Posts tagged ‘competition’
I always find it valuable to watch other industries for clues to trends and innovations.
The hotel industry may hold some clues regarding the changing role of intermediaries. Yes, it is a different industry, as is airlines. But that does not mean that there may be enough similarities to provide valuable insight. After all entertainment, hotels and airlines all sell or licence the right for a person to occupy a specific location for a specified time period. Agreed, there may be some differences in where the booking takes you physically and metaphorically. But there is one overriding similarity – it is a perishable inventory. Once the curtain goes up or the planes takes off, that seat is gone forever and has no value.
“room nights booked through hotel websites last year grew consistently in each quarter, growing 6.8 percent in the fourth quarter compared to the same time in 2010.“
Consumers are increasingly buying direct from the hotel, rather than travel agents or online travel agencies.
“Overall in the transient segment, the OTAs (Online Travel Agencies like Expedia and Hotels.com) accounted for 11.4 percent of all hotel rooms booked for the fourth quarter; GDS (Global Disctribution Systems used by Travel agencies) accounted for 19.3 percent; hotel websites (e.g. hilton.com) accounted for 26.5 percent; direct bookings accounted for 25.0 percent; and voice, or 1-800 numbers, accounted for 16.7 percent.“
“Hotel companies have been focusing on educating customers about the value and benefits of booking direct on their websites. These companies have been investing in improving their websites and web value proposition to ensure hotels and customers understand and believe in the value of booking direct with them online.“
That sounds like a good strategy for entertainment as well, the event owner selling directly to consumers without the need for intermediaries. At the very least, the benefits of control over the service ‘promise’ made, the service delivered and the reduction of additional service fees and commissions all makes sense. As suggested, it is important to educate and inform customers and for the not for profit entertainment sector a major, related issue is transparency.
“… consumers are spending an increasing amount of time shopping and comparing hotel options online, often visiting between 8-15 different websites to make an informed decision.” Consumers are getting cleverer at comparing options and they are more and more skilled at accessing AND sharing information on options.
“While a hotel’s website continues to drive more and more bookings for hotels, it is important to recognise that different channels cater to different types of customers, and having an appropriately diversified and optimal mix will drive improved revenue and profit outcomes,”
Different strokes for different folks at different times and different situations.
Selling directly to customers is not the only option, but it looks like it increasingly must be one option and an important one at that.
Oh pullease … my ass
Add on fees for “convenience” et al are just that .. convenient ways to squeeze more out of the consumer.
Here is a good comparison of airlines and concert tickets. They are both interested in yield management and revenue maximisation, but responsible behaviour comes down to one thing: … TRANSPARENCY
Of course, the first thing to decide is how you measure success.
It is often suggested that a loyalty program is working if it accomplishes at least one of two objectives:
- clients are either holding onto their customers longer or,
- are getting them to spend more with the brand.
Kobie Marketing believes that there is only one variable for measuring loyalty – engagement.
“Engagement is a minimum threshold variable that can measure individual member’s contributions to the program’s bottom line. In other words, if a member has an actively engaged relationship with the brand and program, we should measure their contribution. If the relationship is passive, we say don’t include them in positive performance metrics.“
McKinsey in The Consumer Decision Journey discusses these different kinds of loyalty – active and passive:
“Of consumers who profess loyalty to a brand, some are active loyalists, who not only stick with it but also recommend it. Others are passive loyalists who, whether from laziness or confusion caused by the dizzying array of choices, stay with a brand without being committed to it. Despite their claims of allegiance, passive consumers are open to messages from competitors who give them a reason to switch.“
This suggests that we may need the reality of a harsher measure of loyalty in the arts and entertainment to move beyond the false expectations of a fickle passive loyalty. Much of the shadow audience can only be considered passively loyal and the audience attracted to one of your shows only when it is a hit is at best – passively loyal. Actively loyal supporters are more valuable as they will support the challenging rather than just the easy or safe bets.
I have seen it quoted we should measure audiences not by tickets, but by customers. The view above adds another qualifier to measuring audience loyalty to only actually counting those actively engaged.
Back in April last year FULL HOUSES floated the possibility that ‘Apple is patently on the move into ticketing‘ and this was followed by ‘Apple Adds to Future Ticketing Potential of the iPhone‘.
It appears that NFC did not make it to the very recent iPhone 4S, but there is always the much vaunted iPhone 5 … stay tuned.
Another proprietary interest trying to control ticketing or corral a section of the market is not desirable at this stage, however the groundbreaking innovation that Apple was reknowned for under Jobs may be just what the doctor ordered.
Just maybe we have some potential precedents looming internationally … finally! It is not Ticketmaster taking it in the neck this time. However, the industry practice of venue exclusive ticketing contracts (introduced by Fred Rosen in the 80′s when CEO of Ticketmaster) is being questioned.
There are two cases currently, one in Singapore and the other South Africa, that are considering the anti-competitive impact of venue exclusive contracts.
