AUSTIN, Texas--(BUSINESS WIRE)--
Qcue today announced the 2011 Major League Baseball (MLB) season was the most active season to date for dynamic pricing, resulting in significant gains for all clients, including increases in total revenues, full-price ticket sales and revenue per seat(1).
With the regular season now complete, Qcue conducted in depth analysis across clients, concluding that the frequency of price changes has a direct impact on incremental revenue. In fact, Qcue estimates that a team can generate an additional $900,000 in incremental revenue over the course of a season by making one additional change to each of its prices(2).
Results like this show why dynamic pricing is quickly becoming an industry standard with more than one-third of MLB teams, as well as teams across other leagues, implementing the practice. Qcues roster continues to grow, with the New York Mets and Seattle Mariners set to implement dynamic pricing for the 2012 season. Qcue clients now represent 95% of all dynamically priced baseball tickets.
On average, teams approached 2011 with conservative on-sale prices, often lower than previous years, providing substantial values for many fans.
Additional findings include:
Average price change per seat: $1.55 increase
Average percentage change per seat: 3% increase
Average price decrease: -$13.63
Average price increase: $3.27
The market has definitely hit a tipping point, where teams are no longer wondering if they should embrace dynamic pricing, but rather how often to leverage the intelligence and flexibility a solution like ours can provide to drive incremental revenue, said Barry Kahn, CEO of Qcue. Our analysis demonstrates the relationship between the frequency of price changes and incremental revenue and the value of understanding real-time market dynamics in setting more accurate prices. Teams that adjust prices more frequently make more money that can be invested back into the club.
In addition to regular season pricing, teams are finding ways to extend dynamic pricing to new scenarios such as spring training, which the San Francisco Giants successfully did this year in Scottsdale, Arizona.
Qcues turnkey software solution helps teams analyze sales data and other external pricing variables, providing sales and revenue projections, strong reporting capabilities, as well as market-based price recommendations. Additionally, integration capabilities remove the management burden teams often face by directly communicating price changes to the teams ticketing system and website. With Qcue, thousands of price changes take just a few minutes.
(1) Metrics do not reflect season ticket revenues, which are not used in dynamic pricing.
(2) A price is defined as a single section that is priced together and adjusted at the same time/rate.
Showing posts with label dynamic pricing. Show all posts
Showing posts with label dynamic pricing. Show all posts
Wednesday, October 26, 2011
Tuesday, August 16, 2011
The Right Offer to the Right Person
By Derek Palmer, Managing Director, Executive Vice President, International, Tickets.com
In today's economic climate everyone is focused on providing the right offer to the right patron at the right time. Allow me to share with you my perspective.
Technology obviously plays a large part in this effort. The days of brochures and ushers asking patrons to fill out “contact me” cards in the lobby have given way to complex XRM systems that overlay pricing models and demographics to try and predict and (more importantly) shape consumer behavior. However, the thought process is the same and still seems to rely a great deal on the quantity and quality of data. I would argue it is even more important to have a plan of what you want to do with the data.
Organizations without clear goals for data management risk a condition I have heard best described as "paralysis by analysis" and a waste of valuable time and money.
Before investing in technologies to help manage your data you would do well to ask a few key questions:
1) What are we trying to achieve?
2) What are the key drivers and KPIs that we will use to measure our effectiveness?
3) What are our success criteria?
These are fairly simple questions and therefore it would follow that there are simple answers: We want to sell more tickets and make more money... But how do you achieve that seemingly obvious goal? And what if one doesn't necessarily lead to another? More importantly how do you ensure that you are connecting to the right consumers in the way they wish to be communicated with at the frequency at which they are willing to communicate with you?
Once you have communicated with your target audience, what is your call to action? Too often the immediate response to a slow moving event is to offer a discount to get “butts in seats”, if the goal is to sell more tickets, but does it necessarily make you more money in the long run?
There are many new technologies that allow venues to focus on more nuanced strategies around yield management. Stored Value integrations with merchandise and concession providers offer venues the opportunity to be extremely flexible in their offerings to consumers and in a targeted manner. Instead of giving someone a £10.00 discount on a ticket why not offer them £10.00 worth of value towards purchases at your concession stands or gift shops. In addition to the incremental revenue opportunities, guess what else you get? That’s right-more data. But in this case it is extremely specific data about that individual consumer and their spending habits.
Introducing Dynamic Pricing program for your events is another approach to yield management. Some people will read that sentence to mean “raise ticket prices as high as possible” but in fact a Dynamic Pricing scenario allows just as many discount opportunities and in this case it is based on data. More importantly it allows precision discounting - just because one person in section 400 will only buy if the ticket is £10.00 under face value doesn’t mean the person next to them won’t buy at £2.00 under face value. It goes back to the right offer to the right person.
In today's economic climate everyone is focused on providing the right offer to the right patron at the right time. Allow me to share with you my perspective.
Technology obviously plays a large part in this effort. The days of brochures and ushers asking patrons to fill out “contact me” cards in the lobby have given way to complex XRM systems that overlay pricing models and demographics to try and predict and (more importantly) shape consumer behavior. However, the thought process is the same and still seems to rely a great deal on the quantity and quality of data. I would argue it is even more important to have a plan of what you want to do with the data.
Organizations without clear goals for data management risk a condition I have heard best described as "paralysis by analysis" and a waste of valuable time and money.
Before investing in technologies to help manage your data you would do well to ask a few key questions:
1) What are we trying to achieve?
2) What are the key drivers and KPIs that we will use to measure our effectiveness?
3) What are our success criteria?
These are fairly simple questions and therefore it would follow that there are simple answers: We want to sell more tickets and make more money... But how do you achieve that seemingly obvious goal? And what if one doesn't necessarily lead to another? More importantly how do you ensure that you are connecting to the right consumers in the way they wish to be communicated with at the frequency at which they are willing to communicate with you?
Once you have communicated with your target audience, what is your call to action? Too often the immediate response to a slow moving event is to offer a discount to get “butts in seats”, if the goal is to sell more tickets, but does it necessarily make you more money in the long run?
There are many new technologies that allow venues to focus on more nuanced strategies around yield management. Stored Value integrations with merchandise and concession providers offer venues the opportunity to be extremely flexible in their offerings to consumers and in a targeted manner. Instead of giving someone a £10.00 discount on a ticket why not offer them £10.00 worth of value towards purchases at your concession stands or gift shops. In addition to the incremental revenue opportunities, guess what else you get? That’s right-more data. But in this case it is extremely specific data about that individual consumer and their spending habits.
