March 12, 2014
Over the past few years the attendance on Broadway has fluctuated from a low of 11.57 million patrons to a high of 12.33 million. My hypothesis is that this is the same group of 12 million people who attend Broadway shows each year. Producers such as Ken Davenport think so as well. Each show is in competition for the same pool of 12 million potential audience members.
In America we’re trained from a very young age that competition is good. In reality competition forces companies to compete on two-axes: price and value. A company can reduce their price or they can keep their price the same and provide more value than the competition. Consumers are the only ones that win in a competitive environment. Management theorists are so against competition that they describe competitive environments as red oceans - red to signify the blood in the water due to competitors who have been killed.
Broadway is a red ocean - a known market space where the competitive rules are known and competitors need to outperform their rivals on price or value to get their share of the pie. Looking at Broadway in this light reveals that the boundaries of broadway are defined and accepted. There are geographic boundaries: West 40th Street to West 54th Street, from west of Sixth Avenue to east of Eighth Avenue; award boundaries: Tony eligibility and labor boundaries: the use of Equity Actors, IATSE Stagehands and all of the other unionized labor on Broadway.
The competitive rules of Broadway shows are also known: option a script, rent a theater, retain an advertising agency, open the show before the Tony deadline and put a star in the cast if you’re producing a play.
The known market space and competitive rules make producing a Broadway show a very competitive thing. Decreasing prices is hard, the cost structure is imposed on producers through theater owners and unions. The only real cost to cut is advertising which most producers will only do at their own peril. Producers can also provide more value for roughly the same ticket price by optioning a better script, getting a better (often more-expensive) star or running more ads. These competitive constraints make Broadway a zero-sum-game: each production is competing on the same values and one production’s gain is achieved at another production’s loss.
In comparison to a red ocean there’s a blue ocean - an unknown market space that’s untainted by competition. Demand is created rather than fought for. There is opportunity for growth that is both profitable and rapid. In my opinion Sleep No More is the blue ocean competitor to Broadway. If you Google Sleep No More the second result is Sleep No More Broadway so that tells me that the audience defines Sleep No More as a Broadway show even though it isn’t.
The show is a new theatrical format where the rules of the game are waiting to be set. There’s no obligation to have a script, use Equity actors or to rent a theater. This freedom allows you to experiment with your cost structure. The market boundaries for immersive theater is also not set. On any given night you can see a crowd drastically different than the average Broadway show - young, hip and much more of the club scene than the MTC crowd. This is the beginning of their demand - the show will grow from being popular with the club scene to being popular with wider demographics (like, you mom, for instance). The luxury of being in a blue ocean is that they’re attracting a new audience without having to compete for it. For Gods sake, the folks at Sleep No More don’t even run ads!
In our next post we’ll document the value curves for Sleep No More and Broadway, talk about the elements in the curve, how the elements of that curve put Sleep No More in a blue ocean and we’ll wrap up by briefly discussing how to find a blue ocean for your company.
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