Thursday, March 15, 2018

"Revolutionary" Revenue

“Revolutionary” Revenue
Lydia Heinen

Whether you spend your time listening for hours on end to the hit musical “Hamilton” or not -- odds are you have heard of the “revolutionary” production.  Creator Lin Manuel Miranda took a seemingly boring subject that should be left to history textbooks and created a musical masterpiece that has been breaking the charts since its release in August of 2015.  Theatre productions, especially musicals, are usually lucky to have more than a six month run time, yet Hamilton has managed to run strong since its release, and is well on its way to becoming a billion-dollar musical.  Also, it’s on track for a twenty city tour around the United States.  The real question is: how did they do it?  How does the show manage to run strong, consistently selling out theatres with tickets sometimes going for over $1,000, and why do tickets cost that amount?  How is Hamilton, a musical about a historical figure, such a success?

To start, Hamilton from the beginning had success on its side because of the creator: Lin Manuel Miranda.  Before writing Hamilton he wrote the hit musical “In The Heights” which received four Tony Awards and had had revenue over $100 million.  Lin Manuel’s soundtrack for Hamilton gained initial popularity after performing it at the White House for President Obama.  From there demand took the reigns.  Supply was never able to quite meet the demand for tickets to see the show.  As consumer tastes increased for the musical, demand increased, and since theatres can only house so many people per show, the show was granted longer run times to meet the demand.

Since the demand for popular musicals such as Hamilton is so high, ticket prices are very high as well.  Yet, the high ticket prices come with reason.  The cost of production of a musical is extremely exorbitant.  According to the New York Film Academy, the cost of putting on a show is around $2,400,000 along with an additional $300,000 per week.  These prices come from multiple factors, including: physical production, talent fees, rehearsal space fees, salaries, and advertising.  Physical production involves a lot more that what some people think; as shown by the visual, factors such as the illuminating the stage with the 856 lighting cues in Hamilton would immensely raise the cost of production.  Small factors such as regulating temperature, laundry, and maintaining the quality of the costumes easily add up.  This results in ticket prices that are oftentimes very expensive, and the opportunity cost of going to see Hamilton could potentially be paying for groceries for a month; yet many fans will do just about anything to see their favorite musical played on stage.  Although there are many costs to production, like any major business Broadway makes major profits.  As shown by the chart, Broadway continues to make more and more money as the years go by and more and more musicals are created.

In the end, Broadway is a big business; productions such as Hamilton connect people from all over the world.  Prices may be high, but the demand to see such as revolutionary production lives on. 


Works Cited
“No Business like Show Business.” The Economist, The Economist Newspaper, 16 June 2016, www.economist.com/news/business/21700674-our-analysis-art-and-science-creating-hit-show-no-business-show-business?zid=319&ah=17af09b0281b01505c226b1e574f5cc1.
Oswald, Anjelica. “'Hamilton' Tickets Sell for More than $2,000.” Business Insider, Business Insider, 13 Apr. 2016, www.businessinsider.com/hamilton-musical-revenue-facts-2016-4#he-wrote-most-of-the-songs-in-the-order-they-would-be-sung-in-the-musical-4.
Zeke. “Why Are Broadway Tickets So Expensive?” Student Resources, 7 Apr. 2015, www.nyfa.edu/student-resources/broadway-tickets-expensive/.

Image URLs (in order that they appear):
http://www.playbillstore.com/Shared/Images/Product/Hamilton-the-Broadway-Musical-Magnet/Hamilton-Magnet.jpg
https://i.pinimg.com/474x/be/e9/80/bee98031d365feac78c60cc3db8134bf.jpg
https://www.nyfa.edu/student-resources/wp-content/uploads/2015/04/Screen-Shot-2012-06-11-at-11.13.08-AM.png

15 comments:

  1. I have recently heard of the increase in consumer tastes- my friends have been constantly discussing their wish to see it performed. As a determinant of demand, more and more people are willing to pay the price of a seat, despite the opportunity cost. Although going to see Hamilton is an elastic good, people don’t seem to care about how much it costs. Profit continues to increase.

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  2. It is crazy how popular Hamilton has become. The musical has been running since 2015 yet the demand has kept the cheapest ticket in the house at around $250. I wonder how long the demand for Hamilton will last. It is now more understandable why broadway show tickets can be so expensive. I never realized how much money they spend per week on production.

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  3. Clearly, the demand for Hamilton is off the charts. When I found out tickets to see the musical reached $1,000, I was shocked. Like you said, this is because the supply is scarce while the demand is high. But I’m still wondering why they cost so much. I understand that Lin Manuel Miranda caused a lot of attraction, but the show shouldn’t cost this much more than others. Typically, a ticket to see a show on broadway is anywhere between $100-$400, give or take a little bit. Perhaps because the show has such a different, historical topic, more people were drawn in addition to the regular crowd of broadway fans. It’ll be interesting to see if ticket prices drop anytime soon and if the demand decreases.

