Would you pay an extra $21.59 for a Broadway show just because a celebrity is in it? In a recent paper titled Revenue implications of celebrities on Broadway theatre in the Journal of Revenue and Pricing Management, Kyle Maclean and Fredrik Ødegaard of the Ivey Business School at Western University found the inclusion of a celebrity in a given week improves the revenue of a Broadway play by an average of $250,000. Considering the approximate hiring costs of a bona fide celebrity typically range between $100,000 and $150,000 per week, this would suggest this is a profitable opportunity for Broadway producers.
Utilizing IMDb’s STARmeter ranking, Maclean and Ødegaard analyzed the effect performers had on weekly revenue of 290 Broadway shows over a six-year period. Actors were considered to be celebrities or overall famous if, at the time of joining a show, they were among the top 1,000 STARmeter-ranked performers. Over the timeframe analyzed, it should be noted that several blockbuster Hollywood stars, including Scarlett Johansson, Hugh Jackman, and Samuel L. Jackson, as well as other very famous actors, such as Al Pacino, Christopher Walker, and Sigourney Weaver, were cast in Broadway productions.
The research found that the weeks in which celebrities were in a Broadway show experienced, on average, a $250,000-increase in revenues. The increase was attributed to both higher average ticket price (through dynamic pricing), and by more tickets being sold (through increased demand).
“These research results reinforce the value of measuring historical factors that influence demand, said Maclean. “The impact of a star, or any product decision, is not an idiosyncratic error, but something that should be explicitly considered when forecasting future demand.”
On the other hand, the authors found no statistical evidence that, independent of celebrity status, actors who achieve artistic recognition via Tony or Academy Award nominations increase revenue.
“We believe our findings are particularly significant now that Broadway and other live entertainment industries have started to re-open from the COVID-19 pandemic,” said Ødegaard. “This industry has faced, and continues to face, record levels of structural uncertainty, and understanding drivers of demand and revenue is more important than ever.”
Journalists looking to interview the study authors may contact Ivan Langrish, Associate Director, Media Strategy at the Ivey Business School at ilangrish@ivey.ca, or at 416-203-0664.
