No matter how profitable the nightclub business is, PI hadn't turned a profit in years. It seemed busy on certain days, especially Thursday nights, but it was overrun with CP kids and freaky locals who thought the actors at the AC and CW were their personal court jesters.
Back in the 90s, PI was immensely popular and was not, as some have claimed, "Eisner's Folly." In fact, PI originally featured a roller rink for the family—not every family has three screaming brats in overpriced princess dresses. The roller rink closed because the clubs were extremely popular.
You have to remember, this was during the late 80s and early-mid 90s, when the dance scene was popular for everyone. Look at the awfully cheesy music videos from the time—that was considered cutting-edge and cool! Nowadays, clubbing in the U.S. mostly means "teenagers and niche demographics (like Goths)" unless you live in NYC, LA, or Miami. Disney tried attracting the teens by removing the ticket booths, and we all know how well that worked.
IMO,
the original PI worked for three reasons:
1. Disney opened it at a time when the Touchstone label was highly valuable. Roger Rabbit, The Rocketeer, D--- Tracy, and other films gave Disney a multifaceted public image that wasn't all about little kids. Disney wasn't making direct-to-video cheapquals and Mickey Mouse wasn't just the emcee for a preschool clubhouse.
2. Disney was still publicizing WDW as a resort for everyone, not just a castle for kids. EPCOT Center and the D-MGM Studios were highly advertised, and the MK wasn't character-centric like it is now (only FL really featured fairy tales).
3. The nightclub culture covered a huge demographic who wanted to dance like Michael, sing like Whitney, and flash their leg warmers, neon shirts, and ozone-depleting hairspray.
IMO,
PI failed because...
1. Eisner eventually made Disney a cash-hungry, bloated corporation that forgot about imagination and creativity after TLM, BATB, Aladdin, and TLK made bucket-loads of money. Under his last few years, Disney films became synonymous with cheap, direct-to-video trash suitable only for babysitting.
2. WDW is advertised as a place where preschoolers' dreams come true, and you can choke on the magic as the magical lands of a magical world whisk you away into magic for a magical time.
We know WDW provides more than that, but during the 80s and 90s, everyone knew it. Disney advertised the MK, Epcot, the Studios, golfing, and PI. Now they advertise the castle, because that's how they can make money off the BB Boutique and dress sales.
3. The club culture shifted towards niche demographics. Music videos aren't popular (look at MTV) and the idea of being a dancing/singing/video star for a night doesn't attract people. We've shifted away from the "let's all dance" culture of the 80s and 90s to one of "let's watch the kids on AI and the pros on 'Dancing with the Stars.'" Meanwhile, although groups of people do still enjoy the club scene, most of them aren't interested in a Disney version. Disney refused to reinvest and make PI attractive toward the new club scene, and PI failed.