Disney's (DIS) parks business has historically captured the lion's share of profits for the entertainment giant, bringing in about 36% of the company's overall revenue in its latest quarter. But recent signs of a slowdown have led to concerns the theme parks could be losing their magic.

In Disney's latest earnings results, weakness in the parks division dented an otherwise positive report after the company reported a 6% year-over-year drop in domestic operating income and pointed to a "moderation of consumer demand" toward the end of the second quarter. That "moderation," executives warned, could continue over "the next few quarters."

"We certainly see consumers behaving in a way — I wouldn't call it recessionary necessarily — they're watching their pennies a little bit more," Disney CFO Hugh Johnston previously told Yahoo Finance.

Wall Street analysts have debated whether the slowdown is a temporary blip as consumers deal with high inflation or a sign of a larger trend amid recent price hikes across the parks.

"My one area of concern is whether it's a longer-term issue, as prices have gotten a little bit out of control, versus a shorter-term economically-tied type of issue," Morningstar analyst Matthew Dolgin said in an interview. "I don't know how much of this is a natural cyclical thing versus whether they have pushed the envelope a little bit too much on pricing, but that's the biggest thing that concerns me, rather than their investment in the business."

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To understand how Disney found itself in this position, it's important to look back a few years to the post-pandemic travel boom, which boosted year-over-year growth rates at the parks. "It seemed like we had kind of a macroeconomic bump, and everything was aligned for things to be really good," Dolgin said.

But nothing lasts forever. And that might not be such a bad thing.

"For things to pull back a little bit from there was, first of all, not surprising and, second of all, I don't think concerning in any way," Dolgin said.

He said year-over-year growth will likely continue to moderate as customer dollars shift toward other forms of entertainment. However, the business itself remains strong, in his view.

Disney's big bet

Last year, Disney announced plans to invest $60 billion in its theme parks business over the next 10 years. The company recently revealed that some of those investments will include four new cruise ships and multiple new "lands" and rides across its global theme parks.

Disney is also embracing the virtual world with a first-of-its-kind partnership with Fortnite parent company Epic Games.

"With the expansion, I think there are a lot of opportunities for them to grow really well," Dolgin said.

Third Bridge analyst Jamie Lumley agreed, categorizing the expansion as a way for Disney to edge out competitors like Comcast's Universal (CMCSA) as prices increase and customers pull back spending.

"Because Disney raises the price on their parks every single year, they are definitely competing with other, perhaps cheaper uses for people's leisure dollars," he noted. "Building out these bigger, grander, and more immersive experiences is a way to better justify the cost."

He added, "This is a business that they are betting on and it can definitely be a needle mover."

Meanwhile, all eyes remain on current parks and experiences chairman Josh D'Amaro, who, as a possible successor to CEO Bob Iger, has a lot at stake in ensuring the vitality of the parks ecosystem.

In a presentation at Hubspot's annual Inbound conference in Boston last week, D'Amaro spoke about the magnitude of Disney's theme park investments, emphasizing their place within the overall Disney vision.

Although he did not unveil any new announcements, he did call out six pillars that rule Disney's thinking: emotional connection, innovation, reliability, attention to detail, courage, and boundless thinking.

"We are on a relentless pursuit of perfection," he said at the time.

But that race to perfection has had its challenges. Not only has demand slipped from its highs as customers grow weary of continuous price increases, but recent political battles have also cast a negative shadow on a company that brands itself as the "happiest place on earth."

Shares are down about 30% from five years ago and are currently trading near the lower end of their 52-week range.

A Disney veteran, D'Amaro joined the company in 1998 in a position at the Disneyland Resort. He took over the parks and experiences division in 2020 and has since navigated choppy waters, including a high-profile feud with Florida Gov. Ron DeSantis and a pandemic that brought the parks business to a complete halt.

But the company has been more focused on mitigating losses within its streaming division, with the company reporting its first quarter of streaming profits last month — a significant shift after multiple quarters of bruising losses.

For that reason, Lumley thinks D'Amaro likely won't be Iger's replacement. Instead, he believes Dana Walden, co-chair of Disney Entertainment, who currently oversees Disney’s streaming and television studios, is probably next in line.

"As important as parks are, whoever is in the CEO seat after Bob Iger, it's really important that they have a deep understanding of how Hollywood works, how talent relations work, how the content strategy should be borne out," he said.

"Josh D'Amaro definitely has done a lot of good things when it comes to running the park side of the house, but ultimately, there might be some other factors when it comes to looking at who the next CEO would be."

But before Iger can even step away from the executive position, one thing remains clear: The park's multibillion-dollar bet has to pay off.

Alexandra is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]

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