Introducing Dynamic Pricing program for your events is another approach to yield management. Some people will read that sentence to mean “raise ticket prices as high as possible” but in fact a Dynamic Pricing scenario allows just as many discount opportunities and in this case it is based on data. More importantly it allows precision discounting - just because one person in section 400 will only buy if the ticket is £10.00 under face value doesn’t mean the person next to them won’t buy at £2.00 under face value. It goes back to the right offer to the right person.
Tuesday, April 12, 2011
Minnesota Twins Choose Digonex to Provide Dynamic Pricing for Tickets
Partnership includes integration with Tickets.com and Major League Baseball Advanced Media
Leading dynamic pricing provider, Digonex Technologies, Inc., announced that the Minnesota Twins will be utilizing their dynamic pricing services via a partnership with Tickets.com and Major League Baseball Advanced Media (MLBAM) to price single games tickets in select sections this season. The Twins will utilize the Digonex Sports and Entertainment Analytical Ticketing System (SEATS™), a robust and proven dynamic pricing system for event ticketing that scientifically changes prices based upon econometric and behavioral principles.
The SEATS integration with Tickets.com and MLBAM allows MLB teams, as well as other Tickets.com clients, to quickly analyze pertinent information and adjust ticket prices. With SEATS, the Twins now have a demand-based pricing system in place enabling them to deliver the same great fan experience at just the right price.
“We are confident that SEATS will help us identify the best price for our tickets allowing us to give Twins fans the best value for their dollar at Target Field,” said Steve Smith, VP of Ticket Sales and Service for the Twins. “Fielding a solid team and pricing appropriately are key components to ensuring that our fans get the most out of every ticket.”
“Digonex is excited to team up with Tickets.com and MLBAM to provide the extensive capabilities of SEATS to the Twins and other MLB teams,” said Jan Eglen, Ph.D., CEO of Digonex Technologies. “Our patented dynamic pricing services are proven to increase revenues for our clients in excess of 20%. Along with our expanding analytic offerings, Tickets.com can now offer their clients our patented and proven SEATS service as a method for delivering the best value to their fans.”
The integration of SEATS, along with the advanced features of Tickets.com’s ProVenue platform, will allow the Twins to automate the acceptance of price recommendations from Digonex and eliminate the need for time-consuming manual price updates.
“We are happy to work with Digonex to provide our clients with true fan-driven dynamic pricing capability,” said John Rizzi, SVP of Product Management and Strategy for Tickets.com. “The SEATS platform has provided us with another time-saving, technologically advanced solution for our clients.”
Leading dynamic pricing provider, Digonex Technologies, Inc., announced that the Minnesota Twins will be utilizing their dynamic pricing services via a partnership with Tickets.com and Major League Baseball Advanced Media (MLBAM) to price single games tickets in select sections this season. The Twins will utilize the Digonex Sports and Entertainment Analytical Ticketing System (SEATS™), a robust and proven dynamic pricing system for event ticketing that scientifically changes prices based upon econometric and behavioral principles.
The SEATS integration with Tickets.com and MLBAM allows MLB teams, as well as other Tickets.com clients, to quickly analyze pertinent information and adjust ticket prices. With SEATS, the Twins now have a demand-based pricing system in place enabling them to deliver the same great fan experience at just the right price.
“We are confident that SEATS will help us identify the best price for our tickets allowing us to give Twins fans the best value for their dollar at Target Field,” said Steve Smith, VP of Ticket Sales and Service for the Twins. “Fielding a solid team and pricing appropriately are key components to ensuring that our fans get the most out of every ticket.”
“Digonex is excited to team up with Tickets.com and MLBAM to provide the extensive capabilities of SEATS to the Twins and other MLB teams,” said Jan Eglen, Ph.D., CEO of Digonex Technologies. “Our patented dynamic pricing services are proven to increase revenues for our clients in excess of 20%. Along with our expanding analytic offerings, Tickets.com can now offer their clients our patented and proven SEATS service as a method for delivering the best value to their fans.”
The integration of SEATS, along with the advanced features of Tickets.com’s ProVenue platform, will allow the Twins to automate the acceptance of price recommendations from Digonex and eliminate the need for time-consuming manual price updates.
“We are happy to work with Digonex to provide our clients with true fan-driven dynamic pricing capability,” said John Rizzi, SVP of Product Management and Strategy for Tickets.com. “The SEATS platform has provided us with another time-saving, technologically advanced solution for our clients.”
Tuesday, October 5, 2010
Dynamic pricing pays off for San Francisco Giants tickets
The final weekend of the Major League Baseball season turned out to be more stressful than expected for San Francisco Giants players and their fans. But the unexpected suspense made it a perfect and quite profitable one for Giants ownership.
The Giants employ a dynamic ticket pricing system in which the price of tickets at AT&T Park fluctuates depending on demand. With the system, the team's bottom line got an impressive boost when the Giants—which needed to win only one game against the San Diego Padres to eliminate the Padres and win the NL West—lost the first two games of the series to set up a high-stakes finale (that wouldn’t have actually been a finale if the Padres won, but more on that in a moment) Sunday, October 3.
The Giants stopped their mini-skid in the nick of time by blanking the Padres, 3-0, to win the division and advance to the playoffs for the first time since 2003. The Giants’ clincher came in front of a sellout crowd of 42,822—the third SRO crowd of the weekend at the 41,915-seat facility. The Giants drew 42,409 to the opener Friday and 42,653 Saturday. The sellouts were the first for the Giants since they played to capacity crowds for each of the three games against those same Padres August 13-15—a span of 21 home dates.
Not bad for a series of games for which the Giants originally expected decent but by no means overwhelming crowds. Director of ticket sales Russ Stanley told Bloomberg News last week the Giants figured they would draw between 30,000 and 35,000 per game. Presumably, leading the NL West for the final week of the season also boosted interest in the Giants’ penultimate home series against the Arizona Diamondbacks: The Giants swept three games in front of an average crowd of 37,646.
The additional demand for the Padres series meant those who walked up to the gate over the weekend—or bought tickets on the resell market—certainly paid more than they would have in April, back when neither the Giants nor Padres were expected to contend and the cheapest seat to the October 1 game was a mere $5. By the middle of last week, that cheap seat reportedly was up to $20.
Bloomberg reported that a seat in the Field Club behind home plate was $68 at the beginning of the season but $175 by last week. At StubHub, meanwhile, the cheapest ticket Sunday to the afternoon’s game was $69.
