Ken Davenport - Opinions from a Broadway Producer

How to tell if you're going to sell out this weekend.

Ooooh, here's a fun tip that I started using months ago that has already started paying dividends.  

Broadway and Off-Broadway shows are fully engaged in the variable pricing war.  We used to employ the "set it and forget it" philosophy of our full price sales.  Then, of course, we decimate those prices in the discount market.

Now, we've gone all airline industry on our consumers, and have started adjusting our full price sales depending upon demand.

But when do you know if you've got that demand?

Here's the trick about variable pricing . . . the sooner you know that a show is going to be "hot", the better you're going to do, right?  Raising the prices one day before your show certainly would not be as beneficial to your bottom line as raising the prices one month before, as long as you were sure that show was going to sell out.  (BTW, this is also true about discounting - if you know a show is going to be soft a month out, you have more time to employ tactics to shore it up).

So how do you know if a show is going to sell out?  Especially in a market like NY's, where the week-of, day-of, hour-of, business is so dependent on street traffic and tourist traffic and the like.

There are a lot of factors you can use to help determine how you're going to do on a particular weekend.  The best thing you can do is use historical data (if your show or your theater has been operating for more than a year).  

But what if you don't have it?  

Here's my latest trick . . . and shhhh, let's just keep it between you, me, and the rest of blogoshphere.

What do I do?  I let other industries with a lot more money and a lot more data figure it out for me.

I'll call or go online to check hotel prices in the Times Square area over a month period.  On the days they are offering deals, I know we have trouble.  On the days where the rates get close to the rack or MORE, I know the hotel is expecting heavy demand . . . which most likely means heavy ticket demand.

Sometimes I'll cross reference this with other tourist cities.  A busy tourist time in NYC should also mean a busy tourist time in Las Vegas, DC, etc.   

Then I'll do the same with the airline industry.  See when they are offering deals, or when those deals are blacked out.  If you're paying $600 to fly from Chi-town to NYC, guess what . . . there are going to be some peeps in town that weekend.

You can't set your watch by these tips, of course, but they are just a little more information that will help you understand more about current consumer behavior.

And, as the NBC PSAs say . . . "the more you know."

 

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How long did it take Facebook to recoup?

Unless your name is Rip Van Winkle, then you know that Facebook is poised to be one of the biggest public online companies since Google. 

Think about it.  If we all followed the Peter Lynch philosophy of “Invest in what you know”, 250 million people out there would love to own a piece of Facebook stock.

And soon enough, as was confirmed this week by these initial filings, some of those folks (although a very select few, I’m sure) will have that chance when Facebook finally has its IPO.

This isn’t a stock and bonds blog, so what does this have to do with Broadway?

What interested me about the articles I read about the IPO was how long it took Facebook to become profitable. 

6 months?  1 year?  3 years?

Wrong, wrong, and wrong again.

It took five years for Facebook to make a dime.  Five years.

I found that intriguing, because in the Broadway world, a five year payout would be celebrated, but still slow.  Our monster hits pay back in about 9 months to a year now (it used to be a sell out could recoup in about six months, thank you rising costs).   Of course, it’s an entirely different type of economic structure, so admittedly it’s a bit like comparing apples to pineapples.  (The problem with Broadway is that our costs can’t be controlled as much as the costs of a tech company, and our upside is a wee bit more limited so companies can afford the risk of investing more capital as you go.)

But still, I took it as a great reminder that sometimes, even when you’ve got something that 250 million people want to use, you’ve got to be patient and unbelievably persistent if you want to be profitable.

 

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Movies down. Broadway up.

I'll admit it, sometimes I get a little jealous of our sister industry out there in La-La Land.  After all, it's easy to think that Hollywood's older but smaller brother known as Broadway has it a lot tougher in today's economic and cultural market. 

But do we?

According to the end of year figures released from Tinseltown, they've got trouble with a capital B that stands for Box Office.

According to this NY Times article, Hollywood's gross box office receipts are down $500 mil, or about 4.5%.  And attendance has dropped a gruesome 5.3%, which, combined with the 6% drop the industry saw in 2010, equals a double digit drop that makes our recent attendance woes seem trivial.

A 10% drop in attendance in 2 years?  Somebody should lose their job over that.

Why the decline?  There are a lot of reasons, of course, and I'm not an expert on the business of film.  But from a bird's-eye view, I chalk it up to a lack of scarcity.  Movies are everywhere now.  You can download, stream, rip, drip just about anything . . . . on your TV, laptop, iPhone, iPad, kneepad . . . whenever, wherever.  The two dimensional form of entertainment is here in abundance.  The market is saturated.

