Big Broadway musicals are failing at an alarming rate. None of the 18 that opened last year has so far turned a profit. Some theater critics will surely say that’s because too many of these shows are derivative and play it safe, but I am an economist, so my explanation is slightly different: It’s the producers who aren’t taking enough chances.
Most musicals are no longer based on original content, and most theatergoers find it hard to justify spending upwards of $800 to sit through another movie adaptation or well-known artist’s songbook. Yet the evolving economics of Broadway are pushing producers to take fewer risks with original material. Paradoxically, their pursuit of “a sure thing” may be their undoing.
The expense of putting on a big musical has increased in the last few years, with rising inflation and labor costs, even as ticket prices have remained flat or even fallen, relative to inflation. Yet attendance is still down compared to before the pandemic and many theaters are not filling up — putting a squeeze on profits. It suggests there’s not enough demand to support a price increase.
There are several possible explanations for this lower demand. For one, Broadway is heavily dependent on tourists, and various city hotel policies, regulations and taxes make New York more expensive for tourists. In 2023 the number of domestic tourists was down 4.7% compared to 2019, and international tourism was down 14.1%.
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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