The final weekend wasn’t the only time dynamic pricing paid off for the Giants. Stanley told Bloomberg the Giants’ revenue per seat increased by between 7 percent and 8 percent this season.
The Giants’ division championship gives them the home field advantage against the Atlanta Braves in the best-of-five NL Division Series beginning Thursday, October 7 and at least two more chances to maximize ticket revenue. That sure beats the alternative: Had the Giants lost Sunday, they would have been part of a historic three-team playoff for two spots with the Padres and Braves but would not have hosted either the NL West playoff against the Padres today, October 4, or, if they lost that game, the NL wild card playoff game against the Braves Tuesday, October 5.
Source: TicketNews: By Jerry Beach
Thursday, August 26, 2010
Digonex® Partners with Minnesota Twins For Ticket Revenue Analytics Services
Digonex Technologies, Inc., announced today that the Minnesota Twins will make use of its Sports and Entertainment Analytic Ticketing System (SEATS) for revenue analytic services this season.
Digonex's service is based upon econometric and behavioral principles, employs XML Team and a client customizable approach to give the most robust and flexible solution for analyzing the parameters most relevant to delivering valuable recommendations to the client.
"Sports franchises are facing many challenges including a tough economy, a very accessible secondary market, and competing forces for the entertainment dollar," said Jan Eglen, Ph.D, CEO for Digonex. "The main goal of our services is to provide our clients with greater information on the value of their fans, their tickets, and the opportunities for sustainable growth."
"As the Twins organization continues to adjust to our new home in Target Field, we remain committed to doing all that we can to field a competitive team and to delivering the best ballpark entertainment experience for our fans - now and in the years to come. Certainly, ensuring that we price our tickets appropriately is a key component to delivering on these commitments. The expertise and services Digonex provides have proven to be extremely valuable to their clients throughout the sports and entertainment industry and we hope to benefit from their analytic services as well," said Steve Smith, vice president of ticket sales and service for the Minnesota Twins.
Digonex is collaborating with Tickets.com, and Major League Baseball® to provide its analytics services to the Twins. The Twins utilize Tickets.com's flagship platform, ProVenue®, for ticket sales and inventory management.
Source: Forbes.com, August 26, 2010
Digonex's service is based upon econometric and behavioral principles, employs XML Team and a client customizable approach to give the most robust and flexible solution for analyzing the parameters most relevant to delivering valuable recommendations to the client.
"Sports franchises are facing many challenges including a tough economy, a very accessible secondary market, and competing forces for the entertainment dollar," said Jan Eglen, Ph.D, CEO for Digonex. "The main goal of our services is to provide our clients with greater information on the value of their fans, their tickets, and the opportunities for sustainable growth."
"As the Twins organization continues to adjust to our new home in Target Field, we remain committed to doing all that we can to field a competitive team and to delivering the best ballpark entertainment experience for our fans - now and in the years to come. Certainly, ensuring that we price our tickets appropriately is a key component to delivering on these commitments. The expertise and services Digonex provides have proven to be extremely valuable to their clients throughout the sports and entertainment industry and we hope to benefit from their analytic services as well," said Steve Smith, vice president of ticket sales and service for the Minnesota Twins.
Digonex is collaborating with Tickets.com, and Major League Baseball® to provide its analytics services to the Twins. The Twins utilize Tickets.com's flagship platform, ProVenue®, for ticket sales and inventory management.
Source: Forbes.com, August 26, 2010
Monday, August 16, 2010
Atlanta Hawks, Atlanta Thrashers, Houston Rockets and Utah Jazz Select Qcue to Power Dynamic Ticket Pricing
Qcue, the dynamic pricing engine for live entertainment events, today announced deals with National Basketball Association (NBA) franchises, the Atlanta Hawks, Houston Rockets and Utah Jazz as well as the Atlanta Thrashers of the National Hockey League (NHL). Already the chosen dynamic pricing solution for teams in MLB and the NHL, the Hawks, Rockets and Jazz mark Qcue's entry into the NBA.
As the only fully integrated software-based dynamic pricing solution on the market, Qcue reduces the time it takes to re-price tickets from several days to just a few minutes. Sophisticated algorithms take into account playoff implications, weather, opponents, day of the week, real-time sales and other market conditions to determine the optimal price for each ticket once a price adjustment is determined.
"We believe that Qcue's dynamic pricing system offers a versatile solution that is easy to use and flexible enough to meet the needs of both our NBA and NHL franchises," said Tracy White, Chief Sales Officer and Senior Vice President, Sales and Marketing for the Atlanta Hawks and Atlanta Thrashers. "Sports market conditions are constantly changing and now we are able to quickly adapt to them while also providing greater value to our season ticket holders."
"Qcue's technology will ultimately allow our fans and consumer demand patterns to dictate single-game ticket prices," said Christopher Dacey, Vice President at the Houston Rockets.
With Qcue's dynamic pricing system, thousands of price changes take just a few minutes. The SaaS-based software solution helps teams analyze sales data and other external pricing variables, providing sales and revenue projections, as well as recommendations on setting the right price at the right time. Whether it's a surprise playoff run or an MVP coming to town, teams are looking for ways to stay flexible to match ticket prices with the value of the experience.
"We are excited to move in the direction of dynamic pricing with Qcue," said Jim Olson, Senior Vice President of Sales and Marketing for the Utah Jazz. "Dynamic pricing allows us to better price our tickets according to public demand. The Qcue system is a proven system that takes the guess work out of the process and provides us with the data to both service our fans and maximize our opportunities."
As the only fully integrated software-based dynamic pricing solution on the market, Qcue reduces the time it takes to re-price tickets from several days to just a few minutes. Sophisticated algorithms take into account playoff implications, weather, opponents, day of the week, real-time sales and other market conditions to determine the optimal price for each ticket once a price adjustment is determined.
"We believe that Qcue's dynamic pricing system offers a versatile solution that is easy to use and flexible enough to meet the needs of both our NBA and NHL franchises," said Tracy White, Chief Sales Officer and Senior Vice President, Sales and Marketing for the Atlanta Hawks and Atlanta Thrashers. "Sports market conditions are constantly changing and now we are able to quickly adapt to them while also providing greater value to our season ticket holders."
"Qcue's technology will ultimately allow our fans and consumer demand patterns to dictate single-game ticket prices," said Christopher Dacey, Vice President at the Houston Rockets.