You know what isn't everywhere?  

Broadway.  Live entertainment.  First class, limited seating, a different experience every night, theater.

Sure, all of the things I just mentioned above are the same things that make our industry so challenging.  But they are also what make it more rare.

And maybe, just maybe, the unfortunate decline in the stock price of Hollywood means that what we're selling is on the way up.

I'm bullish Broadway.  The Producer's Perspective says:  Strong Buy.  

 

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Broadway's 2nd Quarter results: We've seen this story before.

26 Weeks down.  26 to go.

The 2011-12 Broadway season is half over and already people are wondering . . . will we shatter another sales record?

Well, so far, so good.  

The first 26 weeks of this Broadway season have grossed $534,026,464, a whopping 5.6% (!) increase over last season at this same time.  

So why aren't I whooping over this whopping?  

Because, once again, even though the cash registers are more full than ever, attendance is down 1.3%.  And this ain't the first time we've had this problem.

Now I could spin this and say that more bucks with less bodies demonstrates how smart we are getting at managing our inventory and increasing prices depending upon demand.  The NY Times just did an article about this very subject, which you can read here.  And it's true, we are getting better.  And the mega hits are turning into MEGA hits.  I mean, Phantom did over $1mm last week . . . after 23 years!  (That's a lot to be thankful for), but less bodies for the rest of Broadway is a problemo, my friends.  

And now that we've semi-mastered pricing, it's time we focus on getting more bodies to pay regular price.  

1.3% isn't a huge differential though . . . there are still 26 weeks to go.  Will we make up the difference?  

I'll be back to update you in 13 weeks to see where we're headed. 

 

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7 Theater things I'm thankful for this Thanksgiving

There's a whole bunch of things about the theater industry that I wish were a whole lot . . . different.  But despite all that, on a day like Thanksgiving, it's important to remember that while there is a dump truck full of things we'd all love to change, there are also a bunch of things we should be thankful for.

Here's a list of 7 theater things I'm thankful for this year.

1.  Broadway League and Actors' Equity finalize new deal with no fireworks.  

The Broadway League and AEA recently announced that their pretty chill negotiations were completed and a new contract had been ratified.  Here's the thing - when it was announced that the negotiations were over, I forgot that they were even going on.  And that's exactly what you want from your labor talks.  There was no talk of strikes, and from what I heard on the inside, it was a pretty peaceful process.  Congratulations to both sides.  Let's hope the Local 1 negotiation coming up is just as smooth. 

2.  Both Broadway grosses and attendance were up!

For the first time in a few frames, Broadway recorded both a jump in gross and in attendance in 2010.  Growing grosses and expanding audiences are what we need to stay healthy.  We did it last year, and now, we're shooting for two seasons in a row.

3.  Broadway's in prime time!

NBC green lit a new pilot called "Smash" that is all about . . . Broadway.  Yep, millions of people are going to hear about what we do every day in a prime time series, and that's even if it sucks.  And from what I heard, it doesn't.  And you know what a successful show could do, right?  See Thankful Thing #2.

4.  The Jackman is back, man!

People would buy premium tickets to see Hugh Jackman hold a phone book.  He wouldn't even have to read it.  When 'cool dudes' like Hugh come back to Broadway, it creates quite a frenzy, and . . . well, it makes us cool by association.  (BTW, do phone books even exist anymore?)

5.  Stars?  Who needs 'em?

The Best Musical of 2011 didn't have one f@&#ing star in the cast, proving once again, make the show the star, and you'll win every time.  

6.  Downsizing becomes a trend.

First Avenue Q, then 39 Steps, now MDQ and Rent have followed the concept we talked about in this blog, extending the life of the shows, and providing work for hundreds.  Oh, and at the same time, they gave some much needed street cred to Off-Broadway.

7.  Spider-Man is a member of the $1mm club.

I know, this seems like a strange thing for me to be thankful for, right?  I'm not a Producer of Spider-Man (and I wouldn't want to be), so why am I thankful that this show is not only still running, but still grossing well over one million every week?  Well, it's like this.  Spider-Man get some of the worst set of reviews I've seen . . . twice . . . and it didn't seem to matter, proving once again, that reviews aren't what makes a show run . . . it's the audience.

 

What about y'all?  What theater thing are you thankful for this year?  Comment below!

And have a happy Thanksgiving!

 

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One group price fits all. But should it?

When pricing a show these days, whether it's on Broadway or in any theater around the country, there are four categories a producer needs to consider.

• Premium Price
• Regular Price
• Discount Price
• Group Price 

The first three prices are generally pretty fixed, as they are announced publicly, and can be purchased with the click of a button from anywhere.

