Friday, July 15, 2016

Economics of choosing to live stream a Broadway show is attempting to become like a Broadway version of Netflix.  But in late June they did something that had never been done before - they live-streamed She Loves Me, a current Broadway show.

She Loves Me was a hit show that had always planned to only have a limited run, and indeed it closed on July 10th.  BroadwayHD charged $9.99 to watch the show live on Thursday, June 30.

The economics behind the decision of the producers of She Loves Me to stream is fascinating.  So what are the pros for a show choosing to live stream?
  1. It brings in extra immediate revenue (the $9.99*# of viewers)
  2. It brings in possible future revenue for the BroadwayHD site (which perhaps pays extra to She Loves Me for this?)
  3. It will likely be seen by hundreds of people who run high school, college, and community theatre musicals who might choose to this show.  To use/perform a show, you must pay for the rights, which is a (sometimes significant) source of revenue for shows.
  4. It could bring in extra revenue to the show - if people seeing the show on the stream then want to see it in person.  I.e., extra revenue if the live-stream and ticket sales are complements. (Although I don't think this is likely given its only open for a limited amount of time.)

What are the cons of choosing to live stream?
  1. Is watching a video of a Broadway show a substitute for seeing the show live?  If so, then the live-stream could hurt ticket sales on Broadway.  Similar to point four above - this doesn't seem to matter as much when the show only has a handful of performances left.
  2. Would showing a live-stream hurt the sales of a show that is hoping to tour?    
  3. How expensive is it to produce the broadcast?

Overall, it seems like the optimal decision here from a theatre producer's perspective is to live-stream but only at the very end of a run - and only if they think it is unlikely to do a national tour.  

Read what others have written about live-streaming Broadway shows here, here, and here.