With Qcue's dynamic pricing system, thousands of price changes take just a few minutes. The SaaS-based software solution helps teams analyze sales data and other external pricing variables, providing sales and revenue projections, as well as recommendations on setting the right price at the right time. Whether it's a surprise playoff run or an MVP coming to town, teams are looking for ways to stay flexible to match ticket prices with the value of the experience.
"We are excited to move in the direction of dynamic pricing with Qcue," said Jim Olson, Senior Vice President of Sales and Marketing for the Utah Jazz. "Dynamic pricing allows us to better price our tickets according to public demand. The Qcue system is a proven system that takes the guess work out of the process and provides us with the data to both service our fans and maximize our opportunities."
Thursday, June 17, 2010
Dynamic Ticket Pricing: Coming Soon to a Stadium Near You
Authority Tickets: Secondary Ticket News
Kelly
San Francisco is always a little bit ahead of the curve, in everything from haute cuisine to public policy. Now, according to Tickets.com, the hometown Giants are setting a trend when it comes to ticket pricing by employing a dynamic system that moves up and down depending on a variety of criteria such as dates, times, and opponents.
It’s a practice commonly found in the secondary ticket market that is making headway in the primary arena thanks to the Giants and other early adopters. And it’s only going to gain more traction in the coming years as consumers get more accustomed to a model that is also standard fare for hotels and airlines.
As Russ Stanley, managing vice president of ticketing sales and services for the Giants, sees it, “This is coming on very, very quickly. Within five years, I think everybody’s going to be doing this. Everybody in the industry is looking at it closely and evaluating it. I’m getting at least a call a week about this [from other teams], probably two.”
The Giants teamed up with Texas-based startup Qcue Inc. to begin testing the dynamic model last season and chalked up an additional $500,000 in revenues earned on a limited number of games. This season, they are looking to bring in seven figures worth as they expand the program to every game at AT&T Park.
The Houston Astros, Dallas Stars, Florida Panthers, and Cleveland Cavaliers are all testing the waters for themselves either this year or next.
What remains to be seen is how fans will react. For many, their hometown teams are their lifeblood and have been for generations. Getting a calendar and buying tickets ahead of time is part of the annual ritual. If prices can’t be determined in advance or fluctuate too much, some fans may push back against their favorite franchises.
The highest risk demographic is that of season ticket holders. If a dynamic system drives the face value of tickets to a price point below what they paid, then the incentive for buying a package up front is eliminated. So far, that problem has been avoided by keep a watchful eye not to let prices drift that low and by offering additional value to the packages such as access to the team.
“I simply wouldn’t be doing this if it meant putting our season-ticket holders at risk,” Stanley said. “At least half of what we’ll sell all year will be through season tickets, so we absolutely have to protect that.”
Chris Hutson, co-chief executive for Turnstyles Ticketing, has his doubts: “I don’t begrudge anybody trying this, but not at the expense of traditional, blood-and-guts ticket selling. I’ve seen every gimmick in this business and we, as an industry, tend to rely on things like this too much instead of good old-fashioned elbow grease. There are so many variables in [dynamic pricing], and I’m not sure we’ve thought through them all. What happens, for example, if [Tim] Lincecum doesn’t pitch in a particular game after somebody’s paid an accelerated price to see that game?”
Filling the stadium and filling the coffers are two goals that can sometimes be at odds. Teams are now looking to dynamic pricing as an answer to both.
As technology – particularly computer modeling – has advanced over the years, some teams have used it to determine audience analysis by inputting factors like when the game will be played, who will be playing, and what the weather will likely be. A true dynamic system takes that another step further by implementing the system season-wide, year-on-year.
The Qcue algorithm uses similar criteria, while also taking the secondary ticket market’s prices into account, to recommend price shifts. The client team can go with that recommendation or consider other factors and set their own price. The Qcue system feeds into the team’s existing ticketing system, as it does for the Stars and Giants through Tickets.com.
Qcue’s chief executive Barry Kahn boasts,“What we’ve done is create a software platform that performs very high-end demand and sales forecasting. Obviously, we’re huge believers in dynamic pricing, but with or without that, that information is still very valuable. That’s the foundation, and from there, we’re proving value and revenue upside.”
Their main rival, Digonex Technologies Inc., is working with the Cavaliers and will soon announce another NBA partnership. The company sees a bright future for the dynamic model.
“Consumer acceptance of dynamic pricing has definitely changed,” said Rex Fisher, Digonex vice president of business development. “We all have greater access to information, and we’ve simply been conditioned that many products are priced subject to change.”
The Cavaliers added six figures to their revenue line last season, too.
Mike Tomon, the Cavs’ vice president of sales, believes that there’s more to it than just money: “Even more than the additional revenue, dynamic pricing has helped us engage the fan and be relevant by offering them the right product at the right price at the right time. That helps with building fan engagement and loyalty.”
Consumer education is one part of the two-pronged approach to respectability for the new model. Surveys and explanations are being offered, along with the tried-and-true ideal of locking in your price now so you save money.
As more fans latch on to the idea, so will more teams. Tomon continued, “It simply makes all the sense in the world to have a true value-based offering that’s derived from fan behavior. This is coming to a head in sports, and with good reason.”
Kelly
San Francisco is always a little bit ahead of the curve, in everything from haute cuisine to public policy. Now, according to Tickets.com, the hometown Giants are setting a trend when it comes to ticket pricing by employing a dynamic system that moves up and down depending on a variety of criteria such as dates, times, and opponents.
It’s a practice commonly found in the secondary ticket market that is making headway in the primary arena thanks to the Giants and other early adopters. And it’s only going to gain more traction in the coming years as consumers get more accustomed to a model that is also standard fare for hotels and airlines.
As Russ Stanley, managing vice president of ticketing sales and services for the Giants, sees it, “This is coming on very, very quickly. Within five years, I think everybody’s going to be doing this. Everybody in the industry is looking at it closely and evaluating it. I’m getting at least a call a week about this [from other teams], probably two.”
The Giants teamed up with Texas-based startup Qcue Inc. to begin testing the dynamic model last season and chalked up an additional $500,000 in revenues earned on a limited number of games. This season, they are looking to bring in seven figures worth as they expand the program to every game at AT&T Park.
The Houston Astros, Dallas Stars, Florida Panthers, and Cleveland Cavaliers are all testing the waters for themselves either this year or next.
What remains to be seen is how fans will react. For many, their hometown teams are their lifeblood and have been for generations. Getting a calendar and buying tickets ahead of time is part of the annual ritual. If prices can’t be determined in advance or fluctuate too much, some fans may push back against their favorite franchises.
