Visiting (the Costs of) ‘Westworld’

Westworld, ©HBO

The cost of building and operating a theme park on the scale of Westworld has been considered since the shows inception. CNBC published such a cost estimate by finding the revenue generated and computing the associated profits/costs from that figure back in 2016. However, in Season 2 we learned that the value of the park is not in the direct revenue stream from visitors but rather the data generated on the guests. This is the greatest market research that money can buy, or be paid for.

By point of comparison. The advertising revenue for Google was $134.81 Billion and for Facebook was $69.66 Billion in 2019. This is multiples of the $20.45 Billion revenue considered in the original CNBC analysis. As there is no clear scheme to monetize the data collected, we will assume that the data is worth the lower bound of these values, i.e., $70 Billion. Thus the total revenue is $90.45 Billion instead, an amount that would have otherwise taken over 4 years to accumulate by Delos Incorporated. Using the same computations from our favorite CNBC analysis, the $24 Billion of annual costs are now completely reasonable with an additional $66.45 Billion in which to pay other operating costs and from which to collect profits.

Now that a robot uprising and massacre has happened, the insurance premiums considered previously will spike as occurs after any large risk. The question is less whether Delos remains solvent following these events, but rather if Westworld would be able to afford to reopen its doors to guests. In short, would Delos be able to purchase insurance, and if not, what payouts would be expected every time an uprising occurs?

With the inherent risks of running Westworld now clear to the world, insurance premiums would likely be similar to flood insurance in the United States. That is, insuring against costly events causing extensive property damage that occur regularly. In order to keep areas prone to flooding affordable, the National Flood Insurance Program was established to provide insurance to private individuals and businesses. Without such a program for robot uprisings, it is unlikely any insurance company would be willing to underwrite any policy post-Season 2.

However, Delos could afford to keep Westworld open so long as guests still want to visit. The 9/11 attacks caused roughly $40 Billion in insurance losses. As the profits from the park are potentially over $65 Billion, this would be affordable so long as massacres occur less than 3 times every 2 years. And with that frequency the guests would surely stop arriving.

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