I think it goes both ways. You have a certain amount of revenue coming in from park ticket sales, that’s offset by the cost to operate the parks (salaries, electricity, materials used, etc..) In current times the parks are artificially low on revenue so they are bare bones on costs as well to try to offset so even if all entertainment could come back safely from a Covid prospective it wouldn’t. Just like after 9/11 or during the recession they cut down on the number of showings of Fantasmic for example. The entertainment is a draw for guests as a part of the whole experience, but just as importantly it’s a people eater. People lineup for hours around the lake in EPCOT or near the hub at MK or in the stadium for Fantasmic. That occupies their time and they aren’t in line for other attractions making everyone’s wait time go down. Best time to ride TT or Soarin is the hour before the show starts. Shorter wait because so many people are getting a spot for the show. So yes, entertainment draws more demand but it’s also needed more as crowds increase to occupy guest’s time.
This summer as crowd demand rises they need to bring back some shows and entertainment and they likely will. The entertainment will only make demand grow more. If the revenue coming in from park ticket sales isn’t high enough Theu could delay entertainment as a cost cutting measure. Seems counterintuitive in a way, but that’s spreadsheet economics for you. Either way I think it’s much more going to be economic driven than covid driven once we hit the Summer peak period. If the demand is there park hours and entertainment will be added.
I don't disagree with any of this.
Though I'll say some types of entertainment are more about crowd-control, eating people -- Like the Beauty and the Beast Show. Few people are going to build their day around seeing BATB at DHS... but it can draw people away from other attractions, give them something else to do.
Other types of entertainment are more about drawing people into the park, or keeping them there -- particularly fireworks. Remember,the night time entertainment actually occurs *after* park close. (best time for rides isn't 1 hour before the entertainment.. it's 1 minute before).
So when it's 9:01 p.m. at Epcot, it's too late to get on another line ride anyway. There is still some crowd control aspect, as it discourages people from getting on line after 8:30ish, or they would miss the entertainment. So it helps clear out the lines at the end of the day. But the primary benefit is drawing people into the park at night, selling dining packages, etc.
The demand/expense cycle is real, but often counter productive. It's an internal war.
Yes... when demand goes down, the bean counters will say, "we have less revenue.. therefore we need to find costs to cut... So let's cut out this entertainment.."
But when taken too far, this becomes a death spiral. I remember some years ago, when Circuit City was the main competition to Best Buy. Circuit City was struggling, losing money.. so they announced, they were cutting costs by firing all their experienced and knowledgeable employees, those who could actually give consumers good recommendations. And going with all minimum wage, untrained employees. That didn't save them -- they just lost even more.
What we tend to see from more successful businesses... is reevaluation and expansion. May cut something that isn't working to focus on something new. So it's.. "revenues are down on soft demand, let's cut the costs that aren't generating demand... but let's invest in new areas that will stimulate demand."
With the pandemic, WDW may have actually been trying to avoid stimulating tooooo much demand. Knowing they had limited capacity to work with, they wouldn't even be able to accommodate a normal level of demand.
But once they *can* accommodate the demand, it would be Circuit-City-level-foolishness to continue to retreat.