Venue Economics &

ServiceScapes

Venue Economics &

ServiceScapes

Chapter 4

Chapter 4

Types of Entertainment

Content

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

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

REI rock climbing experience in

their retail store

Venue as ServiceScapeVenue as

ServiceScape

Shopping centers and retail superstores

Malls and shopping experiences:Flagship storesConcept storesDestination malls

Experience Venue Guidelines

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

Alessi Concept Store

Venue Design and Aesthetics

Venue Design and Aesthetics

Architectural themingRoom-in-room principleFurniture for watchingConvenience and safety

Venue Price Setting StepsVenue Price

Setting Steps

1. Set objectives2. Estimate demand3. Calculate costs4. Analyze competitors5. Select a pricing policy6. Determine price-setting methods7. Decide on final price

Ticket Pricing Strategies

Ticket Pricing Strategies

Competitive pricing - going rateDiscriminatory pricing

Consumer segment pricingPerformance pricing Image pricingLocation and time pricing

Architecture gives added value to a pricing strategy

Architecture gives added value to a pricing strategy

Disney Concert Hall, Los Angeles

Ticket Distribution Strategies

Ticket Distribution Strategies

Venue box officeCentralized ticket agencies Internet bookingsTicket consolidatorsOpen marketplace

FranchisingFranchising

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

Unlike franchises, Starbucks owns and operates all of

its retail locations

Operating statementsOperating statements

Gross salesNet salesCost of tickets soldGross marginOperating expensesNet income before taxes

Performance ratiosPerformance 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

ROIROI

Analytical ratio that compares profits with investment amount needed to sell tickets

net profit net salesROI = ---------- X ------------

net sales

investment

Promotion budgetsPromotion budgets

Percent of future salesCompetitive comparisonObjective task

PiracyPiracy

Optical disc • theatrical theft Internet • signal theft Downloadable • broadcast piracy media

Streaming media • public performance

Camcording • parallel importation

Screeners• back-to-back copying

QuestionsQuestions

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?