The highest risk demographic is that of season ticket holders. If a dynamic system drives the face value of tickets to a price point below what they paid, then the incentive for buying a package up front is eliminated. So far, that problem has been avoided by keep a watchful eye not to let prices drift that low and by offering additional value to the packages such as access to the team.
“I simply wouldn’t be doing this if it meant putting our season-ticket holders at risk,” Stanley said. “At least half of what we’ll sell all year will be through season tickets, so we absolutely have to protect that.”
Chris Hutson, co-chief executive for Turnstyles Ticketing, has his doubts: “I don’t begrudge anybody trying this, but not at the expense of traditional, blood-and-guts ticket selling. I’ve seen every gimmick in this business and we, as an industry, tend to rely on things like this too much instead of good old-fashioned elbow grease. There are so many variables in [dynamic pricing], and I’m not sure we’ve thought through them all. What happens, for example, if [Tim] Lincecum doesn’t pitch in a particular game after somebody’s paid an accelerated price to see that game?”
Filling the stadium and filling the coffers are two goals that can sometimes be at odds. Teams are now looking to dynamic pricing as an answer to both.
As technology – particularly computer modeling – has advanced over the years, some teams have used it to determine audience analysis by inputting factors like when the game will be played, who will be playing, and what the weather will likely be. A true dynamic system takes that another step further by implementing the system season-wide, year-on-year.
The Qcue algorithm uses similar criteria, while also taking the secondary ticket market’s prices into account, to recommend price shifts. The client team can go with that recommendation or consider other factors and set their own price. The Qcue system feeds into the team’s existing ticketing system, as it does for the Stars and Giants through Tickets.com.
Qcue’s chief executive Barry Kahn boasts,“What we’ve done is create a software platform that performs very high-end demand and sales forecasting. Obviously, we’re huge believers in dynamic pricing, but with or without that, that information is still very valuable. That’s the foundation, and from there, we’re proving value and revenue upside.”
Their main rival, Digonex Technologies Inc., is working with the Cavaliers and will soon announce another NBA partnership. The company sees a bright future for the dynamic model.
“Consumer acceptance of dynamic pricing has definitely changed,” said Rex Fisher, Digonex vice president of business development. “We all have greater access to information, and we’ve simply been conditioned that many products are priced subject to change.”
The Cavaliers added six figures to their revenue line last season, too.
Mike Tomon, the Cavs’ vice president of sales, believes that there’s more to it than just money: “Even more than the additional revenue, dynamic pricing has helped us engage the fan and be relevant by offering them the right product at the right price at the right time. That helps with building fan engagement and loyalty.”
Consumer education is one part of the two-pronged approach to respectability for the new model. Surveys and explanations are being offered, along with the tried-and-true ideal of locking in your price now so you save money.
As more fans latch on to the idea, so will more teams. Tomon continued, “It simply makes all the sense in the world to have a true value-based offering that’s derived from fan behavior. This is coming to a head in sports, and with good reason.”
Monday, June 7, 2010
Dynamic pricing has the potential to grow ticket revenue, but will consumers balk?
Ticketing’s changeup
Sports Business Journal
By Eric Fisher
Saturday, May 15, was a rather typical day of what so far has been a somewhat resurgent season for the San Francisco Giants. Star pitcher Tim Lincecum, the reigning two-time National League Cy Young Award winner, pitched eight brilliant innings in a 2-1 win over the Houston Astros at AT&T Park, pushing his record at the time to 5-0.
But the star power of Lincecum also created a noticeable spike in the club’s single-game ticket prices. Lincecum’s dominant presence helped turn a left-field view reserved seat that sold for $15 the night before into a $20 ticket on game day, a $42 lower box seat into a $50 ticket, a $105 field club ticket into a $130 one, and so on through the club’s 20 different seating categories.
Such fluid market dynamics have been the norm on the secondary ticket market for years, particularly over the last decade as that segment of the industry has experienced a historic and meteoric rise in prominence, stature and overall consumer acceptance. On the primary ticket market, many teams over the same time have embraced variable-pricing structures in which more games on popular months or days of the week and against better opponents carry higher ticket prices, though still on a preplanned, static basis.
But the Giants are among a fast-growing collection of teams engaging in dynamic pricing on their primary ticket markets, in which prices more freely move up and down each day based on a wide range of supply and demand factors.
Dynamic pricing, long a benchmark of the hotel, airline and other commodity industries, holds the potential to alter sports ticketing even more dramatically than the advent of officially sanctioned secondary ticketing, many executives and advocates say.
“This is coming on very, very quickly. Within five years, I think everybody’s going to be doing this,” said Russ Stanley, managing vice president of ticketing sales and services for the Giants.
The club, working with Texas-based startup Qcue Inc., made $500,000 in incremental revenue last season testing a small portion of AT&T Park on dynamic pricing. At least a low- to mid-seven-figure sum in additional money is anticipated this season, as the club has expanded the dynamic-pricing program to the entire ballpark for every game for single-game tickets.
“Everybody in the industry is looking at it closely and evaluating it. I’m getting at least a call a week about this [from other teams], probably two,” Stanley said.
Other teams either already active in dynamic pricing or confirmed to start next season include the Astros, Dallas Stars, Florida Panthers and Cleveland Cavaliers.
The rise of dynamic pricing, however, is not so cut and dried, and its accelerating emergence arrives with lots of uncertainty and mixed feelings.
Unlike hotel rooms, airline tickets and other similar products, consumers hold deep, often multigenerational emotional attachments to their sports teams. Those teams, which often play in facilities built at least in part with public funds, have for years also printed their price lists months in advance, creating a general expectation that those prices are set for the coming season. Each ticket price increase, as any team knows, also creates public relations issues and marketplace pushback.
And as sports fans and investors understand all too well, past performance is never a guarantee of future results. Even Lincecum lost his next start after that sparkling win over the Astros.
“I don’t begrudge anybody trying this, but not at the expense of traditional, blood-and-guts ticket selling,” said Chris Hutson, co-chief executive for Turnstyles Ticketing, a New Jersey-based ticketing services company that works with numerous pro teams and universities.
“I’ve seen every gimmick in this business,” Hutson said, “and we as an industry tend to rely on things like this too much instead of good old-fashioned elbow grease. There are so many variables in [dynamic pricing], and I’m not sure we’ve thought through them all. What happens, for example, if Lincecum doesn’t pitch in a particular game after somebody’s paid an accelerated price to see that game?”