Competition Commission Singapore – Abuse of Dominant Position by Sistic resulting in a $989K fine with the appeal hearing on 3rd October 2011.
The Infringement Decision was 4th June 2010 – CCS Fines SISTIC.com Pte Ltd for Abusing Its Dominant Position to Foreclose Competition in the Ticketing Services Market
“CCS finds that SISTIC is the dominant ticketing service provider in Singapore with a persistent market share of [85-95]%, and that the restrictions under the Exclusive Agreements are harmful to competition by restricting the choices of venue operators, event promoters and ticket buyers. Symptoms of such harmful effects have been observed in the market, such as an increase in SISTIC’s booking fee for ticket buyers in 2008.“
Competition Commission South Africa – Exclusionary Conduct by Computicket. Next hearing 13th October 2011
Press Release from the SA Competition Commission announcing the case of exclusionary conduct against Computicket back in May 2010.
“With a market share exceeding 95%, the Commission identified that Computicket is dominant in the market for outsourced ticketing services for entertainment events including theatres, festivals and live events.“
“Computicket’s exclusive contracts prevent rivals from entering the market thereby reducing choice and convenience for consumers. As a result the commission and fees that it charges for its services are higher than they would have been in a competitive market,” said Commissioner Shan Ramburuth. They don’t seem to be addressing the whole issue by focussing (maybe by legal necessity) on the B2C impact as opposed to the B2B effect upon event owners and presenters.
If these cases do set an international precedent, will we see an enduring change to the current ticketing model for venues and agencies?
While it is currently only for a handful of cities (including New York, Chicago, Los Angeles, Dallas and Minneapolis) and for a few airlines (namely Delta, JetBlue, Continental and American Airlines) … oh and only the US – the introduction of Flight Search will be very interesting to watch as it is rolled out further.
In theory, Flight Search will allow you to search for flights by a variety of criteria including price, location and other combinations including duration, stopovers, even loyalty program etc. It has a simple and intuitive Google Maps style interface and lets you iteratively filter and fine tune an airfare search. This would get even more powerful if Google integrated tools like Street Map, Hotel search and so-on.
An early iteration was launched in May 2011 following Google’s purchase in July 2010 of ITA for US$700M. ITA is the developer of the airfare search and pricing system QPX that is used by major airlines. There are no clues yet whether this will follow a similar business model as Orbitz, TripAdvisor or Kayak which use QPX and whether Google has or will strike deals with airlines and prioritise ‘searches’ accordingly or whether Google Flight Search will remain definitive and neutral.
What has this got do with Entertainment?
I am glad you asked! The ITA/Flight Search model accesses various airline schedules and integrates these to offer one view of the various options. I wonder if Google has considered accessing or integrating with the various ticketing services to offer similar functionality for entertainment? It is an interesting idea that you could search what is on in a city independent of the ticketing service selling the event. That sounds like some of the various individual portal projects like www.seethis.com in Manchester or others from www.artsopolis.com to www.theatrebayarea.org. However, rather than develop such initiatives from scratch, imagine if Google just included such funtionality? The questions that remain is what business model Google envisages for Flight Search and what would the possibilities be for Event Search ™
It appears that Apple is still vacillating on whether iPhone 5 will handle NFC. Although some blaggards have already hacked iPhone 4 to enable NFC, bless ‘em.
But fear not – VISA has entered the frey. Although the initiative is not entirely altruistic and carries some bad news for merchants with respect to bearing the cost of fraud (rather than the card company).
Nonetheless, this will definitely facilitate the move online with transactions keeping pace seamlessly.
If Apple don’t deliver with the iPhone – we can be sure that other alternatives will. Stay tuned!
I was surprised by the candour of this website TicketBots – automating human efforts.
“Ticketmaster Helper Application is designed to help brokers, so that they get more organized and save time while purchasing tickets. This product is legal and developed by authorizing the lawsuits. Ticketmaster helper application just helps the user to reduce manual work that user does while purchasing tickets. It is just a transformation of human efforts into an automatic process of buying tickets.“
It appears that they are covering a fair few of the scalping opportunities with a suite of offerings:
Wired recently carried an interview with Ticketmaster CEO Nathan Hubbard Young CEO Seeks to Reset Ticketmaster With Tech and Transparency
In it he addresses the “challenge that faces Ticketmaster: its reputation as one of the most loathed companies in America.“
“… given Ticketmaster’s abysmal track record on fees, transparency, privacy and customer service, it’s going to take more than a sweet jam to change the public perception of the ticketing giant.“
Meanwhile, ex-Ticketmaster CEO Fred Rosen is back and rattling Ticketmaster’s cage with a ‘new model’ partially explained in Taking on Ticketmaster
The article includes a video of Fred Rosen explaining how the model works.
Rosen “estimates that over the next 24 months, as many as a third of the current contracts between venues and Ticketmaster will expire, and Outbox hopes to make a play.“
We wish him luck, many have tried in the past as Fred well knows. I hope Outbox has deep pockets to stump up with key money or a suitable replacement in terms of financial incentive.