SIC 7922
THEATRICAL PRODUCERS (EXCEPT MOTION PICTURE) AND MISCELLANEOUS THEATRICAL SERVICES



This category includes companies engaged in providing live theatrical presentations, including road companies and summer theaters. This industry also includes services allied with theatrical presentations, casting agencies; booking agencies for plays, artists, and concerts; scenery, lighting, and other equipment services; and theatrical ticket agencies. Also included in this industry are producers of live and taped radio programs and commercials and producers of live television programs. Establishments primarily engaged in the production of taped television programs and commercials are classified in SIC 7812: Motion Picture and Video Tape Production. Theaters that are normally rented to theatrical producers and stock companies are classified in SIC 6512: Operators of Nonresidential Buildings. Motion picture theaters and motion picture service industries are classified in the major group for motion pictures. Establishments primarily engaged in operating dinner theaters are classified in SIC 5812: Eating Places.

NAICS Code(s)

561310 (Employment Placement Agencies)

711110 (Theater Companies and Dinner Theaters)

711410 (Agents and Managers for Artists, Athletes, Entertainers, and Other Public Figures)

711120 (Dance Companies)

711310 (Promoters of Performing Arts, Sports, and Similar events with Facilities)

711320 (Promoters of Performing Arts, Sports, and Similar Events without Facilities)

512290 (Other Sound Recording Industries)

532490 (Other Commercial and Industrial Machinery and Equipment Rental and Leasing)

Industry Snapshot

New York City, particularly Manhattan, has always been the undisputed center of the U.S. theater scene. The late 1990s did nothing to change this, though developments somewhat altered the internal dynamics of New York's theater market. At all levels, the theater industry was characterized by rising production costs, which have focused efforts on more tested and proven productions that can more readily assure profits. This trend is most pronounced among the large Broadway theaters with the most to lose—one reason for the proliferation of revivals on Broadway, which are more reliable than new productions.

The scope of theater nationwide is so broad and varied that a snapshot of its size, as measured by revenues, does not currently exist. Broadway productions are fairly well documented; off-Broadway and off-off-Broadway are significantly less so. Regional touring companies, community theaters, summer stock (where one ensemble performs several plays each season), and their contributing entities such as agencies and scenery design and building are so fragmented as to render a comprehensive overall picture nearly impossible to draw.

Throughout the nineteenth and early twentieth centuries, the New York theater district along Broadway kept moving north as new theaters were built and old ones were abandoned or torn down. After World War II, as construction of new theaters became rare, "Broadway" stabilized in an area that can be roughly defined as the section of Broadway between Times Square and 53rd Street. Most of Broadway's 32 theaters are not actually on Broadway but clustered on side streets.

The New York theater market surged in the late 1990s at all levels, generating about $1.6 billion in ticket sales. Although Broadway enjoyed record box office returns, the biggest gains, both in attendance and in prestige, occurred at off- and off-off-Broadway venues, most of which have theater capacities of 75 to 400 seats.

Broadway. The 1998-99 New York Broadway attendance reached a record 11.7 million, according to information provided by the League of American Theaters and Producers, Inc. This represented a 23 percent increase from the 9.45 million Broadway attendees in 1996. Box office receipts also achieved unprecedented heights in 1999, totaling $588.5 million, up 5.5 percent from the year before. Thirty-nine Broadway productions opened in New York, four more than in 1998. However, the total playing weeks of Broadway shows fell slightly to 1,440. Major successes of the late 1990s included "Art," which turned a profit of $4.5 million from its 600 performances; Disney's "The Lion King," a box office smash indicative of Broadway's heightened attempts to draw young and other non-traditional audiences in, as well as the revivals of "Cabaret" and "Chicago."

Although the numbers seem encouraging, there is serious concern about Broadway's future. Ticket prices have gone up with the cost of production. In 1957, top price orchestra seats at a Broadway musical could be had for $8.05. By 1970, the price nearly doubled to $15.00, and by the early 1980s soared to $45.00. In 1999, orchestra seats were going for $75.00. According to the League of American Theaters and Producers, Inc., the average paid admission to a Broadway production was $50.30, up from $48.58 in 1998, and could reach as high as $85.00. In 1987, the average stood at $28.66. Ticket prices for Broadway road companies follow a similar pattern. The rising costs are attributed to a strong U.S. economy, the increasing wealth of the typical theater audience, and, most particularly, rising production costs. Unless production costs diminish, it seems unlikely that ticket prices at commercial theaters will decrease.

