Ken Davenport - Opinions from a Broadway Producer

Advice from an expert: Vol. V. Let's search together

One on the industry's up-and-coming marketers, Leslie Barrett, joins us today.  Leslie is on loan from her position as the Director of Integrated Marketing at one of our industry's heavyweight advertising agencies.  As the Dir. of Integrated Marketing, Leslie insures that marketing and advertising campaigns are working well together.

Leslie and I recently got into a conversation about exactly that, "working well together", and she shared an idea with me on how to combat one of the our biggest online marketing challenges: how do we compete with ticket brokers who can spend a lot more money on online advertising, most specifically Adwords.

Here's Leslie's expert opinion:

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Search has become such an important part of our everyday lives, it’s hard to imagine what we did before the world’s information was available at our fingertips. 

So, I’ve been tossing around the idea of cooperative search, where all Broadway shows would bid on the generic terms as a group, ultimately sending the customer to a page that lists every Broadway show (and off-Broadway for that matter) with face-value ticket prices.  But I did some rough math, and it just seems too expensive ($3K - $5K per show per week). 

Since the secondary market is so highly motivated to sell our tickets (mainly through search), why can’t we make a deal, or several deals?  The secondary market is a multi-billion dollar industry, and it’s here to stay.  Let’s figure out how to partner with these companies, keep our customers happy, and share in some of this revenue.

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Leslie's on to something here.  I like her co-oped search idea, and would go further as to distribute the cost of the program based on its results.  Give each show in the program a specific code, and charge the shows that sell the most tickets the bulk of the costs of the program, thereby distributing the costs more fairly. 

But Leslie's most radical idea is the one we all have to remember.  Reaching across the aisle takes courage, but sometimes our biggest enemies can be our biggest allies.  Godfather fans will remember that Don Corleone brought all the members of the five families together to talk first.

Then, his son killed them all.

Advice from an expert: Vol. IV. A 'wicked' good investor speaks

Do you ever find yourself cruising the Bway grosses and trying to calculate the weekly profit of Wicked? And then do you ever wonder who the lucky Mother Ozers are that invested in The Green Machine?

Well, I found one sitting in the corner of Angus, waiting for his helicopter to take him to the Hamptons and trying to decide between a new Ferrari or a yacht.

Ok, I exaggerate. He wasn't at Angus.

When I asked him what it was like to be in in such a monster, he said, not surprisingly, that before he started receiving his almost-set-your- rolex-by-them monthly profit distributions on Wicked, he had lost a lot of money in quite a few flops.

He was a reader of my blog, so he knew my affinity for baseball analogies, which is why he smiled when be said . . .

"But investing in the theater isn't about having a high batting average. It's about having a high slugging percentage. I would much rather strike out twice and then hit a home run, than get three base hits."

He paid for dinner.

Advice From An Expert: Vol III. Listen to those who can't.

Volume three in this series started out as a "Question From A Reader", but as you'll see, this reader has a lot more answers than I do on this issue, so we turned Jay Alan Zimmerman into an expert!

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OPENING DOORS & INCREASING AUDIENCES

I'm an author/composer, so guess how many Tony nominated shows I saw this year.

Answer: zero.

Obies? : zero.

I used to see shows in previews and opening night, but can't anymore because I've become deaf.

Which totally s*@#!s for me AND producers.

There are over 30 million Americans with hearing loss and millions more with other disabilities, and this group is growing daily due to aging, overuse of amplification, and unnecessary wars.  Add to that the millions who speak languages other than English, and you're missing out on a lot of potential customers by not having your show accessible to all.

What we need is something as simple as the 3-foot-wide door.

You may not have noticed the widening of doors since Bush 1 signed the ADA, but now wheelchair users can go through them just like you.  Currently the deaf are shut out from most shows (all the fringe festivals, events like NYMF, one-night concerts) or forced to wait years until the producers decide to have a captioned night via the TDF TAP program (which also requires that I be free that night and buy a ticket 3 months in advance.)

Sound Associates has developed one promising system called the "i-caption."  Basically, a handheld PDA shows a powerpoint slide show of lyrics and dialog, which is synced to the show via a wireless connection.  Supposedly four Broadway shows use this system, but when I took my family to Hairspray for Christmas it was broken and we had to leave and get a refund.

It's so easy to convert a script into Powerpoint.  Why not make scripts or caption slide shows downloadable from show websites?  Then I can print it out to read with a flashlight, or bring it on my laptop, or on the new iphone I'm going to win from this site (without seeing the shows).  Eventually every theater should have a wireless sync via bluetooth, which could be used both by your crew and for captioning.

Becoming deaf made me so mad I wrote a musical about it.  The producer of the DC production, Commit Media, made it accessible not only to people with hearing loss but to wheelchair users and the blind.

Including this audience made a big difference in filling the house.  You can sell-out too.

Just make your doors a little wider.

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Only 3 days left to play The Producer's Perspective Tony Pool!  You can win an iPhone!  Play today!

 

Advice From An Expert: Vol II. A Gamblin' GM speaks

I jokingly twittered from a casino in Palm Springs last week wondering if the odds on the craps table were better than the odds of investing in a Broadway show.

