BW Communities

Case Study: Going Centrestage With Pricing

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Dr Teja watched his colleagues in agitated discussion. Their intense economics was far removed from Teja's poetic life. Yet he could not help admiring how serious they all sounded. The Waltair Theatre Company was Teja's nest, nay cocoon, where he spent his life. Today, it had become The Waltair Center for Performing Arts (WCPA) as they had now built their own covetable theatre. Today, it did not have to wait for dates from other theaters to perform. It had its own stage.  WCPA was the creation of Ammini Eappen and her grand aunt Omanna Eappen. This is how it happened. Ammini had been all of 21 when she met Hugh Caldwell on a cruise, fell in love, married him in Australia and before long separated from him as well because Ammini got seriously involved in street theatre in Sydney and wanted to study theatre in the US. After an intense study and practice in the US, Ammini returned to Mumbai where she invested her soul deeper into the stage. Bitten by the theatre bug and banished from her parental home in Kozhikode, Ammini was rediscovered by aunt Omanna when Ammini lay ill with typhoid in a ramshackle hospital in Kurla, Mumbai, with not enough to pay for medical care. Thereon the entire story of her life was rewritten with structure. Aunt Omanna lived in Vizag, slaving over a thankless research on bacterial pathogenesis. It was rather absurd as the lady had spent 22 years of her youth chasing microbes and their ilk and had lost touch with reality until news filtered to her from deliberate gossip flowing from her brother's illom (ancestral home) in Kozhikode, about the dying Ammini, whom she salvaged or rescued. Aunt Omanna had a four-acre plot of land, and over thin arrowroot gruel that she was spooning into Ammini's mouth, she said she had no idea what to do with it. Ammini told her about theatre. Aunt Omanna's bacteria were laid to rest, and together with Ammini, she set up The Waltair Theatre Company. As Ammini soared sky high producing plays and acting in them as well, Aunt Omanna's paper got published and together they began to shovel in good quantities of money into their savings accounts. In 2010 (18 years later), they pooled in every paisa of their savings (including the money AO got for her thesis) and set up WCPA. Now they were sitting on a real investment — land and building together valued at Rs 2 crore — but without much idea about how to turn it into a profitable business.  Ammini did not have a repertory group. She already had a decent reputation in Indian theatre having performed with several groups. She knew the right talent set. She had the theatre. Vizag was hungry for culture and had the right pace for enjoying good theatre. She needed people to buy tickets at a good price so that she could pay full-time actors to perform well. Or should she keep rates low, focus on good theatre, and have many shows to pay for the actors? The classical ‘volumes or value' dilemma. Question was: were there enough people in Vizag for multiple shows?  Aunt Omanna's answer was terrible: "If you investigate how L. monocytogenes manage to survive and exploit the environment present in foods...." Ammini got the drift. Many questions flooded her head: how must she price the tickets? How were audiences composed and what were their expectations from entertainment? Mercifully for her, Bali Kashyap, a good friend and a stage actor with a keen sense for business, decided to sort out the answers with her. Bali drew a line on the number of people she would hire: the theatre director, the production manager, and the box office manager who would also double in as facility in-charge. Ammini could not afford too many people, not now, not ever. Theatre drank money. All three were people with whom she had worked closely over the past 17-18 years in theatre; people she had developed deep respect for and trust in. That was how Dr Teja Lahiri was sitting there, face in cupped palms, elbows resting on the back of a chair, listening to the intense debate going on before him. WCPA's personality had been recast. Earlier, not having their own stage meant inconsistent visibility, as also large gaps in public appearance as they waited to get dates from other theatres. This also meant a break in earning, which meant that people in the repertory group had to seek employment elsewhere to make a living. This made theatre secondary in their lives — not a good idea for a repertory theatre group for which its actors were a key result area.  Earlier, they would have to adapt their productions to different kinds of stages — expensive, time consuming and pointless exertions. Now they could invite other theatre groups (that use a similar stage) as well. Having your own performance area helped professionalise theatre — an important aspect of bringing  quality to stagecraft. Neither Ammini nor Aunt Omanna had a business background. Their calling card was their love of theatre. And like so many people who love to ‘do' things, they did what they thought best — except now they sat in the atrium tossing questions and answers.  