The Group Price however, is much different.  You need a minimum number to qualify for the discount.  And most importantly, you need to speak to an authorized agent to get that discount.

Because of this difference, there may be a way for us to increase the revenue we receive from the groups market (on Broadway, groups represent about 9-10% of Broadway sales), if we follow good ol' fashioned sales strategies.

Here's how it works on Broadway right now.

The Producer, GM and Marketing Team come up with a group price that they think will sell the most tickets.  And they distribute it to the Group Sales Agents around town.  Group buyers call up, ask for a show or get a recommendation, an order is placed and filled at the price that was distributed.

The revenue-reducing problem we're having is that the group prices that are distributed are usually the result of the "what are the other shows selling for" question.  And what happens, is that shows end up competing with one another, and forcing the Producers to keep their price low to be in line with "the market," for fear of losing a group to another show.  It's somewhat of a race-to-the-bottom.

But it doesn't have to be.  

If you are looking to purchase any high-end luxury product (and that's what theater is), be that a car, a boat, a stereo, etc., there's usually some wiggle room between the sticker price, and the final price.  There is a sticker price, maybe even a sale price . . . and then on top of that the salesman usually has room to negotiate, in order to try to get the most revenue from the sale.  He doesn't automatically go to his bottom.  He analyzes the customer, the time, the amount of the total sale, and does what he can to close it at the highest rate.

So my question is, why are we providing our group sales agents with only one price?  Why not give them three . . .

For example, instead of saying, "Group sales prices for BLOG THE MUSICAL are $79.50," why can't we say, "Group prices for BLOG THE MUSICAL are $99.50, $89.50 and $79.50.  Use whatever price you feel appropriate."

Why should the agents love this idea?  Because it empowers them to make more money for themselves since they are paid on commission.

Not all group buyers are the same.  Someone cold-calling up an agent or even your box office and asking for 10 tickets to BLOG THE MUSICAL who didn't even know there was such thing as a group discount  (charge them $99.50 and they'd probable be thrilled) is much different from a client that an agent has had for years that brings groups of 50 to shows but doesn't know what a blog is (I'd offer him $79.50).

There's no question there is more work here . . . going to the lowest price is definitely the easiest way to make a sale . . .  so it might to be tough to see this idea take root in a lot of companies.

But if there's one formula I believe in, it's more work = more success.

So let this concept take root in yours.  

Negotiate with your buyers.  Getting the most for your product is not a sin.  It's salesmanship.

 

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The NY City Council is getting into the ticket turf fight.

A blog reader and POG who I also refer to as "the other Ken" tipped me off to a City Council meeting that happened on Friday to discuss, "the unavailability of tickets for entertainment venues for people in New York."

The Council's concern is when a much-in-demand event like Book of Mormon, Hugh Jackman, Barry Manilow at Radio City (ok, maybe I'm the only one that would pay broker prices for ol' Barry eyes), it usually sells out instantly . . . and then, of course, the tickets pop up at the StubHubs, as well as all the online secondary market sellers on the world wide interweb.  And there are a lot of them . . . just look at this google search result for Book of Mormon tickets.

As you can read in this article-ette about the meeting, the Council is considering a bill "to force large venues to make 15 percent of total tickets available at a physical box office and limit sales to four tickets per person per day."

And that would be like punishing a kid who didn't eat his lunch because a bully stole it from him.

This isn't the fault of the consumer who wants to buy six tickets for his family.  This isn't the fault of the venue owners or Producers (although we could release some of our house seats, as I wrote about here).   This is the fault of the de-regulated secondary market, the bigger boys with the even bigger ad-words budgets, and the ease by which those guys can create businesses and resell purchased tickets.

Don't get me wrong, I'm not an enemy of the secondary market.  I'm a fan of what (the good ones) have done.  They offer a service to a select clientele, and they're able to get more than top dollar for providing that service (if only we could do that, there wouldn't be a need for them).  But that internet and the laws have made access to that business so easy, that anyone with a credit card and a website can be a "ticket broker" and start buying and selling and pi$$ing off customers.

So Council members, be careful who you punish when coming up with a response to this crisis.  Don't pull a Spitzer, who got so upset with facility fees that he forced a resolution that did nothing to help the consumer, and ended up just penalizing the Producer, while allowing the venue owners to do as they wished.  And they've all had to practically build another theater to house all the cast they've made from facility fees over the last decade (you can read about my Spitzer-anger here).

And if you want an opinion on this from a Producer before you craft your bill, you can contact me here.