In the mid and late 1990s, the minimum cost of mounting a Broadway production was $750,000 for a play, and $3.5 to $6 million for a musical. Some musicals have had budgets in the $10 million range. Increased costs have made turning a profit more difficult, and shows can run for well over a year without moving to the plus side financially. Investors are increasingly reluctant to back risky ventures — those which do not have the potential for a lengthy run. This situation has led to a preponderance of revivals of past successes, especially musicals. Carousel, Damn Yankees, Show Boat, The King and I, and How to Succeed in Business Without Really Trying, are just a few of the older works that have returned to Broadway in the 1990s. According to the New York Times, about half of the productions that opened on Broadway in the 1995-96 season were revivals. Though revivals are a normal and necessary part of the theater, such a large number of them is unprecedented and problematic. Meanwhile, one of the lynchpins of the late 1990s Broadway market, "The Lion King," had already proven itself as a fantastically successful animated Disney motion picture, thus constituting another relatively safe investment.

Soaring production costs further sparked increased focus on marketing campaigns as a competitive field for Broadway producers. A typical Broadway production spends between $300,000 and $1 million on pre-opening marketing campaigns and maintains publicity with about $50,000 per week after the production hits the theater. Meanwhile, the League of American Theaters and Producers has entered into a number of promotional contracts with major companies, including Schweppes, which agreed to launch a Broadway sweepstakes campaign advertised on its beverage bottles. Similarly, the First USA Bank-Broadway credit card features Broadway-related consumer incentives. Broadway shows have advertised on McDonald's French fries containers, while youth-oriented productions such as "Rent" and Disney productions have placed products such as coloring books in schools.

An extension of Broadway are road companies, which bring streamlined, though still often extremely elaborate, versions of Broadway productions to major cities around the United States and Canada. In the 1998-99 theater season, 14.8 million people attended Broadway shows outside of New York, down 20 percent from 1996. The box office take equaled $716 million, also down from $721 million. The declining number of touring productions largely accounts for sagging receipts; only 25 Broadway shows took to the road in 1999, down 30 percent from 1996.

Off-Broadway. Re-staging of material that has already proven itself Off-Broadway or in London is also a current feature of Broadway. The conservative reluctance to exhibit new and untested work has somewhat diminished Broadway's status as the center of the American theater. The pressure to come up with a long running crowd pleaser has also turned away creative personnel. Off-Broadway, a term applied to a wide variety of smaller theaters in New York located away from the major theatrical district, is becoming more important as a place to showcase original material. Once considered a training ground for Broadway, Off-Broadway is now accorded as much prestige as Broadway, as a venue in which audiences can glimpse the latest, most innovative works before they explode on the commercial scene, as was the case with the late 1990s hit "Bring in 'da Noise, Bring in 'da Funk." Having a success Off-Broadway has even come to be seen as an end in itself. Many playwrights and theater composers, including well-established ones such as Stephen Sondheim, Neil Simon, and Edward Albee, have taken some of their works Off-Broadway in the 1990s.

Eight million people attended non-Broadway shows in New York during the 1997-98 season, representing an increase of 8 percent from the previous year. The commercial possibilities of Off-Broadway have increased along with its prestige. Although the vast sums brought in by "megahit" Broadway shows are not possible in Off-Broadway's small to moderate size theaters and lower profile atmosphere, handsome profits are still being made. Some long-running Off-Broadway successes, such as Tony and Tina's Wedding, have franchised lucrative duplicate productions in other cities. Off-Broadway's appeal has increased so much that, by the mid 1990s, there was a clamor for space in its handful of larger size theaters. Some analysts view the increased status and popularity of off-Broadway productions with some caution; the trend spurred theater construction at a pace of nearly one-and-a-half new theaters per month in 1999, sparking fears of a possible glut in coming years—especially should the newfound success of off-Broadway prove only a fad.

Demographics. The League of American Theaters and Producers notes that the average theater attendee belongs to a household with more than $80,000 in annual income. Moreover, about 88 percent of audiences are white, though that figure diminishes among the growing youth audience.

