I'm actually very surprised, even if it was costing money. Their technological moat has turned out to be much more shallow than expected and competition fiercer. At the moment I think their greatest asset is brand and engagement. With a popular product and a deal with Disney seemed like a slam dunk on remaining prominent in the brand space and retaining user engagement.

Not only have they thrown out a name everyone knew, and exited the market segment, but they've also triggered Netflix/Google graveyard woes. "We may not maintain products you like". This could make people wary of buying into new products, "will it be there in a year?"