Venue Economics & ServiceScapes Chapter 4

Types of Entertainment Content Performance - music, dance,theater, opera, magic and combinations Experiential - playing, visiting, recreating, learning, exploring, etc. Media-dependent (property) - TV shows, movies, music sold as DVD, cable, Internet, etc.

Entertainment Venues Performance venues - theaters, performing arts centers, cinemas Experience venues - casinos, spas, luxury resorts, cruise ships, museums, theme parks, zoos Arenas and Stadiums - specialty activity venues

REI rock climbing experience in their retail store

Venue as ServiceScape Shopping centers and retail superstores Malls and shopping experiences: Flagship stores Concept stores Destination malls

Experience Venue Guidelines Landmarks - physical symbols (REI) Malls - strolling with emphasis hubs Conceptual lines - provide direction and suspense Core attraction - “wow” effect

Alessi Concept Store

Venue Design and Aesthetics Architectural theming Room-in-room principle Furniture for watching Convenience and safety

Venue Price Setting Steps 1.Set objectives 2.Estimate demand 3.Calculate costs 4.Analyze competitors 5.Select a pricing policy 6.Determine price-setting methods 7.Decide on final price

Ticket Pricing Strategies Competitive pricing - going rate Discriminatory pricing Consumer segment pricing Performance pricing Image pricing Location and time pricing

Architecture gives added value to a pricing strategy Disney Concert Hall, Los Angeles

Ticket Distribution Strategies Venue box office Centralized ticket agencies Internet bookings Ticket consolidators Open marketplace

Franchising Paying for a brand’s name and concept and running the business independently Integration of media with licensing and merchandising New opportunities through technology

Unlike franchises, Starbucks owns and operates all of its retail locations

Operating statements Gross sales Net sales Cost of tickets sold Gross margin Operating expenses Net income before taxes

Performance ratios Operation ratio - % of net sales Gross margin ratio - % net sales $ to cover operating expenses & profits Operating expense ratio - % of each net sales $ needed to cover operations Net profit ratio - $ of each net sales dollar left after expenses are paid

ROI Analytical ratio that compares profits with investment amount needed to sell tickets net profitnet sales ROI = X net sales investment

Promotion budgets Percent of future sales Competitive comparison Objective task

Piracy Optical disc theatrical theft Internet signal theft Downloadable broadcast piracy media Streaming media public performance Camcording parallel importation Screeners back-to-back copying

Questions What aspects of venue aesthetics contribute to experience enjoyment? What venues can you recall that are particularly enjoyable? Which types of piracy are most difficult to control? What policing mechanisms can you suggest for halting global piracy?