Declining Revenue for the Performing Arts Industry
In the presentation three distinct points were made: first that as of 2008 the total amount of revenue for the performing arts industry has been in the decline since the financial crisis, second, that the revenue and participation rate in the theatre industry has been in decline since 2004 and lastly new changes in the way society views entertainment have drastically changed the playing field so to speak of how the performing arts industry works (Arenberg 52). As the presentation started, the recent decline in revenue for the performing arts industry is distinctly related to the start of the global financial crisis. The reason behind this is that the primary source of revenue for the Australian Performing Arts Industry is household disposable income (Wilkins & Wooden 358). HDI (household disposal income) is the percentage of money left over after expenses are paid for; changes in the economy such as a sudden spike in unemployment or economic downturns affect the percentile rate of HDI which in turn affects the rate at which people can go to watch live shows (Arenberg 52).
The Live Performance Industry has always been considered a form of luxury, most people tend to watch television or movies rather than theatrical performances due to the difference in cost and it is due to this distinction that problems occurred at the start of the 2008 recession. Consumer spending at the time was driven by the supposed need for survival with various luxuries being the first to be cut from most budgets (Suter 409). As a result, the Live Performance Industry was adversely affected by the economic downturn resulting in a significant drop in ticket sales.
While Australia was able to weather the 2008 global financial crisis better than some other countries the distinct lack of global consumer confidence in the economy resulted in cutbacks in consumer spending which further exacerbated the effects of the financial crisis (Boland 56). The theatrical industry has only just begun to recover over the past two years however the effects of the financial crisis show a distinct vulnerability of the performing arts industry to sudden shifts in the global economy (Arenberg 52). This has shown that consumer spending is inextricably linked to the status of the economy and as such the mode of revenue various live performances utilize is at risk of disappearing should another similar crisis happen in the future (Irvine 2).
Research into the state of the global economy reveals that on average the economy goes through a cyclical cycle of periods of growth followed by periods of recession. While other industries may be able to cope through their flexible business models the performing arts industry lacks the flexibility some businesses have and as a result, multiple theatre companies have gone out of business due to sudden shifts in consumer preferences (WILLIAM 23).
The declining trend in theatre audience patronage
An examination of the revenue and total attendance of the Australian theatre industry from 2004 to 2008 shows a rather bleak outlook with the 2008 growth percentage bottoming out at negative 31.4%. From 2005 to 2007, even before the start of the financial crisis, the average growth rate of the industry has been abysmal. While 2006 was a stellar year with revenue and total attendance growth of 94% to 80.8% respectively the years after that showcased an incredible drop in revenue and total attendance. From, the all-time height of $143,564,232 to a low of $80,476,671 the overall performance of the industry indicates a possible shift in consumer preference for this particular form of performance arts.
It must be noted that even before the start of the financial crisis the industry was already suffering from a negative growth rate and as such, all the blame cannot be placed on the recession but rather on another factor at work that is causing low attendance and revenue rates. When examining the case of the Australian theatre industry with that of other countries it can be seen that this is not a case solely isolated to Australia but rather occurs in other countries as well. Some successful strategies employed by theatre groups in Broadway have been to produce plays that are based on popular culture icons such as the Broadway play “Spiderman – Turn off the dark”. Similar strategies have been employed by the Sydney theatre group in their various productions which to this day have been highly successful (Ilari 13).
One must wonder what this would mean for the theatre industry as a whole as the production of plays and performances are increasingly isolated towards theatre companies that have a production capacity that smaller theatres cannot hope to rival. An interview with Polly Rowe, literary manager for the Sydney Theatre Company, did show that she is optimistic about the fate of the industry despite its size. She mentions that the latest appointments within the industry as well as the various changes that are happening show that, as a whole, Australian society is embracing arts and culture as a way to fascinate and entertain.
On the other hand, this interview can also be interpreted in another way such as her opinion towards the current state of the industry being small means that it is not expanding in any way and may indeed be shrinking. The rule of supply and demand states that supply will always try to conform with demand as such the higher the demand the greater the amount of supply produced however the lower the demand the less a particular product will be made. Taking this into consideration the size of the Australian theatre can thus be estimated as being the result of the overall demand of the populace for theatrical arts.
