How The Gurus Behind Disney’s MagicBand Are Remaking A $38B Cruise Giant

An exclusive look at Carnival’s plans to turn cookie-cutter cruises into something out of Minority Report.

With his aw-shucks grin, neatly parted hair, and his strong resemblance to Richie Cunningham, you can easily picture John Padgett as a kid growing up in Seaford, Virginia, a small town hard by the Navy shipyards, where they built aircraft carriers and nuclear submarines. Nearly all his neighbors worked at yards as tradesmen—electricians and machinist and welders like his grandfather. What it taught him was that scale wasn’t anything to be afraid of. You could imagine something as incomparably huge as an aircraft carrier, and it was just guys like your neighbor building it one rivet at a time, day by day across a couple years, until the whole thing had got bigger than you could have imagined at first. He grew up learning to be a carpenter himself; after college, as a contractor he worked on big projects, with his own two hands.


Padgett grew up unafraid of scale, and scale has become his obsession. He was one of the prime movers of Disney’s $1 billion MagicBand and MyMagic+ project, which transformed how millions of people move through Walt Disney World—a massive experiment in friction-free user experience that has inspired projects in industries ranging from health care to sports. He’s now chief experience officer at Carnival, the $38 billion dollar cruise industry behemoth. which at tomorrow’s CES keynote will unveil the Ocean Medallion. Co.Design got a exclusive look at the process behind creating the Ocean Medallion, which promises to transform the cruise ship experience into a personalized voyage at massive scales: Where touchscreens will recognize you as you move past, a la Minority Report; where every drink you order and every activity you do will power new recommendations, refactored three times a second, based on precisely what you’ve been doing; and where crew members will know you by name as you approach, know where you’re going, and know exactly how much help you might need; and where you can order anything you’d like, anywhere you’d like among the ship’s dozens of floors and rooms, and a waiter arrives with your order in hand. Think of it like Uber for everything, powered by Netflix recommendations for meat space.

By November 2017, when the first Medallion-class ship, the Regal Princess, sets sail, the best place to taste the future won’t be in a skunk works lab in Silicon Valley. It’ll be from a deckchair adrift in the Caribbean, with the smell of suntan lotion in the air and a mai tai in your hand. Whether it succeeds or not in its grandious goals, it’ll be a bellwether for design and technology, and a world where your environment is every bit as important as the device in your hand.

A map of the so-called Genome, which maps a guest’s behavior to recommendations for activities, meals, drinks, and services. [Photo: Jeff Olson for Fast Company]

Solving The Problem Of Choice, Through Personalization

Unless you’re one of the 2% of vacationers who’ve taken a cruise, then you probably don’t realize the size and scale of the modern cruise ship. Take the Regal Princess. She’s almost 1,100 feet long—nearly four football fields—and her 19 decks tower 200 feet above the water. She carries 3,500 passengers and 1,300 crew, and ranks as one of the 15 largest cruise ships in the world. As big as she is, she probably won’t be all that remarkable in a decade. It’s because of the simple economics of the cruise business.


In the 1990s, ship sizes began to explode when cruise operators realized that even if they doubled how many passengers could fit onto a ship, the combined costs of crew and fuel didn’t increase nearly as fast. So whatever you saved thanks to less crew and less fuel per passenger, you could put into profits. And if that cavernous ship proved hard to fill, then you could use some of those profits to put more and more attractions onto the ship itself. Those increasing returns to scale produced the modern cruise ship, which contains far more attractions and shows and activities and restaurants than any one person could ever do in a couple weeks —from giant water slides to casinos to musical shows to ice-skating extravaganzas. The largest cruise ship sailing today, the Harmony of the Seas, has 13 different restaurants—as many as the world’s largest resorts and casinos. Cruise ship heads like to say that cruising provides off-the-charts value. But then again, with so many options, so is the overload.

If you follow the worlds of tech and entertainment, this should all sound eerily familiar: Today we are drowning in an abundance of choice. Instead of picking a DVD to watch from a few hundred at Blockbuster, you have thousands of movies on demand through Netflix, and tens of thousands more through Apple and Amazon. But presented with too many options, it’s easy to choose nothing, or to be disappointed with what you chose. That’s the promise of personalization: To give us exactly what we want most, while spending as little energy as possible on making a choice.

John Padgett, Carnival’s Chief Experience Officer. [Photo: Jeff Olson for Fast Company]
But cruise ships and theme parks offer the one thing Silicon Valley still dreams of, for the Internet of Things: the ability to imbue the environment all around you with enough sensors to understand exactly where you are and who you are. Outfitting just one of Carnival’s 105 ships to create the Medallion experience requires 7,000 sensors, strewn throughout its every nook and cranny, from your state room to the elevator. Getting those sensors onto the ship is a massive undertaking: Every modern cruise ship only comes in for a dry dock every three years, and those dry docks only last around a week. All 7,000 of those sensors have to be installed in a matter of days—it’s almost akin to a pit stop, with every tiny step precisely choreographed so as not to waste any time. But instead of a car screeching in for tune up, it’s a boat the size of a city block.


