Charles Darwin could well have seen into our economic future when he said, “It is not the strongest of the species that survives, nor the most intelligent, but the one that is most responsive to change.”
In other words, take nothing for granted. No one can afford to assume that “the way we’ve always done it” is a formula for success. Tell that to Hostess, Eastman Kodak, Blockbuster or the other once-profitable big dinosaurs that have recently filed for bankruptcy as the nation limps toward economic recovery.
Air shows have their loyal fan base, but they represent a small slice of the demographic pie. The average adult spectator is about 39 years old; most are between 30 and 50 and earn more than $50,000 annually. In order to adapt to the changing economic climate, air shows must either appeal to a broader socioeconomic fan base (including the 19-to-29 age group), or target their resources more intentionally toward the older, higher-income crowd… or both.
The key to both coping strategies is to keep an eye on the larger trends and successful developments in other entertainment industries. In all of this, the impact of technology cannot be ignored. Failing to pay attention can cause you to become a victim of relevant trends and developments rather than being a beneficiary of them. In order to stay at the top of the food chain, you must stay current and integrate leading-edge changes into your own business planning and event marketing.
Consumer Technology Trends Drive Change, Innovation
If we take cues from our competitors, it’s clear that Internet-based and “Third Screen” mobile phone technologies have become major factors in the race for consumers’ attention and entertainment dollars.
Plunkett Research, Ltd. specializes in market research, industry statistics, trends and analysis of top companies. In their 2012 “Introduction to the Entertainment & Media Industries” report, they observe that entertainment and publishing companies are being forced to evolve in order to keep pace with new technologies and new demands from consumers.
“With astonishing speed, entertainment and media have evolved into a highly dynamic industry, interconnected by the global digital platform in a manner that few people could even have conceived of 20 years ago …the industry has changed dramatically into an always on, easy to time-shift, always with you on mobile platforms, customizable stream of news, entertainment, movies and music.”
The report concludes, “The implications of these changes are staggering. The business models upon which most entertainment companies have traditionally run are becoming obsolete. Revenue from traditional advertising is in jeopardy… Online advertising is growing at supersonic speed. The burning issue… is maintaining control of content and audiences while taking advantage of myriad new electronic delivery venues.”
This change in audience behaviors has been emerging since the onset of the new millennium. “From NASCAR to Cirque du Soleil,” published by Grantmakers for the Arts in 2000, prescribed strategies for reaching audiences by studying approaches taken by a variety of non-profit arts organizations, mega-concert promoters, for-profit entertainment conglomerates, sports promoters and religious organizations.
Across the board, a few broad themes emerged:
- Sufficient resources are critical to remain flexible and responsive to audience interests and changing demographics.
- New technology plays an increasing role in reaching younger audiences.
- Leisure time is more fragmented than ever before, making convenience — of time, location, and ease of acquiring tickets — critical.
Though that report is now more than a decade old, its key points remain relevant twelve years later, as technology has advanced and a recession has done its damage. For the four years after the recession hit, entertainment venues had to slash ticket prices dramatically in order to stay afloat, then inched them back up as the recovery began to take root. Recently, gas prices started escalating, putting further strain on consumers’ cash flow.
Now we see a bifurcated pattern emerging, which reflects a widening gap between affluent Americans and the rest of the population; a phenomenon called social stratification. Ticket prices are generally rising, yet both attendance and per capita expenditures are declining for most entertainment, leisure, arts and sport venues.
According to a 2011 report from the leisure group White Hutchinson, three trends emerge in attendance and spending at various community-based, out-of-home, leisure venues including entertainment, the arts and sports:
- Attendance is down amongst the entire U.S. population.
- Admission prices and fees are rising faster than inflation.
- A greater share of attendance and spending is shifting to higher socioeconomic households.
Again, these trends began at least a decade ago and are not attributable to the recession. The economic turndown has simply accelerated the growth of these trends.
Attendance is decreasing because a smaller percentage of the overall population is going to the movies, entertainment venues, sports, the arts and even historic sites. As fewer working class households are attending, a larger share of participation and spending is shifting to higher socioeconomic households. In 2000, the top 40 percent of households by income accounted for 65 percent of all spending for entertainment admissions and fees. Their share grew to 71 percent in 2009.