Well, craps and Broadway are no joking matter to my good friend and uber-General Manager, Mark Shacket, who is currently in office at Alan Wasser Associates, one of the largest General Management firms on Broadway.

Mark worked it out . . . so I thought I'd include his musings on the subject as volume II of our Advice From An Expert series!  Enjoy!
 

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CRAPS - EXPECTED LOSS

If we assume the following things:

- that a typical craps table rolls the dice every 30 seconds
- that the point or seven hits every 5 rolls (meaning each "cycle" from the coming out roll to the end of the session is 5 rolls on average)
- that you play the pass line bet with maximum allowed odds every time, with max odds 3X-4X-5X (House edge: 0.37%)
- that you make 2 place bets every "cycle" (Average House edge: 4.06%)
- that you make a hard way bet every other "cycle" (Average House edge: 10.10%)
- that you make 2 prop bets every "cycle" (Average House edge: 12%)
- that your craps session lasts 2 hours

then the expected loss for your 2-hour session is 37.48%.

BROADWAY - EXPECTED LOSS

If we assume that for every 10 Broadway musicals produced, the following results are achieved:
- 0.25 musicals are HUGE hits (Wicked, Phantom): 1000% return
- 0.75 musicals are big hits: 250% return
- 1 musical is a hit: 130% return
- 5 musicals lose some money: 60% loss
- 3 musicals loss everything: 100% loss

And we assume for every 10 Broadway plays produced, the following results are achieved:

- 0.25 plays are HUGE hits: 250% return
- 0.75 plays are big hits: 150% return
- 1 play is a hit: 120% return
- 5 plays lose some money: 60% loss
- 3 plays lose everything: 100% loss

then the expected loss for your average Broadway investment is 36.88%.

(It should be noted that the above assumptions are based on little more than my whim.)

Therefore, Broadway has a slightly better expected return than craps (36.88% loss for Broadway vs. 37.48% loss for craps).  Ken's question was which has "better odds", and these figures suggest Broadway investing has better odds.  But not so fast!  Broadway investing may have a better average return, but the mean return is far lower.  What does that mean?  Let's look at an easy-to-understand example:

The New York State Lottery paid out 54.7% of their receipts in prize money.  Does that mean that if you play the lottery regularly that you can expect to make a return of $0.547 on each dollar?  No!  In fact, your return will almost certainly be far less than that.  Consider how much of that 54.7% payout is paid to the small handful of multi-million dollar jackpot winners.  That will most likely not be you.  So playing the lottery may have an average return of 54.7%, but the mean return (what the majority of people experience) will be much lower, since they don't share in the big payouts.

The Broadway investment analysis above assumes you can invest in every Broadway show evenly, which you can't.  Broadway's average loss is mitigated in large part by being able to invest in the huge hit.  In fact, if you remove only the huge hits from the equation, the expected loss on Broadway jumps to 52.50%!  But because investors can only put their money in select shows, there is a good chance that they will never find the very rare, huge hit.  Note that 8 out 10 times you invest, you will lose 60% or more.  So the average return on Broadway may be slightly higher than on craps, but the expected return (ie, the mean return; what most investors will experience) is much lower.  Broadway is therefore a far RISKIER investment than craps, even though the overall average expected loss rate is lower.

What can we learn from this?  Well, first, only invest in hits.  But there's another important thing to remember: When you're rolling the dice on the felt, you have absolutely no information about what the next number rolled will be.  But when you're rolling the dice on a Broadway investment or producing opportunity, you have plenty of information to consider.  Who is the producer and what is their reputation and track record?  How does the budget look to you?  What does the current marketplace look like? Are there other similar shows on the boards and how have they performed? Who is in the cast or on the design team?  Is the script well-structured? Is the show marketable?  Read, learn, and study everything you can about your investing or producing opportunity and you will be sure have more than your share of the success.

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Thanks, Mark!  See you at the tables!

Advice From An Expert: Vol I. The Swami Speaks!

I'm lucky enough to have some pretty cool and influential readers of The Producers Perspective out there, so we're going to start a new series that highlights some of their comments and suggestions about issues we discuss here.

The first refers to a post that I wrote at the start of the Broadway League conference regarding the show that sold the most premium seats.  I quoted Brian Mahoney, "The Swami of Statistics", who wrote in recently and wanted me to make sure I made everyone aware that when he referenced Phantom as being the top premium ticket seller, he was comparing premium ticket sales for shows in Shubert Houses only. 

Since I had The Swamster on the e-horn, I asked him for a few words of wisdom regarding seating and pricing to share with all of you.  Here's what he came up with, and I couldn't agree more:

All seats are not created equal.  The public knows this and so do we.  What applies to real estate applies to selling tickets: Location!  Location!  Location!  We should remember this when establishing the parameters for discounts and not discount the first class section.   We should look at a theatre as if we were running an oceanfront resort: you discount the garden view rooms not the ocean front and ocean view rooms.  People who pay full price should get better seats than those buying at a discount.

Some killer analogies in there.  There is so much for us to learn from the travel industry.  My tip of the day?  Sign up for all the travel discount sites you can . . . watch and learn how they get rid of their perishable inventory and maximize their revenue.

Thanks to Brian!  Until the next expert speaks . . .