Old problem, new solution
Dynamic pricing represents the latest attempt to answer one of the most fundamental set of questions in the sports industry: how best to fill an arena or stadium and generate the highest amount of revenue from those fans in the building.
Much of the dynamic pricing answer is not necessarily new.
Market-based pricing on the primary ticket market borrows heavily from several areas: the acceptance of secondary ticketing and its market-driven forces; a rapid embrace of computer-based analytics and research into ticketing and ticket sales; and consumers’ extensive use of the Internet to track prices in real-time for thousands of other products.
Dozens of teams, such as the Cavaliers and the Atlanta Braves, for the past several years have used various computer models that take inputs such as team opponent, day of the week, month of the year, win-loss record, weather and other factors to perform attendance modeling, representing something of an early step toward dynamic pricing.
But dynamic pricing differs from those other, related approaches on two primary points. Making the move requires a willingness to step over that emotionally charged chasm and agreeing to alter prices that historically have not changed within a given season, and then implementing the infrastructure to do so on a continuous basis.
To that end, much of what Qcue has done is reduce sports ticketing to something of a math problem. The company’s software feeds extensively on a complex algorithm that, similar to an airline or hotel model, takes in all the various pricing factors, including going rates on the secondary market, and spits back out recommended prices.
The team retains the option to agree to those recommendations, or alter them based on additional human factors the program may not have considered.
The Qcue pricing engine is designed to integrate directly into a club’s ticketing system, as the company has done with the Stars and Giants in partnership with Tickets.com. Qcue earns money on a two-pronged approach in which an upfront software fee is supplemented by a revenue-sharing component on ticket sales above a certain level deriving from the dynamic-pricing model.
“What we’ve done is create a software platform that performs very high-end demand and sales forecasting,” said Barry Kahn, Qcue chief executive. “Obviously, we’re huge believers in dynamic pricing, but with or without that, that information is still very valuable. That’s the foundation, and from there, we’re proving value and revenue upside.”
Digonex Technologies Inc., perhaps Qcue’s most direct competitor, has taken a similar approach. Seeking to leverage an existing background in dynamic pricing for e-commerce, including digital music, Digonex last fall launched a sports and entertainment ticketing division. Early this year, it began working with the Cavaliers, with another deal pending with an undisclosed NBA team.
“Consumer acceptance of dynamic pricing has definitely changed,” said Rex Fisher, Digonex vice president of business development. “We all have greater access to information, and we’ve simply been conditioned that many products are priced subject to change.”
The Cavaliers also generated an undisclosed six-figure sum in incremental revenue this past season through dynamic pricing. But for team officials, there is an even bigger prize.
“Even more than the additional revenue, dynamic pricing has helped us engage the fan and be relevant by offering them the right product at the right price at the right time. That helps with building fan engagement and loyalty,” said Mike Tomon, Cavaliers vice president of sales. “It simply makes all the sense in the world to have a true value-based offering that derived from fan behavior. This is coming to a head in sports, and with good reason.”
Protecting season-ticket holders
The top concern surrounding dynamic pricing, not surprisingly, is the potential impact on season-ticket holders, still the lifeblood of all sports ticketing. While prices do move up in high-demand situations — generating predictable complaints of teams being exploitative — it’s the downward price movements for lower-demand games that actually create the bigger business threat.
If prices drift down to points at or near what season-ticket holders paid, what then are the advantages of paying for an entire package of games? Fans have already begun for several years to cherry-pick desired games on the secondary market.
“Price integrity without a doubt has been the No. 1 discussion point or concern on this topic,” said Derek Palmer, Tickets.com chief commercial officer.
The general response from teams on that bigger question is to show additional, unable-to-duplicate value to season-ticket holders through amenities such as access to players and coaches. With regard specifically to dynamic pricing, the early adopters have generally avoided going below their season-ticket pricing.
The insertion of artificial price floors means that teams such as the Giants, Stars and Cavaliers are not practicing dynamic pricing in the truest and fullest sense. But preserving that core base of the most-loyal ticket buyers remains critical, even as dynamic pricing advances and more data and analytics become available.
“I simply wouldn’t be doing this if it meant putting our season-ticket holders at risk,” Stanley said. The Giants’ season-ticket base of 21,000 full-season equivalents, though down in recent years, remains among the largest in baseball. “At least half of what we’ll sell all year will be through season tickets, so we absolutely have to protect that.”
Even with safeguards such as that in place, plenty of skeptics remain for dynamic pricing, in large part because for many teams, low-demand games easily outnumber high-demand ones.
“For a majority of teams, you have to be very careful, and this probably isn’t a space you want to play in. And if you’re still dictating [price] floors, it’s not really dynamic pricing,” said Lou DePaoli, Pittsburgh Pirates executive vice president and chief marketing officer. DePaoli has approached the issue from several angles during prior stops with the NBA, Florida Marlins and Atlanta Spirit ownership group. “But in baseball particularly, there are more weekdays than weekends, and more bad teams than good teams. So without a really super premium on your best series, you probably aren’t going to be able to make up the [lost] revenue.”
The push going forward for dynamic pricing will largely be on two fronts: a consumer education and awareness process to enlighten the public on what dynamic pricing is and how it works, and continued improvement in ticket analytics.
On the first point, many teams have conducted extensive surveys with fans, and each of the teams active in dynamic pricing offers some type of detailed explanation as to how its system works. The general sales credo has been to “lock in and save,” in which fans waiting until the last minute run the risk of paying more for their ticket.
On the latter point, ticketing analytics continue to improve as computing power, algorithms and teams’ understanding of how best to use that research grow and develop. That maturation will manifest itself in part through more precise dynamic pricing.
“Everybody’s experimenting to understand the science and figure out the algorithms, as nobody wants to damage their pricing models with haphazard processes,” said Sam Gerace, chief executive for Veritix, a sister company to the Cavaliers and the team’s ticketing provider.
“The challenge has been getting real information as there’s no official ‘trading desk’ for tickets,” Gerace said. “But I think we’re getting smarter and ultimately getting to a situation where the traditional concept of ‘face value’ begins to fade out.”
Sports Business Journal
By Eric Fisher
Saturday, May 15, was a rather typical day of what so far has been a somewhat resurgent season for the San Francisco Giants. Star pitcher Tim Lincecum, the reigning two-time National League Cy Young Award winner, pitched eight brilliant innings in a 2-1 win over the Houston Astros at AT&T Park, pushing his record at the time to 5-0.
