Ken Davenport - Opinions from a Broadway Producer

What I learned from Rocco DiSpirito.

At the NY Emmy Awards on Sunday night, I was lucky enough to find myself at a table with a few fine folk, including soap star Colleen Zenk Pinter, ROA's Constantine Maroulis, and the Celeb Chef, Rocco DiSpirito.

Now, what could I, Mr. McDonald's, learn from a guy like that?

Well, here's what I gleaned from his garnish:

When preparing a new dish, it's all about the ingredients.  You want the freshest peppers and the ripest tomatoes.  Put them together under the right hand and out can pop something unique that has never been tasted before.

And when you've got the best ingredients, you get the best dish, right?

Not so fast, says Rocco, because no matter how great the ingredients, it's how those ingredients combine that counts.  And you just never know what that dish is gonna taste like until it's on your plate and then in your mouth. 

And shows are the same way.

There are always a few shows each season that look like sure-fire hits because of who's billed above and below the title.  I'll never forget buying a full price front row ticket to The Goodbye Girl.  Simon, Hamlisch, Zippell, Peters, Short . . . it's one of the few times I've bought a ticket based solely on a poster.  While I'll never forget Martin Short's performance and I still think that the score deserved more credit than it got, the show didn't live up to my expectations. 

Unfortunately, individuals don't make a show, just like ingredients don't make a dish.

And unlike food, you won't really know if a show is any good, until it's "frozen".

Are discounts eroding our sales?

Ohhh, if I had a dollar for every time I heard this question, my shows would never have to discount ever again!

While discounting has always been used to launch new products as well as entice people to buy old products (remember when your Mom used to cut coupons?), it wasn't until the internet exploded that discounting exploded right along with it, like an unsliced hot dog in a microwave.  The days of delivering discounts by direct mail alone quickly began to disappear . . . 

The airline industry was the first industry I remember trying to get rid of their perishable inventory on the internet, with their last-minute-price-slashing email blasts.  And we followed suit.

Discounts to Broadway and Off-Broadway shows are now much more available than they ever were, thanks to sites like BroadwayBox, Playbill, Theatermania, BestOfOffBroadway, and so on.  

So, the question is . . . "Is all this discounting doing more damage than good?"

Let's take a look at some numbers!

Here's what I did:

I found out when the major email blasts and discount clubs started to appear on the scene and graphed  figures before and after, eight years in each direction (the first thing you'll notice is that there is this cool discounting zeitgeist type thing that occurred right about the turn of the millennium), and differences in growth during each of those eight year periods.

Here are the figures we examined:

• Gross sales
• Number of Tickets Sold Average ticket price
  
• Price of top price ticket to Phantom of the Opera (We used Phantom since it has been open the entire span of time of the data and since it seemed a pretty good archetype)

Here are the results:

GRAPH #1 - GROSS SALES

• In the years from 1992 - 2000, the total gross sales on Broadway grew 120.22%
• In the years from 2000 - 2008, the total gross sales on Broadway grew 59.69%

GRAPH #2 - NUMBER OF TICKETS SOLD

• In the years from 1992 - 2000, the total # of tickets sold on Broadway grew 54.20%
• In the years from 2000 - 2008, the total # of tickets sold on Broadway grew 7.82%

GRAPH #3 - AVERAGE PAID ADMISSION

• In the years from 1992 - 2000, the average paid admission to a Broadway show grew 33.37%
• In the years from 2000 - 2008, the average paid admission to a Broadway show grew 44.32%

GRAPH #4 - PRICE OF A FULL PRICE TICKET TO PHANTOM OF THE OPERA

• In the years from 1992 - 2000, the top full price ticket to Phantom grew 30.77%
• In the years from 2000 - 2008, the top full price ticket to Phantom grew 41.18%
• Inflation rate 1992-2000: 22.23%
• Inflation rate 2000-2008: 25.05%

Ok, so a quick recap:

• During the eight years pre-discounting zeitgeist, the growth of the total overall gross, and the # of tickets sold were much higher than post-discounting zeitgeist.
• Average paid admission seems consistent with the rise in price of the full price ticket, which also grew at a greater rate in the most previous eight year period than the earlier period.
• Our increasing ticket prices are outpacing the rate of inflation (a different blog topic would be to compare our expenses with the rate of inflation with our ticket price.  10:1 that our expenses are increasing at the higher rate).

