I’ve been chatting with folks in the world of tickets and entertainment the last few days about a number of ideas and here is a consolidated list of where folks are at right now:
- We likely won’t be able to see fans really start going back to events until 2021. The science isn’t there, the safety measures won’t be sufficient, and the economy is going to be muted are just three of the reasons that have come up for this.
- To get through the shutdown of events and to get to the other side, we are looking at 18-24 months.
I could go on, but those two issues are at the heart of what I’m thinking about right now and about how the coronavirus is going to change the world of ticket sales going forward.
Here are three ideas that I keep coming back to a lot lately:
Less consolidation, speculation, and commoditization:
A few years back, I was chatting with one of the folks that helped me get started in tickets and we were talking about the challenge of commoditization of tickets and how the marketing and selling of tickets had been devolved to a financial input on a spreadsheet.
At the same time this was going on, we saw the rise of a lot more speculation and “arbitrage” from brokers.
And, we also saw a huge influx of investment money rushing into tickets.
All three of these forces have combined to create an incredibly volatile ticket market where prices fluctuate on what is hot or not and the ability to market and sell a ticket has a lot more in common with whether or not you can pick the right color to bet on at the roulette table than any skill in marketing, sales, or service.
I don’t think any of these factors are unique to the world of tickets, but it does reflect a challenge in the economy as a whole.
We’ve seen how the influence of investment dollars has perverted the market for transportation, food delivery, movies, and more.
What does this mean going forward?
In general, I’d say that we are likely to see less money flowing into the world of entertainment in the short term which will mean that folks in the ticket industry will be less able to speculate on tickets and manage their businesses on the float of their credit cards in the case of speculation and brokers.
We will also likely to see less money float into the world of tickets for the next year or so for a number of reasons including buying opportunities in other sectors, risk from the uncertainty of live events, and folks looking for safer investment opportunities in an unstable economy.
What will this mean?
It likely means that the consolidation model will be under stress because it will be much more difficult for consolidation partners to justify high priced deals that are risky as part of a portfolio of partnerships.
Finally, because we are likely to see the above two things happen, the issue of commoditization is going to fly up and bite folks in the bum.
As we have been quarantined in our homes, we’ve seen people yearn for human connection, return to old games and ideas for entertaining themselves, and we’ve seen folks have to change their consumption patterns.
To be honest, history shows that in many cases a lot of the things that we consider normal snap back pretty readily in the face of turmoil, but that cuts both ways and, typically, downturns and crisis lead to the acceleration of trends…in this case, before the pandemic, attendance was an issue and as I’ve stated many times before, you didn’t need to be a very good marketer to realize that the way that we were selling and marketing tickets was basically a textbook example of commoditization.
So what does all of this mean coming out of the pandemic?
It means that the trend for customer attention is going to be greater and the ability to just throw out tickets like a commodity is going to be even less successful than before. Meaning, the need to rethink the way that tickets, suites, and events are marketed and sold is going to increase in importance.
We could see less profit in the industry now:
I think a lot of folks were already surprised at how close to the bone many of the businesses in entertainment were being run.
This is the law of perception in action, which means that just because something seemed like a big, successful business it must have been a big, successful business.
You really only needed to read the financial reports of a lot of the publicly traded companies to recognize that they were getting high on the cheap money that was flowing into their businesses from investors, excited to be a part of entertainment, sports, concerts, etc.
Which means that logic would hold that if the businesses were strained for profit in the boom times, what will things look like during a time of uncertainty?
Not better if business practices remain the same.
Want to know something?
This might actually be a good thing.
Well, we might actually get rid of the $17 Bud Lights at Nats Park.
We might see the end of $50 t-shirts at the ballpark.
We might see a return to customer focus and innovation in marketing, product development, and service.
This may happen because consumers that were already stretched are likely to have less discretionary income, corporations that were already complaining about the need for teams to be more responsive to their needs are going to have more strength, and there will still be the lingering concern about gathering in mass groups that may not show up in the conscious decision-making process, but will definitely be there in the subconscious decision-making process.
Don’t believe me? Check out Martin Lindstrom’s ebook on the subject.
This doesn’t even begin to mention the impact of folks waiting longer and longer to buy tickets due to uncertainty, fear of not being able to get a refund, or the number of options asking for their attention.
More competition for the customers:
Ultimately, in the recovery from the coronavirus pandemic and the financial crisis that has sprung up out of it, we are likely to see a much greater amount of competition for customers.
Why does this matter?
To begin with, if you are in business, you have one job…create and keep a customer.
Second, for many organizations, the idea of maintaining and building relationships with their customers has been a secondary consideration.
We don’t see a lot of organizations with nearly the robust customer retention plans that nonprofits might offer, subscription services, or, even many professional service firms.
The point here is that each time you give away your customer to someone else, you are paying a tax in a number of ways:
- Every time StubHub sells your ticket and you don’t have a relationship with the customer, that’s a tax.
- Every time your tickets are sold on Groupon or other discount sites, that’s a tax.
- Every time you have to pay Google to advertise your events, subscriptions, or offers above a broker or some other content, that’s a tax.
I could go on and on, but the inability to have a direct relationship and a direct conversation with your customers or the people coming to your events…that’s a tax and an expensive one because it isn’t just money, but time, service, and relationships are all weighed down.
This post is mostly about changes that I think we will see going forward, but before I go…here are a couple of solutions to mitigate these changes:
- Start now building relationships with your customers. What does this mean? What do you own that you can drive your customers and fans towards so you can start talking directly with them? Make sure you create something that allows you to have the relationship with your fans and control it. Not like Facebook, Google, or Twitter that can change your presentation at a moment’s notice.
- Rethink what you are giving your guests: I didn’t get too deeply into it here, but customers are likely to wait longer than ever to buy. How can you counterattack that? You are going to need to think through what you are offering more consciously because you are going to be competing in a more competitive environment, for potentially fewer discretionary dollars, and in a market where differentiation is going to be more important. Act like it.
- Review your business model: The NBA says 40% of its revenue comes from fans in the arena. So what does that mean when you consider TV money? Likely that 80%+ of an NBA team’s revenue comes from two sources. I know that there are many revenue streams that go into the live experience, but still…I think this example should highlight the need to be even more aggressive about rethinking and reimainging what is possible from your business model so that you aren’t too heavily weighed in any one direction.
What do y’all think? Let me know.
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