Disney has announced that it's nearly doubling its capital expenditure for its parks.
👉 Background: Disney is the mass entertainment empire that started 99 years ago as a humble animation studio. It's known for major films like Tangled and Aladdin, its streaming service Disney+, and the theme park every kid dreams to visit, Disneyland.
👉 What happened: Now, Disney has announced that it's nearly doubling its capital expenditure for its parks. We're talking around $60 billion USD over the next decade. And the wheels are already in motion because Disney has already secured over 1,000 acres of land.
👉 What else: The reason is simple. Disney's theme parks are its profit engine. We're talking $32.3 billion USD operating income in the last 12 months. And that has helped them cover some of their big streaming losses.
💡Profitable divisions can often give companies the appetite to go after risky ventures. It's not easy for a company to take on high risk activities if they don't have any buffer.
💡That's why the income generated from Disney's mass expansion of parks will likely be used to fund the expansion of Disney+ for years to come.
💡We've seen Amazon and Google do the same - taking profits from their cash cows in AWS and Search to pump money into big bets. Some winners and some big losers.
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