What on earth has happened to Broadway
ticket prices!? I have to admit that as a student in New York City, I have not
bought a full price ticket in a very long time. And because I have access to
student tickets and I know how to work the incredibly convoluted discount
ticket process, neither has my family. But recently when we went to get tickets
from the Beautiful box office, we
were offered either balcony seats for $75 a ticket or regular priced orchestra
seats for $165 each. As a business
student, I can’t help but put this into perspective with a little statistics.
When I was in 8th grade (7 years ago), a regular priced orchestra seat to
Wicked (then one of the most highly demanded shows) was $110. That is a 150%
increase in price over a 7-year period. Dividing that increase over 7 years,
ticket prices rose 21.4% per year. Considering that the average inflation over
the same time period was 2.7%, this is a massive problem for Broadway.
So what is going on here? Why are
Broadway’s ticket prices increasing at this insane rate? I don’t know the exact
answer since I am no expert, but I have some hunches. First of all, the cost of
producing on Broadway has increased greatly. In 2003, Wicked was the most
expensive musical to ever be produced on Broadway at $14 million. A little over
10 years later, that’s pretty much the going rate. With big shows like
Spiderman and Wicked to compete with visually, producers are feeling the
pressure to make their shows as spectacular. With the stakes and failure rates
so high – one in five shows never make their investment back – producers are
having to increase ticket prices to have any chance of making their money back
in this century, if at all.
(Source: NYTimes.com)
But the problem is that shows don’t
usually procure the ticket price they are asking for. Broadway priced itself out of
the reach of many middle class families long ago, but now it is even starting
to become difficult for even a well-to-do family to attend a show. For a family
of four to go see Beautiful, the cost
would be $660. And this doesn’t include dinner, parking, or even a hotel. At
that cost, it is easy to see why some families are electing other forms of
entertainment on their New York City vacations. And when the tickets are not
selling, shows start to offer discounts through discount websites and TKTS. In
2013, the average Broadway ticket was sold for $87.57! For a show like Beautiful, that’s a 50% discount!
My point here is that if this is the
price that the market is demanding tickets at, wouldn’t it make sense to sell
tickets closer to this price? I’m not saying that all tickets for shows be
sold for $87.50, but if this is what the average
consumer is willing to pay and producers are charging $165 for a ticket, that
is a big discrepancy! While it may seem counter intuitive price your tickets
lower, it may capture a wider group of people paying that “full price” rather
than having them immediately look for discount tickets. The more your seats are
filled, the more word of mouth will spread about your show. Even if the show
does not earn its entire investment back, having more people see your show
means that it may be able to earn more money in national tours and regional
licensing after its Broadway life.
No matter what happens, the extraordinary price of
Broadway tickets and the existence of so many discount tickets indicates to me that something is wrong with the financial model of the industry.
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