Baby Wally - Marketing a Broadway Show

"BABY WALLY"

Marketing A Broadway Show

"BABY WALLY"

"Baby Wally" is a Broadway musical comedy that has been playing eight performances a week for the past three years. As such, it is a great success, and has been considered a "hot" show since its opening in February 1979. In March 1982, the producer (Jim Hughes) is concerned about the future of "his baby", as attendance has been down for the last two weeks and could be a sign that the show is on the decline and may have to close in the near future.

I - Situation Analysis

Baby Wally has been running continuously for approximately 162 weeks (2/l/79 through 3/14/82), during a period when the average Broadway show closes after only four weeks. Even though Baby Wally was an expensive production ($1.9 million vs. $1.2 million for the average musical), the initial investment has been recovered many times over. The Broadway production is grossing $350,000/week (Exhibits I-A and I-B), and when revenues from the two U.S. touring companies and London company are included, weekly gross receipts are over $1,000,000.

Net of expenses and royalties, weekly profits for the New York production during the first two weeks in March were $128,250 (see Exhibit II), even though the house averaged only 82% of capacity (Exhibits I-A and I-B). Assuming average weekly profits of $132,900 for the entire run (the play was a sell-out for many weeks after opening), the Broadway production of Baby Wally has returned almost $20,000,000 profit, or $10.33 for every dollar of initial investment (Exhibit III).

Broadway shows must maintain the image of being popular, as this keeps advance ticket sales high and lessens the need to offer day-of-performance discount tickets through such outlets as TKTS and Chargit (where all seats are sold at half-price). As much as possible, producers prefer playing to a "clean house" (sell-out), which keeps the play's ticket demand (and profitability) high. This also has an effect on the touring companies, as the marquee value of a Broadway "smash" keeps the demand for these performances high as well.

After three years, the show appears to still have appeal, but Hughes is discouraged because he has not seen the usual seasonal attendance jump in March. While the best seats have averaged over 93% capacity in the past two weeks, the second best seats averaged only 63.5%, and the cheapest seats about 41.5%. Standing Room Only (SRO) tickets, which were in great demand after the initial opening, averaged only 35% of capacity during these same two weeks. There were no sell-outs during the period, and the best seats and SRO places sold out only once (Saturday evening performance on 3/13).

Break-even analysis (Exhibit IV) shows that at the current level of profitability, Baby Wally could play to only 45% of capacity without going "into the red" (losing money). At this level, however, the show would no longer be considered a "hit" and would probably close. Attempts to bolster attendance with discount tickets could help to keep people in the seats, but could also lower profits. In effect, the house could remain relatively full, but still not earn money.

It is possible that this show's appeal has become a little dated. Its initial popularity was based on a light-hearted treatment of contemporary issues (similar to the comic strip on which the play is based). After three years, these issues may have become timeworn, and no longer topical. Hughes' concern is that with the usual summer slump coming, and with slow sales during what is normally a brisk period, Baby Wally may have run its course. Even a modest drop in attendance of an additional 10 - 15% would mean the show would play to less than 70% capacity, and empty seats mean a show has lost its appeal.

The New York Theatre Market

The New York theatre market can be divided into six segments, five of which are active theatergoers (Exhibit V). The sixth segment consists of people who do not currently attend any theatre productions, but could offer some potential if they can be persuaded to go. At present, 85% of the audience are residents of the greater New York area; the rest are out-of-towners, and come from major U.S. and world cities.

When Baby Wally opened, it had targeted the young (18-34) audience, due to the topical nature of the play, and the great popularity of the comic strip on college campuses. Over its run, however, Hughes found that the show appealed to audiences of all ages. The audience was made up of a greater number of "entertainment seekers", as the play's name was not considered serious enough to attract traditionalists.

II - Problem Definition/Decision

Hughes must decide how to rejuvenate interest in Baby Wally, and prolong the image of its popularity if he is going to keep the production open. He also has a responsibility to his partners, as weekly operating expenses are high and they do not wish to return the profits they have already earned.

Hughes is also considering if he should raise his ticket prices to keep pace with other popular Broadway shows. Another musical down the street just raised its top price to $50, while Baby Wally's top ticket is $40 (and only for the most popular Friday and Saturday evening performances). Hughes is concerned that he may have to raise prices to cover inflation, but does not feel confident doing so because he is no longer selling the "hottest ticket in town". He is also concerned about a recent study conducted on the theatre district, in which 35% of all theatre-goers stated that the cost of a ticket was a "major obstacle" to more frequent theatre attendance.

Terry Diefenbach, a former Hughes employee now conducting free-lance promotions for the theatre district, has presented a merchandising proposal that could offer a new way of marketing Broadway productions to the general public. Hughes is meeting with him this afternoon to discuss the proposal.

III - Alternatives

1. The Diefenbach Proposal:

Intended to enhance the theatre-going experience by telling infrequent attendees where they are going to sit (seating chart), and giving them a momento of the occasion (Baby Wally premium, e.g. mug, T-shirt). This would be accomplished through a theatre "kit" which would include two seat vouchers redeemable at the "Will Call" window upon 48 hours advance notice, or through the mail. Each voucher is coded, so no physical transfer