So what do you think?  Do the above graphs indicate that discounts are eroding our ticket sales?

Before we draw any conclusions, we must remember that there are other events during the past sixteen years that have impacted the above charts.  Broadway, as well as the world, shifted dramatically, on Sept. 11, 2001.  It just so happens that the major discounting efforts started just prior to that date, and then even more (i.e. Seasons of Savings) were the direct result of it.  And let's not forget the dot.com boom and bust in the late 90s.  Certainly that had an effect.

But back to the original questions!  

Could the discount efforts have really slowed our growth?  How would the industry have grown without sites like BroadwayBox, etc.?  Would the growth rates have been even worse?  Was the discounting necessary in today's Walmart society?  And if discounting has slowed growth, what can we do to reverse the trend?  Or is the growth slower because we are getting closer to the ceiling for the Broadway audience?  

Oh the questions, the questions!  One thing I know for sure is that the above charts are just a few clues in the mystery of whether or not discounts are actually eroding our sales, and we shouldn't jump to too many conclusions in a brief blog.  

I will say this . . . it's obvious to me that discounts haven't helped.

But I'll also say . . . I don't think we had a choice.   

In today's society, thanks to the internet, it's much easier to competitive shop.  And that has made a lot of us feel more entitled to a discount (my nose would be growing if I didn't admit that I google Staples Coupon or Avis Coupon before buying paper or renting a car).  Also, those discount sites are opportunities for shows to get free media.  Cut your price, they'll put you up on the site.  What's better for shows with limited budgets . . . paying to buy space to sell a full price ticket or getting free space and selling a lesser priced ticket?  Either way there is a cost, but one is much less risky (this is just one of the reasons why Off-Broadway shows full price buyers are only 25% of the audience as opposed to 50% of Broadway shows).

Consumers changed their behaviors.  And now, to get back to those past growth rates, we're going to have to do the same, because we're not discounting properly yet.  

What's next for us to tackle?  Yield Management. Just like we learned from the airlines in sending emails for perishable inventory, it's time to tackle different prices for different weeks of the year, different days of the week, etc., depending on supply and demand.

Here's a bonus graph for you.  It's the Dow during the same sixteen year period.

• In the years from 1992 - 2000, the DJIA grew 210.06%
• In the years from 2000-2008, the DJIA grew 20.08%

I left off what happened in the year following January 1, 2008, because, well, we all know what happened then . . .

Special thanks to all my friends across the industry who helped with the research for this blog, including The Swami, Laura, Hugh, Darren, Jennifer, Karen (one of my assistants) and The League.
 

Today is World Theatre Day: Here's How To Celebrate.

Who knew?

Today is World Theatre Day, which began in . . . are you ready for this?  1961!

Here's a blurb about it from the TCG website:

World Theatre Day was created in 1961 by the International Theatre Institute, and is celebrated annually on March 27 by ITI Centers and the international theatre community, with the reading of a World Theatre Day Message and various national and international theatre events being organized to mark this occasion.  

You can celebrate by including the message at a performance you're doing, joining the FB group, following WTD tweets, and by checking out the official blog.

But here's how I recommend you celebrate, and it's simple, and fun.

• Pick a show, any show (Broadway, Off, Off-Off, Regional Community or High School) that you were NOT already planning to see.  
• Go see that show tonight!
• Bring a friend that normally wouldn't go to the theater.  
• Come back to this blog and tell everyone what you saw.  

Your birthday isn't the same without cake.  4th of July just isn't the same without fireworks. 

And World Theatre Day isn't the same without a show.

What's cool is that the right shows can be like eating cake and watching fireworks all at the same time. 

Enjoy the day!

The High School Tony Awards: From the Onion Perspective

Here's a fun video to get you through the rest of the week.  Something tells me that each one of you will find yourself somewhere in this vid.

And while the above may be just a bit tongue-in-cheek, this certainly is not.  And I think it's pretty cool.  And it's pretty cool of "Jimmy" to support it.  

Books are like black . . . always in style. So I published one!

Records, 8-tracks, cassettes (and cassingles), CDs and MP3s:  I've seen all of these in my lifetime, and only two of those methods of music distribution remain.

Books, audio books and digital books:  I've seen all of these in my lifetime, and all three remain (interesting how the word book has stuck whereas music has come up with new "titles" altogether).