Movies and the MLBs
For example, movie cinemas are considered the most affordable and popular form of out-of-home entertainment, with over two-thirds of Americans attending movie theaters at least once a year. In 2002, the average American went to the movies five times. But by 2010, that had decreased by 22 percent to less than four times a year. Simultaneously, ticket prices increased 35 percent, eleven percentage points greater than inflation. Since higher ticket prices haven’t made up for lower attendance, box office revenues have actually decreased eight percent in inflation-adjusted dollars since 2002.
Similarly, per game attendance at 29 Major League Baseball stadiums has decreased eight percent since 2000. Such decreases were also found in other types of sports and art venues. Community-based family entertainment centers and bowling alleys are responding to slumping attendance by enhancing their offerings, raising prices and capturing more per capita spending on each visit.
Business Week reported in April that Major League Baseball ticket prices will be essentially flat for the first time in two decades. The average is $26.92 this year, up 1 cent from last season and the smallest increase in the survey’s 21-year history, according to the Team Marketing Report. That’s a 1.5 percent increase in 2010 and 1.2 percent last year. That type of anemic “growth” means that MLB ticket prices have not even kept pace with inflation during the last three seasons.
For the 2012 season, 17 of the 30 MLB teams are hoping to boost ticket sales and fill seats with some form of dynamic pricing. This flexible system adjusts prices of individual game tickets up or down based on demand, opposing teams, or even the weather. Discounted seats are made available to fans who purchase in advance. As game day gets closer, ticket prices start normalizing.
Previously, teams used variable or tiered pricing, where tickets to weekend games or games against high-profile opponents are more expensive. Dynamic pricing is the next step in that evolution, similar to the technique used by airline and hotel companies. Even New York’s Metropolitan Opera is getting into the ticket re-pricing game.
The San Francisco Giants were the pioneers of dynamic pricing in 2009, with Qcue Inc., the company that originally developed the pricing software. Giants ticket revenue has increased annually by filling otherwise empty seats and reclaiming ticket proceeds that would have gone to scalpers.
Qcue works with 30 teams and organizations in the NBA, NHL, Major League Soccer and NASCAR. What a team sacrifices on price for a game, they can recoup in higher volume. According to the Atlanta Journal-Constitution, even by offering these discounts, most teams last season saw an average price increase of $1.55 per ticket (a 15-25 percent boost in overall ticket revenue).
NASCAR, NFL & Disney
Not so with NASCAR where ticket prices are still dropping in an effort to keep their middle-class fan base at the races. The ticket revenue of track operator Speedway Motorsports Inc. declined from $139.1 million in 2010 to $130.2 million in 2011. About 78 percent of that decline was due to cheaper tickets rather than lower attendance, the company stated in its annual report. (In 2010, a 14.7 percent decline in ticket revenue was attributed evenly to lower attendance and the sale of cheaper tickets.)
SMI is ramping up their use of weekend package promotions, hoped to accelerate the pace of ticket sales, Sporting News reports. SMI saw its event-related revenues—from sponsorships, suite rentals, merchandise sales, camping and concession sales—increase 4.4 percent in 2011. It marked the first time in three years that SMI experienced an increase in that category. In a nutshell — for NASCAR, anyway — it appears that cheaper ticket prices have the power to lure the customer, but special package promotions work to seal the deal.
The National Football League is the largest live spectator sport in the world, in terms of average attendance. Even so, season ticket sales declined from 2007 through 2010, with overall attendance down by nearly 500,000 in 2009.
The recession, rising ticket prices, competition with other sports and other forms of entertainment, plus high television coverage have all been blamed for declining league attendance, according to NBC Sports.
In contrast, major theme parks have weathered the recession quite well, thanks to the introduction of new attractions, overseas visitors and favorable pricing.
Theme parks suffered an initial slump in 2008-2009, with attendance slipping as the economy forced millions of people to stay home. In 2009, attendance at North America’s 20 most-visited theme parks dipped 1.1 percent from 2008, to 121.4 million visits, according to data from the Themed Entertainment Association. By 2010, the improving economy, coupled with dozens of new attractions at theme parks around the country, pumped up attendance figures.
Disney’s parks in Florida and California bucked the temporary downward trend altogether by posting year-to-year increases. The number one amusement park was Magic Kingdom at Walt Disney World with just over 17.2 million visitors.
Regional parks that rely on locals for attendance figures have had a harder time. Busch Gardens Tampa Bay posted a 12.3 percent decline, to 4.1 million visitors. Kings Island in Ohio was down 4 percent, to 3 million. According to TEA, the theme park industry improved along with the economy in 2010, in part because of new features like the 5,100-foot-long roller coaster Intimidator 305 at Kings Dominion in Virginia; the first phase of Luna Park Coney Island in New York City; and the Wizarding World of Harry Potter in Orlando.
