By Jim McCarthy May 26, 2010 0 comments

Will Broadway Lead or Be Led?

Here’s the news: Broadway revenues are up slightly for the 2009-2010 Broadway ‘season’ and attendance is slightly down.  All other things being equal, it means of course that people are paying a little more for a ticket and volume is off as a result.  It’s a little worse than that because, as Ken Davenport  says in the article I link above, it’s the first time in a long time attendance has dropped for three years in a row.

I have a few things to say about this:

First, since grosses are up despite a decrease in volume, there’s still some inelasticity in pricing.  Translating from the Geek, this means that a Broadway ticket is still something that has relatively little price sensitivity for the marketplace.  This is amazing given the economy and the incredible run up in prices we’ve had in recent years, but I attribute it to the substantial portion of the audience made up of tourists, who are notoriously price insensitive on things they consider to be essential to the experience of the place they’re visiting.  I think if someone did a separate econometric study on non-tourists, you’d find a decrease in both volume and revenue, but I have no way of proving that obviously.

But let’s go back to the facts.  Overall, if Broadway were interested simply in revenue, it still appears that there’s room to raise prices.  Wow.  It supports my thesis about Live Entertainment that you’ve probably already heard that the value capture that’s happening in live entertainment is astonishing and on the long-term, permanent rise.

Which Way?  We'll Find Out...

Which Way? We'll Find Out...

But second, I think this could be somewhat illusory for three reasons.  First, it is tourist-reliant to a degree that is  unhealthy.  Second, eventually shrinking volume leads to shrinking relevance, and third, there’s a demographic problem for the Broadway sub-industry, but I’m kinda tired of talking about that, so I’ll come back to it another time.

Let’s talk about tourists. The last stat I saw was that something like 65% of Broadway patrons are tourists.  If you’ve seen a more recent or better stat or can cite one, comment it and I’ll be sure and add an update.  This is too much, in my view, because it means that Broadway is at the mercy of macro-economic forces, including really boring stuff like currency exchange rates, that are truly and completely beyond its control.  Hoping your production of Rocky, The Musical is a hit this fall?  Better hope Greece’s debt as a percentage of public income doesn’t exceed 110%.  Ugh.

A more robust local market would do two things: first, it would insulate Broadway against many of these externalities and second, it would allow Broadway to become a leader in developing cultural intellectual property again.  It’s sad to say it, but for the most part, Broadway is a follower when it comes to developing intellectual property.  I’m not saying Shrek the Musical or Addams Family or Young Frankenstein or Tarzan are bad shows because I know they have some fans.  I’m saying that Broadway’s creative community should aim to be making musicals that get turned into movies, not the other way around.  If your audience consists in large part of Spaniards on vacation, stepping out of a taxi in Times Square and picking a show based on what they recognize, then Shrek’s what you end up with.  (Again, no knock on Shrek specifically.)

Volume is important to Broadway for just that reason.  If you’re leading, you get volume.  Wicked is a great example (and yes, I know it’s based on a book, but its success is not predicated on the incredible popularity of the book translating into ticket sales, because the musical is far, far more successful than the book.).  Avenue Q is a great example, and there are others.  These are shows that create volume and create intellectual and creative thought leadership.

When you rely on ticket buyers with a passing knowledge of the English language and mad money to spend on their trip to America, it’s tough to do that.  Ironically, of course, if you lead, you get those people too.

The denizens of New York City, particularly the creative people and the arts and entertainment goers, are the most powerful group of influencers in the world.  What would happen if Broadway decided to focus on wowing them for a few years? Obviously, there are people working to do just that, like Ken himself, and lots of others.  But I believe there are even more people in the business who’d like to be doing that and wish someone would give them the opportunity.  One thing that impresses me about Broadway people is how much they love the work.  Not to say they’re not cynical about many aspects of the business sometimes, but the work itself, they’re in love with.  Even compared to the sports marketers I know (who I thought were fanatics), Broadway people love the material.  Somebody who gives them extraordinary material, something risky and powerful, something great would get a lot of loyalty from people in the business.

And if this was being done more, you could bid farewell to Broadway’s problem with volume and grosses because they’d both be up.

Share and Enjoy

    Comments are closed.