An examination of the total gross revenue accumulated by the performing arts industry within a given year shows that nearly 30 to 40% of its entire revenue comes from performances of non-classical music, this is defined as the latest popular music by various recording artists (Taylor Swift, Beyonce, etc). While musical theatre may possess 18 to 20% of the total share of revenue that fact remains that people are more interested in the non-classical performing arts as compared to the classical forms. The theatre industry in particular barely controls 7 to 8% of the revenue stream with very little gains over the past few years. As such despite the statement of Ms. Rowe that people in Australia have begun to embrace the classical arts could be considered overly optimistic with cold hard data showing otherwise. This is indicative of the fact that people are embracing something other than theatre productions.
Changes in the Culture of Entertainment
In essence, the theatre industry is a form of entertainment, while others make call it an art form, a way of life, or even a form of expression its purpose is still first and foremost to entertain an audience. As with all manners of entertainment operations, there is a certain degree of cost associated with various productions, and as such to continue operations theatres have to charge audiences a nominal fee. Taking this into consideration it can be thus assumed that should another form of entertainment come along that is far more affordable and easily accessible as compared to the theater industry then it is likely that consumers would choose that.
During the early to late 1700’s theatres, operas, and concert halls were the primary forms of entertainment for various populations around the world. The appearance of black and white movies and then television sets radically changed this notion and as a result theatres and operas lost their prominence in the entertainment industry. Today the general public is practically drowned in a sea of possible forms of entertainment however theatre companies such as the Sydney Theatre Company still do exist as a way in which that particular form of performing arts is preserved. Unfortunately, the overall impact of the theatre industry in the live performance industry of Australia only reached 9.6% of the overall gross income in 2007 while in 2008 this number went even lower to 7.6%. While musical theatre did account for 18.6% in 2007 and 23.8% in 2008, the fact remains that productions that theatrical companies such as the Sydney Theatre Company primarily focus on are slowly but surely losing their impact in the live performances industry.
While several factors could be attributed to this such as changes in consumer preferences and the economic recession the fact remains that current trends in the amount of gross revenue attained do not bode well for the theatrical industry. It can be stated though that the low percentile value could be explained by the fact that the performances themselves do not draw as many people as compared to concerts however the fact remains that the decrease itself is an indication that non-musical theatrical companies might be suffering from an overall change in a consumer culture where going to the theatre is no longer considered a viable form of entertainment (Cahill 5).
The lack of consumer growth for the theatre industry lies with the fact that it is dealing with aging and depleting consumer base. The more recent generations in Australian culture have become more interested in the latest pop culture icons rather than theatrical performances (Cahill 5). While proponents of the theatrical industry may say that conditions are improving the fact remains that for every step forward that the theatre industry improves the pop culture industry moves 20 steps ahead (Brunschweig 1). Not only that but recent economic upheavals in the international market have made older advocates of the theatre industry more reluctant to spend their money on expensive theatre tickets just in case another economic recession may happen again. This would explain why there is a steady depletion in the number of people that go to the theatre each year as seen in the data shown in the presentation.
One way of resolving this issue has already been presented by the incorporation of pop culture into the theatre industry such as the recent Spiderman play on Broadway which became a success. On the other hand, another method would be to simply minimize the size of the theatrical industry in Australia to a few main companies to better utilize and concentrate the resources of the industry (O’Steen 83).
Works Cited
Arenberg, YY 1991, ‘Service capacity, demand fluctuations, and economic behavior’, American Economist, 35, 1, p. 52.
Boland, M 2006, ‘Sydney keeps good company’, Variety, 403, 5, p. 56.
Brunschweig, C 1999, ‘United artists struggles with cash flow. (cover story)’, High Yield The report, 10, 40, p. 1.
Cahill, P 1999, ‘Musicals need to lure younger auds to survive tough times’, Variety, 374, 11, p. 5.
Ilari, A 2007, ‘Armani Donates to Sydney Theatre Company’, WWD: Women’s Wear Daily, 194, 79, p. 13,.
Irvine, J 2010, ”Go Early. Go Hard. Go Households’: The Economic Stimulus Package In Australia’, Ecodate, 24, 1, p. 2.
O’Steen, K 1994, ‘Ahmanson shrinks to fit the times’, Variety, 357, 7, p. 83.
Suter, K 2009, ‘THE AUSTRALIAN ECONOMY: THE CONTINUING ‘WONDER DOWN UNDER”, Contemporary Review, 291, 1695, p. 409.
WILLIAM, G 1997, ‘Broadway Tries Analysis And Gets Shock Therapy’, New York Times.
Wilkins, R, & Wooden, M 2009, ‘Household Debt in Australia: The Looming Crisis that Isn’t’, Australian Economic Review, 42, 3, pp. 358-366.