Trends in Live Entertainment
Live entertainment venues – including music concerts, fairs and festivals — offer yet another prism of perspective. Mintel Group, Ltd., an international market intelligence company, published their analysis of live entertainment trends in October 2011. They observed these successful innovations and marketing strategies:
- Festivals generate additional revenue by streaming online.
- Event operators use social networks to engage ticket buyers, increase multi-platform marketing and involve buyers even after event.
- Text messages drive last-minute sales and awareness of events and sponsors.
- Increased smartphone sales and promoter investment in apps increase sales via mobile ticketing.
- Online photo sharing generates interactivity on event ticketing sites.
- Live Nation partners with Groupon to raise awareness about events.
- Ticketmaster uses Facebook to allow buyers to tag seating choices.
Note the key words among these trends: online, social networks, text messages, smartphones, Facebook. The common thread is technology. Collaboration among participating business entities plays a strong supporting role.
“The digital world is a disruptive force to out-of-home entertainment that should not be ignored,” the White Hutchinson report warns. “Unfortunately, many existing entertainment venues are doing just that. Not that long ago, bricks-and-mortar bookstores didn’t pay attention to digital books. Now Amazon.com sells more digital books than hardcopy ones and Border’s, a hard copy-only bookstore, recently filed bankruptcy. That is exactly what is happening with entertainment in the virtual world.”
Last season, forward-thinking and fast-acting air shows collaborated with corporate sponsors to provide free, downloadable mobile apps for spectators and pilots, and reaped measurable rewards.
This February, BtoB magazine recognized Aviation Week by naming it the Mobile winner of Social Media Marketing Awards for its Paris Air Show 2011 app.
Sponsored by Airbus, the mobile application was downloaded more than 5,000 times during the air show. The event — the biggest business gathering for aviation and defense professionals — attracted more than 150,000 trade visitors and more than 204,000 public visitors. Traffic for the Paris Air Show’s mobile website increased 200 percent over the previous year.
Along with an air show guide, the app included an interactive, pinch-zoom and scrollable map of air show grounds. Users could tap seating areas and exhibition halls to see a list of exhibitors in that area, making it efficient to move through the air show grounds. A city guide of Paris provided a list of nearby restaurants. Each restaurant’s page provided cuisines, restaurant hours and prices. The news tab provided an in-app link to the Aviation Week news feed, as well.
Also last season, organizers of the MCAS Miramar Air Show in San Diego ventured into the world of apps with an iPhone/iPad app that provided spectators with an interactive tour of the air show ramp and essential information about the show, including details on the schedule, parking, performers, statics, ticket information and frequently asked questions. The app also included short videos, a history of the air show, information about the centennial of naval aviation, and additional opportunities to thank and recognize air show sponsors.
This season, Sun ’n Fun unveiled a free app that included show hours, ticket details, fly-in information for pilots, maps, custom favorite lists where users could keep track of all their must-see exhibits and events, special FBO offers and workshop schedules, plus travel and lodging information for those driving to the show.
The app was sponsored by Sporty’s Pilot Shop, which first introduced an app for Sun ‘n Fun in 2011. “The 2012 edition of the Sun ‘n Fun app was downloaded by thousands of users and featured an increase in download of nearly 30 percent over the 2011 app,” said Sporty’s Vice President Mark Wiesenhahn. “I can only see the use of apps growing in relation to air shows. The air show app is perfect for pilots, who have proven to be fast adapters to smartphones and pads in the cockpit. It’s a natural transition to use an app that demonstrates the air show stays current with technology, and enhances the overall air show experience, where there’s so much to see and do.”
If your air show or act is teaming up with cosponsors to create cross-promotions, generating traffic on its Facebook page, attracting a following on its Twitter feed, or has developed an app for mobile devices, it’s going in the right direction. Essential survival skills are flexibility and innovation, especially as they relate to mobile technologies, social media, B2B collaboration and creative promotional packaging. Entertainment venues that are thriving in the midst of this economic downturn have hitched their wagons to these emerging consumer trends.
“One thing is for sure; if out-of-home entertainment is to survive long term, it will need to evolve to stay relevant to contemporary consumers who are finding the virtual world of entertainment and social media so appealing,” the White Hutchinson report advises.
Darwin called it 150 years ago: “In the long history of humankind (and animal kind, too), those who learned to collaborate and improvise most effectively have prevailed.”