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  4. It amazes me that a musical that is based on such an obscure topic as Alexander Hamilton could make that much money. I predict that this is going to go on for much longer, because every few days I hear someone talking about how great Hamilton is, which makes more people want to see it, so then more people are talking about how great it is, until people like me who don’t even like musicals want to see it. Now that is a great way to increase demand, by making everyone love your show.

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  5. This post is very intriguing and clearly something you’re passionate about. The $2 billion cost of putting on Hamilton is shocking; however, with the price breakdowns that you included, this cost seems more reasonable and explains why the tickets sell at such high rates. It will be interesting to see how long the demand for Hamilton remains high, and whether that demand will be affected by other, future shows. With the extreme popularity and success of Broadway, it would also be interesting to see how these shows contribute to America’s GDP. The billions of dollars spent on creating props, costumes, and theaters for these performances ought to have some impact on GDP.

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  6. I like that you took one of the top grossing musicals of all time and you were able to analyze the actual reason for their success. I really like the visual you used that helped us get some perspective oh how much work actually goes into a production that has been running for three years now while others run for maybe six months.

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  7. This is really interesting how Hamilton brings so much demand and revenue into Broadway. I agree with your stance on how Broadway is a booming industry. Also, it's amazing to hear how Hamilton started out as a performance for the president and from there the whole production took off. A thousand dollars for a ticket is extremely pricey, but considering the effort and special effects put into the production, Hamilton for sure has brought a lot of demand to the theater industry.

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  8. Its amazing to see what a huge success Hamilton has become! Like you mentioned, the show has been in existence since 2015 and still popularity is sky high. With ticket prices upwards of 1,000 dollars it is safe to say it is not a show to miss. In knowing that people are willing to pay such high prices for a single ticket I, like many others, am more inclined to see what this show is all about and go buy a ticket myself

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  9. It's crazy to see how expensive tickets for these shows really are. I've heard a lot of people talking about the show, and I was thinking about going, but once realizing how much money they were I had to think if it was worth it or not. However, it seems like people are still willing to pay these high prices, so it is a smart strategy because the producers know they can still charge these high prices. If the show began to lose popularity, then ticket prices would probably go down since the demand for tickets wouldn't be as high.

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  10. As you mentioned, Hamilton has clearly found success. The scarcity of this show certainly contributes though. By having a limited number of cities, casts, and seats, the demand rises for shows far in advance. With this excess demand, ticket sellers are able to price-discriminate and capture the majority of consumer surplus as those who are willing to pay more, will buy better seats. More productions are added to combat this, but it seems to only expand the market more.

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  11. It makes sense that the production would make such a high demand. Due to its popularity, more and more people want to see it, which is a plus for broadway. To make the show what it is, a lot of money has to be put towards building the set and creating the show it is to entertain the audience. Due to the high amounts of money being put towards the production, the ticket sales will have to increase so they can continue to produce the show they want to create. This goes for any huge production, like the Phantom of the Opera, Wicked, etc. Each show has their fees to keep the show fresh and exciting, so Broadway will definitely gain the amount of money they need to keep producing those shows.

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  12. Broadway productions are interesting because although no physical merchandise or product is being sold, they still obey all of the laws of supply and demand. This is because the experience of seeing a show in person is considered to be valuable enough that people are willing to pay for it, and by having a limited amount of showings and seats, price is driven up. I would be interested to see if there is any correlation between the rise of online shows and ticket price for theatrical productions, because online shows could be considered a substitute and the price of online shows is certainly much cheaper than seeing a production.

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  13. I never realized how expensive it is to produce a musical and keep it running for so long! However, it is smart of the producers to keep charging such high prices in order to bring in capital. In business you have to seize every opportunity you can to make money, so why not charge people as much as possible to see the show. If people are willing to pay hundreds and hundreds of dollars to see your show, why would you charge them any less? With such high demand and high prices it also suggests to people who previously didn’t know about the show that this show is amazing, and worth sometimes thousands of dollars, which only increases the demand to see the show!

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  14. Because the musical, “Hamilton” is so high in demand, businesses are going to increase in demand and in supply demand. As ticket prices rise, more people are still willing to buy them because a majority have a large interest in this musical. Theatres are going to have more revenue than ever before, they can spend money to improve their theatres, and all of the employees will earn a higher income. If all the employees earn a higher income, then they can more buy elastic items. The more products they can buy, the more money that other businesses will receive. When a business receives more money, they can increase their prices and the quantity of their products.

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