 

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Trend alert: The British are . . . cutting costs.

Little Billy Elliot broke a lot of hearts last week when he announced he was hanging up his toe shoes and closing up shop at the Imperial Theater, where he has been dancing his bollocks off for 3 years.

It was a bit of a shock, actually.  While lots of folks knew Billy's dancing days were numbered, we certainly didn't expect to see him take off so quickly.

So what happened?

Well, kudos to Lead Producer, Eric "The Big Buck Stops Here" Fellner of Working Title Films, for stepping up and saying this to The Post:

"It's my fault entirely.  We'd never made a new musical before.  We believed in the vision of the show, and we decided to put on the best production we could without worrying about the [weekly] running cost.  But when you're grossing $700,000 a week, which is not bad, and losing money, there is a problem."

(One of the great things about the statement is that, of course, it wasn't all Eric's fault.)

It is a shame that Billy went down sooner than he should have . . . but that is not what this blog is about.

This blog is about a half-a-sentence towards the end of the Post article, that goes something like this . . . 

"While the show continues to do good business in London (where costs are lower) . . ."

Yep, the show is still running overseas.  And probably will for some time.  

I know, I know, you're thinking that it's running because it's more of a British story.  Well, maybe.

But does that explain the recent conversation I had with a veteran Broadway producer who, when I asked him what he was working on, said, "I'm bringing a show in to the West End.  It's so much cheaper over there . . . there's less risk, and you can do more adventuresome stuff."

Hmmmm . . . 

I've heard this from a few folks, lately, and it's starting to tickle my tutu.  Couple that with talk like, "a theatrical achievement like War Horse could never have been developed on American theatrical soil," and color me concerned.

Broadway's more cutthroat costs creates less fertile ground, which makes it harder for shows to take root.  Some would argue that's a good thing . . . it's a theatrical survival of the fittest, encouraging producers and writers to get better and better, or face premature wiltage.  

My concern is that Producers will just start looking to plant elsewhere. 

I know I've thought about it.  

 

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Can we Moneyball Broadway?

One of the most popular flicks of the last several weeks has been the Brad Pitt produced, Moneyball, based on the book of the same name.

Simply put, Moneyball is about statistics . . . and how the Oakland A's used complex mathematical formulas to find some of the most undervalued players on the baseball market, in order to put together a team that could challenge the best teams, for 25% of the payroll costs.

Despite a bunch of the old baseball guard rejecting the theory, the A's were so successful that the principles in Moneyball are now used by a bunch of ball clubs across the MLB.

Think we could do it for Broadway?  

It's not as easy, because we just don't get up to bat as much.  Ball players play over 100 games a season, get up to a bat a few times a game at least, and play year after year.  They have a long-term past behavior that can help predict future results.  

It's not as easy for plays and musicals . . . but maybe . . . 

Could we analyze which theaters recoup more shows?  Which writers?  Which actors?  What about the time of year?  Musicals versus plays?  Is there a budgetary sweet spot that gives you an edge?  

I'm not sure we could ever get something as effective at sabermetrics, but there are no doubt a whole bunch of numbers that could help determine what degree of risk you were taking with a show.

Would statistical analysis be the only thing I'd use to make a decision to produce or invest in a show?

Nah.  

Don't get me wrong.  I'm a huge believer in numbers, and I'd be the first one that would support the research of some of my questions above.  But in the business of Broadway, as in sports and the like, the numbers come second . . . and your gut comes first.

 

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Sharing media space in the square.

Snapped this pic on Sunday eve as one of the first examples of media sharing in Times Square between two unrelated shows.  

This billboard (one of the baby bills in TS) first split pre-summer when Stomp gave up half of it (after holding the whole thing for years) to John Leguizamo's show, Ghetto Klown.  But, it appears that the sharing-notion has stuck, as the upcoming Stick Fly has taken the bottom half.

Why do I point this out?  Because changes start small.  And this is not the last example of major media sharing you've seen, especially in Times Square.  See, the problem is that shows aren't the only companies that want those big boards.  Pepsi wants 'em.  Levi's.  Target.  And that kind of competition will continue to drive up their price . . . which may force shows to look into alternative options of advertising in the Square, like what Stick Fly and Stomp are doing.

Or maybe we'll figure out something completely different.  

Like maybe we take the $10-$15k in billboard money and put it into a 30+ person monster street team.  Or maybe we put it into mobile media that drives through the square constantly.  

Or maybe we'll just continue to learn how we can work together.

(P.S.  What about that Stomp artwork, huh?  I mean, it jumps out at you like a zombie, even though it only takes up half the space.) 

 

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