AN EMPIRICAL STUDY OF FACTORS RELATING TOTHE SUCCESS OF BROADWAY SHOWS Jeffrey S. Simonoff and Lan Ma * Jeffrey S. Simonoff, New York University, 44 W. 4th St., New York, NY 10012–0258 Key Words: Proportional hazards regression INTRODUCTION The Broadway theater is one of the most impor- tant arts and entertainment industries in the world; indeed, the Broadway musical is commonly consid- ered one of the few truly American art forms. Lo- catedinandaroundTimesSquareinNewYorkCity, theroughly35legitimateBroadwaytheatersformthe backbone of (along with London’s West End) one of the most highly concentrated entertainment districts in the world. Besides its cultural importance, the production of dramas, comedies, and musicals on Broadway is big business. According to data provided by The League of American Theatres and Producers, more than 11 millionticketsweresoldforBroadwayshowsin1999, leading to more than $550 million in gross revenues. This doesn’t consider ancillary revenues from sou- venirs, cast albums, etc., or the hundreds of millions of dollars in tourism revenue generated by the indus- try. While the payoff from a successful Broadway play can be high, so are the risks. A Broadway musi- cal can cost as much as $10 million to produce, with few guarantees of success. Many shows close after only a few performances, resulting in total losses for investors. While the motion picture industry has been the subject of several empirical investigations recently, relatively little research has been done on the Broad- way stage. The Broadway stage shares with the movie industry the atypical, but key, characteristic that demand is unpredictable, since audiences don’t know if they will like a product until they actually experience it (as De Vany and Walls, 1996, put it, “audiences make hits or flops, and they do it, not by revealing preferences they already have, but by discovering what they like”). For this reason, infor- mationtransfertothepotentialaudienceiscrucialin the ultimate success of a show (or a film). * This paper is based on a longer paper that will appear in 2002 in the Journal of Business, which includes additional tables and analysis. Several factors that represent potential informa- tion sources have been found to be associated with success in studies of the film industry. These in- clude the genre (action, comedy, etc.) of the film (Wallace, Seigerman, and Holbrook, 1993; Sawh- ney and Eliashberg, 1996; Neelamegham and Chin- tagunta, 1999; Ravid, 1999; Simonoff and Sparrow, 2000),the MPAA rating of the film (Wallace, Seiger- man, and Holbrook, 1993; Sawhney and Eliashberg, 1996;Ravid,1999;SimonoffandSparrow,2000),crit- ical reviews (Hirschman and Pieros, 1985; Sawhney and Eliashberg, 1996; Eliashberg and Shugan, 1997), Academy award nominations and wins (Hirschman and Pieros, 1985; Dodds and Holbrook, 1988; Ravid, 1999;SimonoffandSparrow,2000),measuresof“star power” (Wallace, Seigerman, and Holbrook, 1993; Neelamegham and Chintagunta, 1999; Ravid, 1999; Simonoff and Sparrow, 2000), whether or not the movie was a sequel (Sawhney and Eliashberg, 1996; Ravid, 1999), first weeks’ revenue (Sawhney and Eliashberg, 1996; Simonoff and Sparrow, 2000), and the budget for the film (Ravid, 1999; Simonoff and Sparrow, 2000). There is also a key difference between the Broad- waystageandfilmindustry,inthatfortheformerat any given time supply is fixed and local, rather than flexible and geographically diverse. Thus, recent re- search into the dynamics of movie success that are dependent on the supply of movie screens being flex- ible and adaptive (e.g. De Vaney and Eckert, 1991; De Vany and Walls, 1996) are not relevant here. The only systematic study of the determinants of success of Broadway shows is Reddy, Swaminathan, and Motley (1998). Two measures of success, the number of performances and cumulative attendance, were examined. They found that critic reviews (par- ticularlythosein The New York Times), pre–opening advertising in the Times, show type, and timing of theopeningoftheshowweresignificantpredictorsof the longevity (number of performances) of the show. The study of Reddy, Swaminathan, and Motley (1998) exhibits several weaknesses. The data are quite old, coming from 1980–1982; given the major Proceedings of the Annual Meeting of the American Statistical Association, August 5-9, 2001