They had wanted to create a repertory theatre. They created it. But it came with an appetite for revenues. The disturbing word ‘revenues' was thanks to Thomas Kodipalli, production manager, who also brought up the pricing issue. So while their eyes were gently touching every corner and direction of the new property, allotting it a function and role, saying that will be a lovely little reading room with quaint chairs, this will be a cafeteria, out there will be an alcove for script writers... Thomas said, "And what are you expecting the monthly upkeep cost to be?" break-page-break Bishen Dagar, the box office and facility-in-charge, had done a rough list and gave a figure of Rs 2.5 lakh per month. Sensing Ammini's question, Thomas said, "I have heard of something called break-even point; it is an amazing approach to knowing the point below which you are heading for the cleaners." Then they all took turns defining it, interpreting it. Bishen said, "Okay, so let's start at the very beginning. Ticket prices... we must charge Rs 300 a piece...." It was at this point that Dr Teja stopped rocking himself, as Ammini's voice rang out, "Oh no! How can we?! Other theatres in the city charge Rs 75. Theatre, you see, is seen as the poor man's entertainment in India." When the truth is quite dramatically different, thought Dr T. Reaching for his laptop on the floor, he flipped it open, activated his Photon, peeped into his GTalk window, found his intellectual guru Partha Pandey online, clicked him open and asked, "Bandhu! Why this perception that theatre is poor man's fare?"  Partha Pandey (MR expert): As always, in India everything is context sensitive. So ‘poor man's fare' gains its definition from theatre's roots in traditional forms, which were folksy and easily accessible to all. The Ramayan (Ramlila) and Mahabharat first recognised plays. So did Bhavai from Gujarat, Jatra from Bengal, and Swang from UP. Then there is nautanki, tamasha, puppet theatre, Indian street theatre.... For the elite with western education, their references come from Roman and Greek dramas and operas. Away from his GTalk window, Ammini was continuing to dig in her heels, in deference to which Thomas had come down to Rs 250.  Thomas: Times have changed, Ammini, rather the consumer has changed. The expectations from theatre and what we want to deliver cannot be labelled at Rs 65! Bishen: I would say even Rs 250 is too little. Let us look at what it will cost us to run this 200-seat theatre — keeping the lights on, the phones working, the website up and running, maintenance, and the security — each day is about Rs 9,000 a day. That is Rs 2.7 lakh per month.  Rough incomes from renting the theatre for four weekends a month is Rs 1.2 lakh. That leaves us to worry about a deficit of Rs 1.5 lakh — which has to be made up through rentals for rehearsals, talks, product launches, seminars, discussions, etc. But these revenue streams necessitate that you indulge in marketing.... Aunt Omanna: Mango Grove (where WCPA is located) is partially elite. So there will be takers for Rs 350 — this is true of the whole of Vizag, too, because we are talking 200 tickets, not 2,000! But there are also buyers for Rs 250 in Mango. Both price points can deliver a full house. But the two price points deliver a different theatre experience. Which is the right theatre experience to deliver, is the question.  Ammini: While I want to stay with 65-75, yet, how different is the Rs 350 from the Rs 250 experience? I assume you are benchmarking the cinema theatre experience? Therefore, what is the experience that a live play theatre goer would seek as against a movie goer?  Aunt Omanna: Mini, first of all, we need to dissect your ‘others charge Rs 60-75' theory. Raaga, Manishan, Naatyakala charge 75 and they hire out the theatre for Rs 2,500 a day. But they do only language theatre. As opposed to us, who will do only English theatre and the audience is very different, plus... it's a far smaller market than the language theatre's! Given Mango Grove, we are looking at a discerning, quality-conscious, English language consumer. So, the differences are huge, Mini!  Bishen: I am not sure that we must think about high price, low price and all that now. First of all, serious theatre itself is a gamble. As long as we were wandering minstrels it was okay — we produced, acted and moved our caravan to a different city. Now we have a fixture, which has to be looked after and must come to stand for excellent theatre. Then again, what is the attitude to entertainment in Vizag? Movies, malls and McDonald's are also entertainment. So your Rs 250 competes with Rs 30 for a McChicken... do you see them paying Rs 250 for a play, although I believe that the audience for theatre come with a natural attitude for premium pricing? Bali: I have some concerns too — not problems — I just want us to have answers. Theatre is core to Indian culture so I don't see a roadblock there. And I believe the theatre goer is real. He is not trading a play for a McChicken. But is there a pronounced demand for quality theatre as we understand it? So should we be doing regular theatre first and then step up to investing in a repertory group? I feel the pricing will be defined by answers to all this. Thomas: How important is a repertory group to a theatre in this country that has barely experienced professional theatre? A repertory group is the raw ingredient required for regular theater with a consistent quality. Do theatre goers recognise this? Be it Vizag or Versova... what is the appreciation for quality theatre and how big is your market? Unless the theatre goers have an appreciation for this, they will not be willing to pay extra for the performances.  Ammini: Okay, so the alternative to a repertory group is importing productions, but they will not have consistence in terms of theme, language, cultural fit and so on.  Aunt Omanna: But in a globalised, flat world, why are we cribbing about this? Isn't this part of being globalised? What the hell are you doing eating McChicken and Pepperoni Pizza anyway sitting in Vizag? That is not even on the border of your culture!  Thomas: But the bigger question here is: is theatre a buyer's market or a seller's market in Vizag? Because, if it is a seller's market, the tickets can be Rs 450, too, in a place like Mango Grove. This will now begin to exclude all Rs 250 folks and the quality of the theatre will have to cater to the Rs 450 market.  