But the star power of Lincecum also created a noticeable spike in the club’s single-game ticket prices. Lincecum’s dominant presence helped turn a left-field view reserved seat that sold for $15 the night before into a $20 ticket on game day, a $42 lower box seat into a $50 ticket, a $105 field club ticket into a $130 one, and so on through the club’s 20 different seating categories.
Such fluid market dynamics have been the norm on the secondary ticket market for years, particularly over the last decade as that segment of the industry has experienced a historic and meteoric rise in prominence, stature and overall consumer acceptance. On the primary ticket market, many teams over the same time have embraced variable-pricing structures in which more games on popular months or days of the week and against better opponents carry higher ticket prices, though still on a preplanned, static basis.
But the Giants are among a fast-growing collection of teams engaging in dynamic pricing on their primary ticket markets, in which prices more freely move up and down each day based on a wide range of supply and demand factors.
Dynamic pricing, long a benchmark of the hotel, airline and other commodity industries, holds the potential to alter sports ticketing even more dramatically than the advent of officially sanctioned secondary ticketing, many executives and advocates say.
“This is coming on very, very quickly. Within five years, I think everybody’s going to be doing this,” said Russ Stanley, managing vice president of ticketing sales and services for the Giants.
The club, working with Texas-based startup Qcue Inc., made $500,000 in incremental revenue last season testing a small portion of AT&T Park on dynamic pricing. At least a low- to mid-seven-figure sum in additional money is anticipated this season, as the club has expanded the dynamic-pricing program to the entire ballpark for every game for single-game tickets.
“Everybody in the industry is looking at it closely and evaluating it. I’m getting at least a call a week about this [from other teams], probably two,” Stanley said.
Other teams either already active in dynamic pricing or confirmed to start next season include the Astros, Dallas Stars, Florida Panthers and Cleveland Cavaliers.
The rise of dynamic pricing, however, is not so cut and dried, and its accelerating emergence arrives with lots of uncertainty and mixed feelings.
Unlike hotel rooms, airline tickets and other similar products, consumers hold deep, often multigenerational emotional attachments to their sports teams. Those teams, which often play in facilities built at least in part with public funds, have for years also printed their price lists months in advance, creating a general expectation that those prices are set for the coming season. Each ticket price increase, as any team knows, also creates public relations issues and marketplace pushback.
And as sports fans and investors understand all too well, past performance is never a guarantee of future results. Even Lincecum lost his next start after that sparkling win over the Astros.
“I don’t begrudge anybody trying this, but not at the expense of traditional, blood-and-guts ticket selling,” said Chris Hutson, co-chief executive for Turnstyles Ticketing, a New Jersey-based ticketing services company that works with numerous pro teams and universities.
“I’ve seen every gimmick in this business,” Hutson said, “and we as an industry tend to rely on things like this too much instead of good old-fashioned elbow grease. There are so many variables in [dynamic pricing], and I’m not sure we’ve thought through them all. What happens, for example, if Lincecum doesn’t pitch in a particular game after somebody’s paid an accelerated price to see that game?”
Old problem, new solution
Dynamic pricing represents the latest attempt to answer one of the most fundamental set of questions in the sports industry: how best to fill an arena or stadium and generate the highest amount of revenue from those fans in the building.
Much of the dynamic pricing answer is not necessarily new.
Market-based pricing on the primary ticket market borrows heavily from several areas: the acceptance of secondary ticketing and its market-driven forces; a rapid embrace of computer-based analytics and research into ticketing and ticket sales; and consumers’ extensive use of the Internet to track prices in real-time for thousands of other products.
Dozens of teams, such as the Cavaliers and the Atlanta Braves, for the past several years have used various computer models that take inputs such as team opponent, day of the week, month of the year, win-loss record, weather and other factors to perform attendance modeling, representing something of an early step toward dynamic pricing.
But dynamic pricing differs from those other, related approaches on two primary points. Making the move requires a willingness to step over that emotionally charged chasm and agreeing to alter prices that historically have not changed within a given season, and then implementing the infrastructure to do so on a continuous basis.
To that end, much of what Qcue has done is reduce sports ticketing to something of a math problem. The company’s software feeds extensively on a complex algorithm that, similar to an airline or hotel model, takes in all the various pricing factors, including going rates on the secondary market, and spits back out recommended prices.
The team retains the option to agree to those recommendations, or alter them based on additional human factors the program may not have considered.
The Qcue pricing engine is designed to integrate directly into a club’s ticketing system, as the company has done with the Stars and Giants in partnership with Tickets.com. Qcue earns money on a two-pronged approach in which an upfront software fee is supplemented by a revenue-sharing component on ticket sales above a certain level deriving from the dynamic-pricing model.
“What we’ve done is create a software platform that performs very high-end demand and sales forecasting,” said Barry Kahn, Qcue chief executive. “Obviously, we’re huge believers in dynamic pricing, but with or without that, that information is still very valuable. That’s the foundation, and from there, we’re proving value and revenue upside.”
Digonex Technologies Inc., perhaps Qcue’s most direct competitor, has taken a similar approach. Seeking to leverage an existing background in dynamic pricing for e-commerce, including digital music, Digonex last fall launched a sports and entertainment ticketing division. Early this year, it began working with the Cavaliers, with another deal pending with an undisclosed NBA team.
“Consumer acceptance of dynamic pricing has definitely changed,” said Rex Fisher, Digonex vice president of business development. “We all have greater access to information, and we’ve simply been conditioned that many products are priced subject to change.”
The Cavaliers also generated an undisclosed six-figure sum in incremental revenue this past season through dynamic pricing. But for team officials, there is an even bigger prize.
“Even more than the additional revenue, dynamic pricing has helped us engage the fan and be relevant by offering them the right product at the right price at the right time. That helps with building fan engagement and loyalty,” said Mike Tomon, Cavaliers vice president of sales. “It simply makes all the sense in the world to have a true value-based offering that derived from fan behavior. This is coming to a head in sports, and with good reason.”
Protecting season-ticket holders
The top concern surrounding dynamic pricing, not surprisingly, is the potential impact on season-ticket holders, still the lifeblood of all sports ticketing. While prices do move up in high-demand situations — generating predictable complaints of teams being exploitative — it’s the downward price movements for lower-demand games that actually create the bigger business threat.
If prices drift down to points at or near what season-ticket holders paid, what then are the advantages of paying for an entire package of games? Fans have already begun for several years to cherry-pick desired games on the secondary market.