Despite the awesomeness of The Kindle (the PDF conversion feature makes it so easy for me to take 10 scripts on trips without having to bring an extra suitcase), don't expect your paperback to disappear anytime soon.  Kindles and the like will become more and more popular, as will reading on your iPhone, but there's something about a book's portability, durability, and economicability (I know that's not a word, but I wanted another "-ility" and it made me laugh when I read it out loud so I went for it.  Sue-ility me.).  

I mean, think about it . . . what would hotels do if books disappeared?  Would you find a e-bible in your nightstand instead?  Books have history.  They have character.  They sit on shelves and act like art.

Since books aren't going anywhere, and more importantly, since my father still thinks the "world wide inter-web" is a place where spiders hang out in-between meals so he has yet to read any one of my blogs . . . I published one!

And here she is . . . it's a collection of the first year of my blogs titled YEAR 1:  Is There A Doctor In The Theater?  

In addition to my Dad, it was created for people who may have joined the ranks of the readers more recently, and want to catch up.  Get the book and you can flip pages on the subway or on the beach rather than click and click and click while seated at a desk in an office or at home.

The other reason I published the book, frankly, is because I just wanted to say that I did it.  No other reason than that.  And thanks to that cool "place where spiders hang out" and companies like Lulu, it's easier now to publish a book than ever before.

The book will be on Amazon.com in a few weeks, but until then you can get it for yourself or for a friend, here.

And Dad, if someone is reading this to you, it will be in your mailbox in three weeks.  I know that seems like a long time, but since you still think old-school communication is the way to go, I thought I'd send it to you via Pony Express.   ;-)

Oh, BTW, a portion of the proceeds from the book are going to this cool thing I have planned for all of you . . . but it's still in its ameobic form, so I can't get specific yet.  But it's something that will hopefully help you guys get your shows off the ground.

A marketing axiom in two parts.

The bad news is . . . a great marketing campaign can't save a bad show.

The good news is . . . a bad marketing campaign can't kill a great show.

"How many movies recoup their investment?"

You hear me and others quote the Broadway recoupment stats all the time:  4 out of 5 shows never make their money back (it sounds like a Trident commercial, doesn't it?  "4 out of 5 dentists surveyed . . . ")

An inquisitive reader whom I'll call Joseph, because that's his name, wrote in over the weekend and asked, "How much better off are movie investors than Broadway investors?"  

A good question that I was disappointed that I didn't have the answer to . . . so I got on my google and did some research.

I found this interesting Freakonomics blog, written not too long, that featured a Q&A with the President of the Motion Picture Association of America, Dan Glickman.  In it, he talks about the increasing price of movie tickets (sound familiar?) as well as why he thinks movies do well in times like these (buzz word alert:  "staycation").

He also says this about recoupment stats in the film industry:

Movie making is inherently a risky business.  Last year, the average cost to make and market a studio film was over $100 million.  Contrary to the perception you might get if you just read the headlines about the big summer blockbusters, 6 out of 10 movies never recoup their original investments in their domestic runs.  

Well there you have it, curious Joe who's not from Hannibal, Mo.   Movies have a 60% failure to recoup rate in their domestic runs.  

(It must be stated, however, that looking at a movie's domestic run is a bit like looking solely at a show's Broadway's run (like our "Will It Recoup" rules), and not accounting for any subsidiary income, etc.  The rub is that a movie's post-domestic run can be much more rewarding than a show's life post-Broadway, thanks to the number of places available for distribution and the cost of that distribution compared to the potential income.)

While I'm glad Joe got me digging for this stat, the most important bit of info I learned from his question was not how many movies fail to recoup.  No, no . . . the most interesting thing to me was that both Broadway and Hollywood constantly refer to their recoupment rates in failing terms!  

"4 out of 5 shows never make their money back . . ."

"6 out of 10 movies never recoup . . . "

Depressing, right?  

Well, I'm changing my semantic tune, and accentuating the positive from now on.  A 20% success rate may not be much to shout about, but it's better than the 10% success rate associated with drilling for oil, and that hasn't stopped people from digging . . . and 20% won't stop us from producing, will it?  I didn't think so.

So from now on, you have permission to e-slap me if you catch me using any of the above negative phrases in the future.  And I promise to do the same to you. Deal?