For the Carnival cruise of the future, the personalization will begin at home, when you start choosing exactly what to book. Then your Medallion arrives in the mail. A small disk, about the size of a quarter and laser-etched on the back with your name, you wear it on a bracelet of your choice. Inside, the Medallion has long-range and near-field sensors, so that all the sensors on the ship can pinpoint exactly who you are, and where you are. Equally as important is the app, dubbed Compass, which you can access to change your itinerary and make new bookings for restaurants and shows. The choices you make, the tours you tap on to find out more, even the places you linger the longest on the ship all become fodder for machine-learning algorithms that try to map what you’ve done to what you’re most likely to enjoy.

I saw a flicker of this as a prototype, at Carnival’s Experience Innovation Center. As I walked around a rigged up sundeck with the 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.

[Photo: Jeff Olson for Fast Company]

Time and time again, in the move from paper money to credit cards to web retail, one iron law of commerce has been that less friction means more consumption. Standing on the deck, knowing that whatever I wanted would find me, and that whatever I might want would find its way either onto the app, or the screens that lit up around the cruise ship as I walked around—it was friction-free commerce at a scale reserved only for science fiction. But it wasn’t hard to see how many other businesses might follow suit in the coming years, or try to. “One way to view this is, creating this kind of frictionless experience is an option. Another way to look at it is that there’s no choice,” says Padgett. “For millennials, value is important. But hassle is more important, because the era they’ve grow up in. It’s table stakes. You have to be hassle-free to get them to participate.”


Inside The Genome Factory

Padgett had spent nearly 20 years at Disney, and six of them working on the MagicBand project, when Carnival’s CEO, Arnold Donald, hired him. Padgett was restless, eager to imprint what he’d learned on another organization. Donald wanted Padgett to figure out how to increase personalization at every level of the company, which covers a mind-boggling footprint: Not only the 105 ships, but 740 destinations around the world, which each had its own points of access to the ships, its own activities on land, its own cultures, its own staffs. But the cruise industry has stagnated, growing slowly if at all since the days of the Love Boat, and Donald was eager to figure out a new approach to serving customers, to getting them to come back. Padgett told Donald, with typical confidence, give me six months, a few million dollars, and I’ll give you a presentation that will change the course of this company. Padgett’s ramrod self-assurance can be either inspiring or insane-making, depending on whom you ask. But the results are hard to argue. You can see them for yourself. Padgett’s presentation to Donald wasn’t a PowerPoint. It was nearly an entire building.

Carnival’s Experience Innovation Center looks just like any other bland office building you’d find in any other office park in Miami. But the perfunctory lobby offers a hint of constant construction that’s been happening over the last year and a half: There’s a steel door that leads to the inner sanctum, and there are sprays of sawdust emanating from all around the door jam, as if something had just exploded on the other side.

Through the door, there’s a reception desk, and a painted message on the wall, 7 feet tall, from Bucky Fuller: “The best way to anticipate the future is to design it.” It’s dark, and the rooms beyond aren’t rooms—they’re curtained-off staging areas that feel like sound stages on a movie set, which, in a way, they are. There are sun decks, hallways, elevators, state rooms (the cruise-ship word for what’s otherwise a hotel room), casino, bars—all the pieces of a real-life cruise experience. At the center of this maze, behind all the curtains like so many Wizards of Oz, you’ll find hundreds of engineers and designers arrayed cheek by jowl at cheap folding tables, clicking away at algorithms and app screens and floor plans. But pride of place is given over to one giant whiteboard wall, which is covered with a sprawling map of all the inputs and ideas that flow into the algorithm that crunches all the passenger data into personal recommendations—what Carnival likes to call the Genome, or the market of one, which is recalculated three times a second on the ship’s servers.


If Padgett is the prime mover of the Medallion project, then his right hand is Michael Jungen, another Disney veteran, who for years headed all the company’s ticketing operation. Where Padgett is the vision guy, Jungen makes the details happen. But it’s perhaps in living with the nitty gritty that both Padgett and Jungen were able to see a bigger picture at all.

One of Jungen’s signature achievements at Disney was to create the Fast Pass system, which allowed guests to skip the lines outside of rides, and simply collect reserved tickets in advance that would let them walk right up to the ride, like a VIP. That idea eventually morphed into the MagicBand, and the ability to set reservations on the app, and walk up to the ride without even needing a ticket at all. To Padgett, the ease of remaking every single transaction in the park through a single, seamlessly interwoven piece of technology was key. But so too was the broader promise, that of letting technology give people a level of service that once would have cost several hundreds of dollars.