The increase in ticket sales enjoyed by theaters in recent years is often attributed to an overall increase in the adult population due to the post World War II "baby boom," rather than increased interest in the theater. Though the number of tickets sold has gone up, the percentage of Americans who say they have attended a theatrical production in the last year has declined steadily to about 11 percent in 1999. Various reasons have been put forth for the waning popularity of theatergoing, including the greater availability of home entertainment; high ticket prices; and the trend towards late-in-life parenthood, which has left many people with child care obligations well into middle age.

For many years, the theater industry was most disturbed by the strikingly low attendance rates among younger audiences, suggesting that the theater's future lifeline was sorely thin as younger people showed little interest in theater shows as an entertainment form. Toward the end of the 1990s, that long-standing trend began to change somewhat. The percentage of Broadway audiences composed of people younger than 18 years of age grew from 1.3 percent in 1990 to 4.7 percent in 1998. The 18-24 sector, meanwhile grew from 3.6 percent to 5.9 percent over that period. While in the late 1990s, many attributed this sudden turnaround to the massive popularity of youth-directed productions, such as the Generation-X-angst production "Rent," some analysts suspected that long-running intensive marketing efforts geared toward younger audiences were finally paying off.

Notable developments on the road included a considerable gender gap in Broadway audiences, particularly among younger attendees. Women comprise 70 percent of the touring Broadway audience; moreover, they purchase 75 percent of the tickets for those shows. A demo-graphic study by the League of American Theaters and Producers concluded that approximately 30 percent of theater goers are "apparently dragged to the theater by their wives or girlfriends."

Tourists constituted an increasing proportion of Broadway audiences through the 1990s, equaling roughly 60 percent of Broadway attendees at the end of the decade, up from 50 percent just three years earlier. For long running hits such as Les Miserables and Cats, the percentage of tourists can be as much as 80 percent. There is great concern that the theater in New York, and elsewhere, is losing its base of regular patrons whose interests go beyond an occasional visit to a hit show. Observers surmise that tourists tend to be drawn to the traditional glamour and mystique of Broadway, while more hardened New York locals have grown weary of its increasing conservatism and reliance on lavish revivals.

Background and Development

Theater in America dates back to the Revolutionary War period, which saw the formation of the first professional company in Williamsburg, Virginia, in 1752. The company was led by Lewis Hallam and was a profitsharing venture. This financial structure called upon the actors to pay a percentage of company expenses and to receive a share of the profits. This organizational structure was adopted from Elizabethan England and also existed in the first known company in the Americas, which began in Peru in 1599. The general manager of the company was also generally a leading actor and would both invest more, and receive a greater share of the profits, than the other performers in the company. Playwrights and musicians would also participate in this type of ensemble. Not only did the performers often make a meager living from this arrangement, but they also faced the barrier of resistance from Quaker and Puritan colonists. But theaters began to open in the late 1700s and were well established by the turn of the century.

The era of profit-sharing theater companies gave way to one of independent stock companies, which lasted through the 1870s. The independent stock company would instead have a fairly permanent stable of actors and a fixed supply of scenery and props. These companies would stage a variety of current works and classics, and would either tour or present shows in a fixed venue. Most actors remained relatively obscure, although audiences made tours of celebrity performers from England popular during this time.

The impetus for the next major change in the structure of theater was the development of the railroad system, which led to the "combination company"—the ensemble that toured by train from one major city to another, stagehands, scenery, and the like in tow. Most combination productions were organized in New York, and this led to centralization of the American theater in that city (Philadelphia and Boston had offered some rivalry to New York in earlier decades). The combination system required a complicated booking system to insure that large ensembles of performers and scenery would move smoothly through lengthy tours. As a result, theater ownership became centralized into a small number of circuits, which monopolized booking rights in various geographical areas. In 1896, three theater owning circuits joined forces to create the "Theatrical Syndicate," which dominated the theater for the next two decades. Producers who wanted to use a Syndicate-owned theater in a certain city were forced to book their entire tours in Syndicate theaters. Thus, theaters owned by non-Syndicate members languished and competition was minimal. Syndicate members, most notably Charles Frohman, were also producers and reserved the best routes and best theaters for their own productions. Theatrical offerings of this era focused on star performers in vehicles suited to their talents, such as Maude Adams in Peter Pan and David Warfield in The Music Master. Road tours, which made one-night stops in small cities as well as playing for lengthier engagements in large cities, were more profitable than playing in New York and only a handful of major successes ran on Broadway for more than two or three months. Eventually, the Theatrical Syndicate declined, and the chain of theaters owned by the Shubert brothers became the nation's most powerful theatrical landlord. The Shubert Organization still thrives, owning sixteen of Broadway's thirty-two theaters, with a half interest in a 17th, the Music Box. Theater owners hold an important position in the commercial theater since they control what goes in their venues.