From now on it's 1 out of 5 shows recoup their investment, or 2 out of 10 pay profit!  

Unless, of course, you're involved with one of my shows . . . and then the ratio is a lot higher. ;-)

It's that time again: we're looking for a few good assistants.

As you know, I don't have interns, I have assistants, and we're looking for our next class!

Here's the scoop on our summer program:

• Each Assistantship lasts from May to August
• You must be willing to commit to at least 15 hours a week (weekdays and weekends are available).
• A $500 stipend is paid upon successful completion of the program 

If you're interested or know someone that may be, get a resume and cover letter to my GM, Matt Kovich at matt@davenporttheatrical.com and indicate what area of the biz you're interested in (i.e. General Management, Marketing, Internet Marketing, etc.), and why specifically you'd like to work with us.

What do soaps and subscription houses have in common?

Barring major breaking news, you can count on your soap to be on every day.  Same time, same channel (and same story line).

Barring a major financial crisis (!), you can count on your non-profit to produce X number of shows a year as well.

They've put themselves on a schedule and by doing so, they become internally committed to delivering product (and at the same time trained their audience).

Or what about sitcoms?  When a sitcom is green-lit, the team is committed to writing, casting and producing 13 of those shows.  The first may be awful, the second may be great, the third may suck wind, the fourth may be so-so.

But they are on a schedule so they keep on creating . . . because their calendar tells them too.  And their hope is that the season is fantastic.

Commercial theater producing is hard, because we hire ourselves. No one green-lights and pays for 13 shows in a row, or a five episodes a week, or even five shows a year.

But that doesn't mean we shouldn't put ourselves on some kind of similar schedule.

Successful commercial theater producers, like successful sitcom writers or successful stock pickers, are about the long term.  Sure, one great episode or one great stock is fantastic . . . but what you want is much more than that.

To get it, you have to be willing to have an awful show, a great show, a suck-wind show, a so-so show, and so on.

So if you're a producer, tell yourself you're going to do a show a year. 

If you're a writer, tell yourself you're to write a play year, or a scene a week.

 

If you're an actor, tell yourself you're going to audition for five projects a week.

Put yourself on a schedule, because on this side of the biz, no one else is going to do it for you.

And believe that over the long haul, you'll have one hell of a season.

Airlines have change fees. Should we?

Somehow, I got to the Madrid airport a lot earlier than I expected to. "Just in time to take the earlier flight back to Newark," said Ms. "You're Lucky I Speak English" Continental Airlines employee.

Just in time, that is, if I was willing to pay the $50 change fee.

It wasn't a tough choice.  Sit in the airport for 3 extra hours or pay $50 to get to my office 3 hours faster.  Since I consider my in-office hourly rate to be higher than $16.67/hour, I forked it over.  

And Ms. Continental smiled so sweetly as she violently ran my credit card and racked up another $50 in sales for the day.  And for what?  For printing out a new ticket?  For the 2 minutes it took for her to switch my reservation?  The earlier flight wasn't sold out, so moving me around wasn't costing them anything.  In fact, since I was moving to an earlier flight, that gave them another seat to sell on a later flight, and gave them more time to sell it!  They got more cash and more profit potential!

Airlines have very strict no refund/no exchange policies, just like we do, but they've figured out how to use it to their advantage. (BTW, here's a tip for you or your box office managers:  when customers do complain about not being able to get tickets refunded because their plans change, etc., my sales team reminds them that buying theater tickets is a lot like buying airline tickets, or cruise ship tickets, or any vacation ticket.  They tend to calm down a bit when they realize we're not the only industry that doesn't give cash back.)  

So if airlines do it . . . should we?

If your cat had to be rushed to the VET because she ate your Annie action figure, and you'd rather see Shrek next week instead of 'tomorrow', would you pay $5/ticket to switch 'em?  I bet you would.  

In fact . . . would you be more inclined to purchase tickets in advance to a show if you knew you could make a switch later on for a small fee?

I know I often buy airline tickets weeks in advance to lock in a deal, knowing that if my plans change, I'll pay the fee and move the tickets as I need.

Would theater patrons do the same?  

Of course the problem here is seat locations, and sold-out shows.  This isn't a service everyone could offer, but it seems it could be designed in a way that could do two things:

• Make the patron happy
• Make the production more money

 And shouldn't those be the goals of every one of our initiatives?