• Walt Disney (DIS) launched a new line-skipping service Genie+ late in 2021.
• It has been a source of great aggravation for its theme park guests.
• Disney appears to be pushing monetization angles heavily to make up for its money-losing streaming service.

Walt Disney (NYSE:DIS) theme park guests are having a less than enchanting experience lately. At least that’s the case at Walt Disney World in Orlando and the Disneyland Resort in California where the company has rolled out its Genie+ system for waiting line management.

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DIS stock has had plenty of issues in recent years. The company’s cruise line has seen operating results curtailed by the pandemic. Legacy assets such as ESPN are worth less and less in a cord-cutting world. And the Disney+ streaming service faces vast competition from all angles.

Until recently, however, analysts weren’t too worried about the amusement parks. As soon as the economy reopened and travel got back to normal, those should return to full prosperity. But a new risk has emerged.

Genie+ Is Infuriating Many Park Guests

Disney has potentially harmed its theme parks’ reputation by getting too cute with its new Genie+ app. In the past, Disney offered FastPass, a line-skipping service, for free, to guests that signed up early. This helped motivate folks to plan their trips far in advance and give Disney a great deal of advance bookings to smooth out its reservations cadence. FastPass had been around since 1999 and was a beloved feature for many guests.

Disney is now doing away with FastPass, however, and replacing it with Genie+. Unlike FastPass which was free, Genie+ costs $15 to $20 per guest per day.

Genie+ is part of the broader Genie App. This is intended to function like a GPS for Disney’s parks. Users get an itinerary for the day, and the app guides them to the next ride with a map service. In addition, park guests can do things such as see wait times for upcoming rides and order food and refreshments for pick-up through the app. That’s all well and good.

Where things get controversial, though, is with the paid surcharge for the Genie+ offering. For the Genie+ fee, park guests get to go to the front of the line for most rides in the park. But not all. Disney is charging a la carte for front-of-the-line access to some of its most popular attractions. This puts people in the position of paying $15 to think they can jump the lines, and then having to pay again to dodge the biggest lines at the best rides.

Many visitors see this as Disney nickel-and-diming families that are already shelling out $500 or more to visit the park per day. Genie+ is also frustrating from a user experience perspective as well. Many of the best rides use up all their fast-lane spots within two or three minutes of the park opening. This means that guests are glued to their phones hoping to get a pass to cut the line rather than taking in the sights.

DIS Stock Has A Major Streaming Problem

Disney has some of the world’s best intellectual property. That’s particularly true for programming aimed at children. However, dominant companies sometimes cross the line in terms of taking too much advantage of their power.

CEO Bob Chapek has talked about using measures such as Genie+ and reducing portion size at Disney restaurants as a way of improving yield on its amusement park business. This sort of cold Excel-driven approach to finance can deliver more profits in the short-term but may lead to fatigue and frustration with a brand longer-term.

Why might Disney feel so pressured to extract every cent out of its park-goers? It might be related to the dimming of prospects for its Disney+ service. Subscriber growth slowed down sharply in late 2021. Disney and DIS stock may have an effective monopoly in a lot of offline entertainment, but it’s been much tougher online against shrewd rivals such as Netflix (NASDAQ:NFLX).

The streaming service has been losing roughly $500 million per quarter on average recently. That’s not an insignificant number. Disney will have to sell a gigantic number of Genie+ upgrades and other sorts of additional surcharges at its profitable businesses to fund the cash burn on the streaming side of the business.

DIS Stock: Streaming Losses Put Broader Company At Risk

Back in 2020, Disney suspended its dividend. While the economy has largely reopened since then, there’s no sign that Disney is about to restart its dividend soon. That makes sense, as the several billion a year Disney used to return to shareholders with the dividend can now be used to subsidize Disney+.

Shareholders of DIS stock already lost the dividend. And now, in Disney’s drive to optimize yields out of its successful business units, it threatens to diminish its reputation and customer loyalty in the long-term. In a consumer-facing business such as what Disney has, it’s a risky strategy to irritate frequent customers to earn an extra buck today.

Moves like Genie+ may boost results in 2022 but dramatically harm the company’s long-term standing. Streaming is expensive and Disney+ needs more capital to compete with Netflix. That’s understandable. However, Disney risks damaging some of its strongest businesses by going down its current strategic direction.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.