It was a rough fiscal fourth quarter for Walt Disney (DIS -0.62%). Revenue rose 9% to $20.15 billion for the three months ending in September, woefully short of the 30% increase that analysts were targeting. Adjusted earnings declined. Wall Street pros were holding out a for a 60% surge. 

There was plenty of blame to go around. Revenue declined for its flagship linear networks as well as its content sales and licensing businesses. Disney's direct-to-consumer streaming business rose a mere 8%. The audiences grew briskly -- with Disney+, ESPN+, and Hulu growing paid subscriber counts by 39%, 42%, and 8%, respectively -- but average revenue per user fell sharply. 

It also didn't help Disney's bottom line that the streaming segment saw its operating loss more than double, soaring 134% over the past year. Will this segment really be cash-flow-positive by the end of fiscal 2024? It wasn't all bad, but it seems as if all of the bright spots in Disney's otherwise brutal quarter are coming from its theme parks business.

Mad Hatter, White Rabbit, and Alice in Wonderland look surprised in front of their spinning teacup ride at Disney World.

Image source: Disney.

You must be this tall to ride 

Disney theme parks -- and to a lesser extent Disney+ -- have been carrying the revenue growth torch for the House of Mouse for the past year and change. Business is booming at Disneyland and Disney World.

We knew it would be a strong showing. Rival Comcast (CMCSA 0.48%) -- matching Disney's reach with its Universal Studios gated attractions in Central Florida and Southern California -- posted a 42% year-over-year increase in revenue for the same quarter late last month. The segment's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) soared 89%.

Disney fared even better. Its domestic theme parks rang up 44% more in revenue than they did in the prior year's fiscal fourth quarter. The segment's operating profit nearly tripled. The gains were even heartier on both ends for Disney's smaller international theme parks. The segment thrived despite a disruption in Disney World near the end of the quarter as Hurricane Ian barreled through Florida, just as Tropical Storm Nicole threatens to interrupt operations later this week. 

The secret to the theme park segment's success isn't going to make everyone happy. Revenue per capita is up 6% over the past year and up a whopping 40% from pre-pandemic levels as Disney adds premium add-ons to get folks willing to pay for access to shorter queues for rides and attractions. Disney's park reservations system that typically favors higher-paying guests on single-day admissions or staying at a resort hotel has also made every turnstile tap that much more lucrative. 

Disney and its rivals are now comfortably ahead of where they were back in 2019, something that can't be said for the cruise industry, multiplex operators, and other leisure stocks. It feels good, but it's a dangerous game. 

It's been a year since Disney introduced Genie+ as a premium queue-shortening platform. Prices for in-park food and merchandise continue to head higher, far outpacing inflation. Disney shareholders may marvel at the rising ceiling, but what happens when the lights go out and the body crashes to the floor?  

Disney will naturally keep pushing prices higher and add premium experiences until folks stop coming or paying. The elasticity is what made Tuesday afternoon's quarterly update merely bad instead of horrendous. It truly is a stunning ascent, and Disney revealed that its international business in terms of guest mix is finally back to pre-pandemic levels. It looks good now, but is it sustainable? Is anybody happy with the Disney parks reservations system that rivals have long abandoned? At some point the pricing elasticity will snap, and that's when Disney will learn that it's a small world after all.