theme park will have to figure out what it wants to know—say, buying patterns, ride behavior and response to marketing pitches—and filter out other events.

Smith advises theme parks to look to RFID to solve problems beyond their pilots. Many initial pilots are designed to make it easier to spend money, but project managers shouldn't forget efficiency.

Radio tags are being used at a "big West Coast park" to track personal defibrillators, which are used if a visitor suffers a heart attack, says Smith. Instead of tracking inventory manually every day, each defibrillator has a tag and sits in front of a reader. When the defibrillator is removed, park managers know instantly it has either been used or stolen. The park has also tagged its wheelchairs because they were often stolen and operators had to buy several hundred a year, says Smith.

"These implementations can apply anywhere—hospitals, amusement parks, airports and museums—there are high-density transitory consumers," says Smith. "RFID was developed in the supply chain, but is rapidly escaping and moving into other areas."

Additional reporting by John McCormick

This article was originally published on 2004-05-04
Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.
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