Michael Jungen, VP of Design and Technology. [Photo: Jeff Olson for Fast Company]
Most businesses don’t work on democratizing better experiences. Growth more typically comes in identifying the richer portions of your audience—in finding them, offering them more, and changing them for the privilege. The FastPass was a different thing: The idea that using technology, you could offer higher service, and make everyone happier. Padgett wasn’t necessarily an idealist. He was a pragmatist who began his career at Disney as an MBA-toting finance guy. When he crunched the numbers, serving a few rich people never made sense to him. It only improved a business around the margins. It didn’t grow the whole business.


Padgett likes to say that the Medallion is about maximizing experience versus selling you more stuff. To be clear, many of the new experiences that you’ll be offered on your app do, in fact, cost more money. But at some point the dollars and cents of frictionless transactions bleed into the squishier stuff of experience—how people enjoy themselves, how they remember, what they remember. Get someone to venture out on a couple more excursions, get them to try a couple activities that they otherwise would have skipped, and maybe they’ll have a better experience, create better memories. And if better memories mean that people are 10% more likely to return? That’s hundreds of millions of dollars. That’s why Padgett was able to sell Arnold on the idea of retrofitting the fleet, with just the startup costs alone running to the hundreds of millions of dollars.

The Future: Localizing An Experience

Cruises remain a niche offering—just 2% of the broader travel industry. Perhaps one of the main reasons is the perception that, with their tightly scripted schedules and itineraries, they’re floating islands unmoored from local cultures. That tends to chaff at another, even more prevalent and modern vision of leisure time: That travel is a form of self-actualization, and local discovery. It’s what’s made Anthony Bourdain a star, and what’s made the locavore food movement into global phenomenon.

Padgett often likens the Medallion program to the smartphone: That is, it’s a platform that will evolve over time, and which comes with the implicit promise that, year by year, it’ll eventually do things that hadn’t seemed possible before. But this, of course, is still a cruise. The place where Carnival is most excited about bringing local flavor to guests, at least while they’re on the ship and not at a stop-over destination, is the bar. There, you’ll be able to talk to a bartender who takes you through a 15-minute tasting exercise—which happens to serve double duty as a data-gathering session, to build a profile of the flavors and foods you like. The bartender will tell you stories about local ingredients used in your cocktails, such as the salts from the local salt flats, or the fruits from a nearby island, while digital displays pinpoint all the locales around you that were involved in the creation. As your cruise goes on, the flavor profile in your guest Genome won’t change, but the ingredients will.


The next stop in the plan is to take that local tailoring into the destinations themselves—into the actual ship excursions. And here, things start looking pretty futuristic. Amber Cove is an otherwise unremarkable destination among the hundreds that Carnival sails to. There’s a nice beach, and shops. But the cove is actually named after all the amber that was created during the Jurassic period, and all that amber trapped plenty of fossils that prove the place was crawling with dinosaurs, millions of years ago. Carnival’s idea, which currently exists as a proof-of-concept on an HTC Vive headset, is to create an “enhanced reality” Jeep-tour of the cove, and the Jeep’s windows would either become projection screens, or, you might wear “magic binoculars” provided by the augmented-reality headset company Magic Leap. (The startup’s headquarters in Florida are conspicuously close to that of Carnival.) As you travelled around the cove, you’d see layers of digital beasties, spanning millions of years, from the Triassic to the Jurassic to the Cretaceous. You’d have the chance to time travel, and after your trip, you might see echoes of the dinosaurs playing across the TV in your stateroom. “Today, people dock and they don’t know why they’re there, or the history of where they are,” says Kyle Prestenbeck, a former Disney Imagineer who’s working on the Amber Cove project. Carnival is hoping that technology can finally give meaning to the places it sails.

Padgett admits that with all this hyper-personalization, with all the crew around you knowing what you’re interested in, what you did today, and what you did tomorrow, the key will be making people feel the personalization as a luxury—and not as as creeping incursion. Thus, perhaps one of the hardest things to do will be to make all these capabilities not only subtle, but seamless. So if it’s your birthday, a crew member should be smart enough not to say, “Hey I see it’s your birthday!” Instead, a few days after you first embarked, after some of the personalization has started to trickle into the experience, they might ask, “Are you celebrating a special occasion with us?” It’s those subtleties that might offer the biggest lesson for design and technology out in the real world. As the gadgets around us get more and more capable, they’ll need to get more polite, and more socially aware. The real design challenges will become less about screens and things, and more about scripts and cues. When technology gets laced into the fabric of everything, what we’re left with is etiquette


About the author

Cliff was director of product innovation at Fast Company, founding editor of Co.Design, and former design editor at both Fast Company and Wired.