Bishen: Theatre is not a buyer's market — challenge this please! The seller decides what to sell and the buyer has to acquiesce! Hence, seller determines pricing too...  Thomas: Because the demand for theatre is so huge (in certain societies, economies and geographies), it is a seller's market. There was a time when people paid anything for an Alyque Padamasee or a Gerson D'Cunha play! Then came groups like Motley, and others. But the supply isn't there nor enough theatres to stage productions! So WCPA with a good play plus a good production plus a good venue is poised to be a winner! We are in a seller's market!  Ammini: Are we jumping the gun talking pricing before quality? The need is for good theatre. Let us first give them the experience of good theatre, then they will be willing to pay for it. Thomas: But that's the point. To get good theatre, you need quality productions, quality actors, good sound, light, rehearsal areas, great seating... all of it goes into the creation of a comfortable and memorable experience. And better gate pricing helps deliver all this. Bishen: Local theatre has seen minimal improvement because there is no money in it. The commitment that theatre demands is single-pointed. Quality theatre experience needs intense devotion to rehearsals. The earnings are meagre, time for rehearsals will be replaced by side jobs to earn more... back to pricing, then! Ammini: True, we need commitment from actors and it does cost to train as an actor. Recognised theatre schools don't come cheap. But my point is that if you raise prices without super performances to back them, there will be no audience. Aunt Omanna: No, Mini, a lot has changed and we must rework our expectations sensibly. One, the consumer himself has changed. He lives in a virtual supermarket of choices, and demands that he be entertained. Two, the environment that caters to his demands has changed, too.  break-page-break Competition for theatre isn't from theatre anymore. It is not just Raaga or Naatya, everything else is also fighting for the viewer's eyeballs. While you were building Waltair, the outside world changed! There is a thousand-fold increase in good television programming, access to movies has improved, live music performances, there is, oh dear, IPL! The real competition to entertainment now comes from weekend outings, gourmet dining and mall hanging. Today, for many, live performances are just a hazy memory. They have moved on to other forms of enjoyment, and may probably feel that the quality of theatre has reduced in light of other forms of entertainment. So, the theatre experience has to be really good to get them back. And, you must have ready access to theatre in the neighbourhood, say, within 4 km. Otherwise, it is too painful and you will opt out of it. Ammini: I wonder.... Theatre caters to a special kind of audience. And if you are a born theatre aficionado, 4 km is mere dancing distance away! What differentiates plays from movies? Tata Sky and DVDs make movie watching flexible but mess up the anticipation value! Thomas: So what has changed? The socio-economic fabric, the definition of ‘good', or the definition of recreation? Yet let's not forget that a PVR can charge Rs 250 for a movie that comes out of a can... and we fear taking it beyond Rs 75 for a live performance! Ammini: A play is a different experience, Thomas, I am not even sure you watch a play for entertainment! Live entertainment is a big part of Indian culture: a live performance by Sonu Nigam or SRK is prized. People pay huge amounts for it.  <img src="/businessworld/sites/default/files/theatre-pricing2-200x200.jpg" width="200" height="200" style="float: right; margin: 5px;">Why this is so is difficult to tell. Maybe it has to do with the proximity it offers to cult heroes. Maybe it is the aura of the super stars. For example, the musical Bollywood dance extravaganza at Kingdom of Dreams, called Zangoora, is priced between Rs 750 and Rs 3,000 and is not considered high priced!  Bali: I am keen to understand the mindset and behaviour of a movie goer and that of a play watcher. For example, an avid movie watcher, if he goes to a movie hall to watch Tanu Weds Manu (TWM), does not get tickets, he will buy in black. If that fails too, he will jump into an auto and go to another hall and watch any movie! No doubt he will come back another day and make sure he watches TWM, that loyalty won't change, but the ‘need to watch a movie' is a high one for him.Can we say this about a play goer?  Bishen: If a theatre goer is unable to get tickets to Tumhari Amrita, he won't go to some other play. He will wait for Tumhari Amrita to come around again. Loyalty to theatre is very high because it is not about ‘getting entertained', it is about being stimulated in a specific manner. Bali: Correct. So, we are seeing two different kinds of people; two completely different behaviours. And from behaviours we get to demand types, needs from environment, from entertainment. Am I speaking your language now? Bishen: There is economics involved. For a movie hall, the key result area is bums on seat. If it is a 500-seat hall, and he gets 500 bums to take a seat each, he is happy. He doesn't care if some of the audience didn't like the film. In a theatre, the owner shoots for much more than bums on seats. Ammini: So, what are we charging for? For content or for packaging? On the other hand, what does the consumer pay for? For the experience also or the content only?  Dr Teja: The answer lies in changing your belief that theatre is poor man's entertainment. Let the play unfold... it will call its audience! Classroom Discussion Is the theatre consumer outside the defining shackles of conventional marketing parameters? casestudymeera(at)gmail(dot)com