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The Entertainment Glut

As entertainment companies spend more on content, the audience is fragmenting. What will it take to win?

This is how it's supposed to work: The Walt Disney Co. made The Lion King for $55 million in 1994. The animated movie took in $313 million in U.S. theaters and $454 million abroad, sold $520 million worth of videos, and was a main attraction on cable's Disney Channel. Fans spent $3 billion on Lion King merchandise. The Disney-produced soundtrack sold 11 million copies, and Disney used the film again in September, 1996, to boost the ratings of its struggling ABC network.

And The Lion King is still roaring. In November, the Broadway musical debuted in a new Disney-run theater in Times Square. Within days, tickets with a face value of $70 were being scalped for $1,000 each, and Disney is toying with the idea of staging additional productions to meet the overwhelming demand.