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Pricing the House

April 21, 2017

 

This week I attended the Ticketmaster Summit at Melbourne’s Meat Market, a fantastic event venue just north of the CBD. The summit was attended by over 400 people representing mainly venues and event promoters.  Pricing the House the first panel session was moderated by Evelyn Richardson, Chief Executive, Live Performance Australia, the peak body for the live performance industry.  

 

The Live Performance Australia 2015 Ticket Attendance and Revenue Survey reported that 18.38 million tickets were issued in 2015 representing $1.41bn in revenues.  The average ticket price for live performance events was $87.29.  The contemporary music sector holds 34% or the revenue share and musical theatre has 23.8%.  Those sectors were well represented on the panel by Michael Coppel, Chairman Live Nation Australiasia, Jason Marriner CEO Marriner Group and Louise Withers, Director Louise Withers and Associates.   Representing the Australian Football League was Gillon McLachlan CEO Australian Football League and Trevor Nisbett CEO West Coast Eagles Football Club and the only non Melbourne participant.  

 

The session sought to undercover the biggest challenges currently facing event promoters in relation to pricing, comments about the resale market and thoughts around what the future of event pricing may look like over the next five years.

 

 

How to price your events?

Not surprisingly there was not a one size fits all approach to pricing events, and perhaps a little discouragingly for fledging event promoters the comment that pricing events was more of an art than a science.  The warning not to overprice events was made.   Coppel noted that music artists are not interchangeable, so whilst you may be tempted to compare one act to the prices set for another this is not a wise strategy, rather you are better served by testing the market for your artist.

 

AFL pricing strategy has long been based on consistency, with the home and away prices remaining almost static year on year with only slight rises every couple of years playing catch up with CPI.  The AFL currently sells around 7 million tickets a year so they operate in a high demand and large inventory environment allowing them to keep prices down.  Their pricing strategy for children's tickets, being the lowest price in the sport or entertainment industry, creates long term opportunities to grow and maintain audience numbers.

 

However it is the model of daily tickets and season reserved being sold into the market which creates competing tension. The football teams have traditionally sold membership tickets going back to the earliest days of the competition.  During the 1990’s after a number of lookout events at various venues, clubs found an increasing desire from members for season reserved seats and with positive impacts on their financial models and the collection of the majority of the ticketing revenue at the start of the season this practice was embedded.   Currently there are nearly 900k members of AFL clubs, a significant portion of club revenue.  However, once secured a member is unlikely to relinquish their season reserved seat despite their personal schedule or the appeal of a certain match, resulting in members not attending every match allowable with their membership.   This can result in poor show rates at matches leaving thousands of unused seats in prime viewing locations.   McLaughlin noted a 35% show rate for the Geelong v Hawthorn match at the MCG on Easter Monday, which was visually evident while watching the game with empty seats on the bottom deck of the stands and daily ticket holders filling the top decks of the stadium.

 

In AFL it’s all about the atmosphere whether you are in stadium or watching at home therefore it is imperative that seats are full.  This continues to be an issue for the AFL, clubs and venues as they try to find a solution to the no-show problem that has been plaguing the AFL now for a number of years.

 

Dynamic Pricing

A strategy that both theatre and sport are currently using to increase yield and attendances is dynamic pricing. Slightly different from variable pricing where prices are set for specific events, time of day such as matinees or days of the week, dynamic prices takes input from current sales data, time until the event and perceived demand to recommend shifts in prices either up or down to optimise yield.   Marriner told us that Marriner Theatres had been successfully using dynamic pricing for 10 years and noting the success of dynamic pricing is all in the level of demand.

 

West Coast Eagles CEO Trevor Nisbett has been dealing with over demand and undersupply issues for years while the WCE played out of Subiaco Oval.  The club has implemented a resale option for WCE members who couldn’t attend certain games to resell their tickets.  Nisbett spoke of a generation of WCE supporters who have not been able to attend live AFL matches due to over demand and undersupply, a situation hopefully to be remedied in 2018 with the completion of the new Perth Stadium, with a capacity of 60,000 making it the third largest stadium in the country and adding additional seats into the WA marketplace.

 

Although the live performance industry’s average ticket price has barely grown only 1.9% from 2008 to 2015 (source: Live Performance Australia Ticket Attendance and Revenue Survey 2015) there has been a dramatic shift in the higher and lower priced tickets, this is also shown in the sporting realm by the AFL’s finals ticket pricing strategies where some of the lowest priced tickets being drastically reduced last year to levels not seen since 2001 but the most expensive non corporate seat at $399 and a change in price reserve splits taking the load on revenue generation.

 

In theatres, pricing is the number one decision, Marriner recommending to the audience creating clarity in communications with customers.  He told us that by being very clear to your customer about ticket prices that their purchasing decision much easier and quicker.

 

Resale

Making news earlier in April via the Daily Telegraph resale and aggravating lack of customer concern is a huge issue for the live performance industry.   The issue starts for consumers with their FOMO and the urgency to buy hot tickets, a quick google search and a click could take the customer unknowingly to a un-legitimate seller who at best will charge well over the promoter's price and at worse will sell a fraudulent ticket.  One problem for producers is that the resale companies can afford to buy their number one position one the google search, creating confusion for customers about where to buy their ticket.  

 

Another issue is where customers searching for tickets find overpriced tickets on reseller sites and then are turned off, they don’t know that there are tickets available from the authorised seller at a reasonable cost.  Trying to get information to these purchasers is a challenge for the venues and producers.  Marriner told us that in the US 70% of ticket sales is via reseller market, he believes the issue is around education, making sure that you are on top of the google search is a start.  Sounds simple but when the big players can buy the number one spot it is hard to compete.

 

The secondary market includes people wanting to resell for legitimate reasons and those looking to create speculative sales.   The industry for such a long time made it so difficult for customers with legitimate reasons to resell their tickets - no refunds, no exchanges leaving the door open to other companies to provide opportunities, rightly or wrongly, that legitimate ticketing agents, venues and event promoters were not providing to their customers.   It’s an emotive issue with fans missing out or being taken for a ride, and the industry, artists, venues, ticketing agents and producers, missing out on their share of the total event revenue.   

 

In a differing view McLauglin noted that generally resale is good for football, apart from the few events like that AFL Grand Final which is covered by legislation and the occasional sold out event, AFL is a volume product in a price sensitive market with affordable prices and an oversupply or inventory therefore is not a prime marketplace for resale and speculative sales.  The AFL prefer to have people at the football and therefore support resale programs by football clubs of their reserved seat inventory and therefore create opportunities for daily seat purchases to obtain access to buy better seats.  Not surprisingly at this event the role of Ticketmaster Resale was not raised by the panel.

 

 

Future

When asked about the future of ticket pricing Nisbett was looking forward to opportunities for the WCE fans to experience the new stadium, and also to implementing reasonable flexibility in pricing by conversing with the customers and via the relationship with stadium owner.  He also noted looking to employ people who could successfully ride the wave of technological changes impacting ticketing and pricing.

 

McLaughlin told us that the AFL were committed to an affordable mass product in the foreseeable future and Marriner was looking to grow ticket numbers whilst accepting that if ticket prices could keep up with CPI that would be a good result but that the average ticket price won’t grow, he saw a real opportunity to grow audiences.

 

Withers was hoping to see the creation of new innovative product and whilst Australians generally don’t support new product trying to find relevant content was the key.  She noted there was increasing audience diversity and more product with shorter season lengths.   To finish off the panel Michael Coppel foresaw increasing power of the artist and disturbance of technology.

 

Want to learn more about pricing your event?

Click here to learn more about our online course Event Management for Beginners.

 

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