In the 1920s, the once lucrative road dissolved as many theaters were converted into movie houses which are inherently more profitable than legitimate theaters since operating costs are lower. Theatergoers in many medium and small cities were left with no theater to attend. According to Jack Poggi in Theater in America, the number of legitimate theaters outside major metropolitan centers dropped from 1,549 in 1910 to 400 in 1928. Motion pictures had begun to capture the imagination of the public, especially that segment that had patronized second tier theatrical comedies and melodramas. This left the theater with a smaller but more sophisticated clientele.

The stock market crash of 1929 and subsequent Great Depression hurt the theater but, unlike in other industries, improvement in the economy did not bring a recovery. The level of Broadway activity in the prosperous post-World War II era, sometimes considered Broad-way's heyday since so many works from that period still enjoy popularity, was actually no higher than during the depths of the Depression.

A burgeoning number of non-profit resident theaters, or repertory companies, began operating in cities outside New York in the 1970s, though a number of them, such as the Pasadena Playhouse in California and the Arena Stage in Washington, D.C., have existed for much longer. These companies, which have lower ticket prices and a wider range of offerings than the commercial theater, depend to a great extent on government grants and private sector donations. Reduced levels of support from these sources imperil many resident companies. The budget of the National Endowment for the Arts was slashed by 40 percent in fiscal 1996, and while its budget was squeezed tightly throughout the remainder of the decade, debate raged on Capitol Hill and elsewhere often calling for the endowment's dissolution altogether.

Even more important, in the opinion of some analysts, is the dramatic drop in private philanthropy. Younger people are patronizing art organizations at a decreasing rate and, consequently, they are not supporting such organizations with generous donations. Charitable donations to the arts declined by about half between the mid 1980s and mid 1990s, and registered a further 2.5-percent drop in 1998, despite a booming U.S. economy and increased income among the largest traditional arts-patronage demographic. To deal with this situation, many resident theaters are restructuring their finances, making longer range economic plans, and producing works that appeal to a wider audience. There is also greater acceptance of the idea that some resident theaters, especially those that cannot put themselves on a stronger financial footing, will have to be disbanded. This situation is troubling to many people since producing highly commercial material is not viewed as the purpose of nonprofit theater, and companies with sound finances are not necessarily those of the greatest artistic merit.

Further Reading

Bernstein, Paula. " 'Year of the Play' Brings Record Broadway Revenue." Hollywood Reporter, 1 June 1999.

"Broadway Finally Has its Promotion Act Together." Entertainment Marketing Letter, May 1998.

"Fewer Broadway Musicals Hit the Road." Wall Street Journal, 9 December 1999.

"Forget the Stereotype: America Is Becoming a Nation of Culture." Wall Street Journal, 17 September 1998.

Gener, Randy. "Theaters Enter Big Growth Stage: Venues Burgeon; Is Glut In Offing?" Crain's New York Business, 18 January 1999.

"The Great Hyped Way." Business Week, 3 May 1999.

"The Magic Is In the Marketing." New York Times, 19 November 1998.

"Market Fact 1998: Tourism." Crain's New York Business, 6 July 1998.

"A New Season Shines." Travel Agent, 6 September 1999.

O'Brien, Tim. "Youth Increases at Touring Broadway Shows." Amusement Business, 12 April 1999.

Peterson, Kyle. "Disney Fans First, Then the Highbrows." Advertising Age, 1 February 1999.

Poggi, Jack. Theater in America: The Impact of Economic Forces, 1870-1967. Ithaca, NY: Cornell University Press, 1968.

Siebert, T.W. "Raleigh Little Theater Flyers Play for Big Laughs." Washington Post, 2 February 1997.



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