“Price integrity without a doubt has been the No. 1 discussion point or concern on this topic,” said Derek Palmer, Tickets.com chief commercial officer.
The general response from teams on that bigger question is to show additional, unable-to-duplicate value to season-ticket holders through amenities such as access to players and coaches. With regard specifically to dynamic pricing, the early adopters have generally avoided going below their season-ticket pricing.
The insertion of artificial price floors means that teams such as the Giants, Stars and Cavaliers are not practicing dynamic pricing in the truest and fullest sense. But preserving that core base of the most-loyal ticket buyers remains critical, even as dynamic pricing advances and more data and analytics become available.
“I simply wouldn’t be doing this if it meant putting our season-ticket holders at risk,” Stanley said. The Giants’ season-ticket base of 21,000 full-season equivalents, though down in recent years, remains among the largest in baseball. “At least half of what we’ll sell all year will be through season tickets, so we absolutely have to protect that.”
Even with safeguards such as that in place, plenty of skeptics remain for dynamic pricing, in large part because for many teams, low-demand games easily outnumber high-demand ones.
“For a majority of teams, you have to be very careful, and this probably isn’t a space you want to play in. And if you’re still dictating [price] floors, it’s not really dynamic pricing,” said Lou DePaoli, Pittsburgh Pirates executive vice president and chief marketing officer. DePaoli has approached the issue from several angles during prior stops with the NBA, Florida Marlins and Atlanta Spirit ownership group. “But in baseball particularly, there are more weekdays than weekends, and more bad teams than good teams. So without a really super premium on your best series, you probably aren’t going to be able to make up the [lost] revenue.”
The push going forward for dynamic pricing will largely be on two fronts: a consumer education and awareness process to enlighten the public on what dynamic pricing is and how it works, and continued improvement in ticket analytics.
On the first point, many teams have conducted extensive surveys with fans, and each of the teams active in dynamic pricing offers some type of detailed explanation as to how its system works. The general sales credo has been to “lock in and save,” in which fans waiting until the last minute run the risk of paying more for their ticket.
On the latter point, ticketing analytics continue to improve as computing power, algorithms and teams’ understanding of how best to use that research grow and develop. That maturation will manifest itself in part through more precise dynamic pricing.
“Everybody’s experimenting to understand the science and figure out the algorithms, as nobody wants to damage their pricing models with haphazard processes,” said Sam Gerace, chief executive for Veritix, a sister company to the Cavaliers and the team’s ticketing provider.
“The challenge has been getting real information as there’s no official ‘trading desk’ for tickets,” Gerace said. “But I think we’re getting smarter and ultimately getting to a situation where the traditional concept of ‘face value’ begins to fade out.”
Monday, May 24, 2010
Tickets.com Partner Spotlight: Qcue
The Austin Technology Incubator Graduates Member Company, Qcue The Austin Technology Incubator (ATI), a not-for-profit arm of The University of Texas at Austin, announced today that its member company, Qcue, Inc., will graduate later this month.
The Austin Technology Incubator (ATI), a not-for-profit arm of The University of Texas at Austin, announced today that its member company, Qcue, Inc., will graduate later this month.
Qcue, the dynamic pricing engine for live entertainment events, joined the ATI in May 2008. Sports teams, concert promoters and venues use Qcue's software to set the right ticket price at the right time based on shifting market conditions. By enabling fans to purchase fair-priced, face-value tickets directly from a team’s box office, Qcue’s dynamic pricing solutions ensure a more consistent, high-value experience coupled with greater price transparency and choice-of-seat flexibility.
During its tenure at ATI, Qcue landed its first professional sports client, raised in excess of $1M in funding and expanded its client roster to include teams across the major sports leagues. Qcue also added senior-level business and technology executives to the company’s leadership team.
“The professional staff at ATI has been invaluable in helping us address the unforeseen challenges that come with scaling a fast-growing business,” said Barry Kahn, CEO of Qcue. “Their deep experience and breadth of resources are things you just can’t put a price tag on, and have played an integral role in the early advantage we’ve established in the market.”
Qcue’s plans include expanding its existing client base in professional sports and exploring new market opportunities in live music and the performing arts.
“Barry and the Qcue team have done a phenomenal job engaging customers, proving out the value proposition of dynamic pricing, and positioning the company for explosive growth,” said Bart Bohn, Director of ATI’s IT Incubator. “I look forward to watching them capitalize on this success as they continue to outpace potential competitors in the space.”
Qcue is the fifth company to graduate from the Incubator this year. A formal ceremony is planned for early 2011.
About the Austin Technology Incubator
The Austin Technology Incubator is a nonprofit unit of The University of Texas at Austin that harnesses business, government and academic resources to provide strategic counsel, operational guidance and infrastructure support to its member companies to help them transition from early stage ventures to successful technology businesses. Since its founding in 1989, ATI has worked with over 200 companies, helping them raise close to $750 million in investor capital. ATI is a key program of the IC2 Institute at The University of Texas at Austin. For more information, visit www.ati.utexas.edu
About Qcue, Inc.
Qcue is reinventing the primary ticket marketplace with the world’s only dynamic pricing engine for live entertainment events. Sports teams, concert promoters and venues use Qcue’s patent-pending technology to set the right price at the right time and provide the best value for fans, from the date of on-sale to the date of the event. Customers and partners include the San Francisco Giants, the Dallas Stars, Major League Baseball Advanced Media and Tickets.com. Founded in 2007, Qcue is based in Austin, Texas. For more information on Qcue, visit www.qcue.com.
Thursday, May 20, 2010
Giants, Sharks Experiment with Ticket Pricing
SFGate
Benny Evangelista
Buying a ticket to a game is becoming more like watching the stock market.
For example, San Jose Sharks fans can buy "options" on future Stanley Cup playoff tickets.
Meanwhile, the price of a San Francisco Giants ticket might rise 25 cents on any given day based on market variables like supply and demand - or whether Tim Lincecum is pitching.
Technology is transforming the way tickets are sold, and these two Bay Area sports franchises are on the cutting edge.
"Within five years, I think everyone will be doing something like this," said Russ Stanley, vice president for ticket sales and services for the Giants.
Years ago, tickets to sporting events and other forms of live entertainment were simply priced by location - the closer to the field, ice or ring, the higher the price. But in the past decade, the Giants and other teams helped usher in an era of "variable pricing," which valued tickets using other factors such as the drawing power of the opposing team and whether the game was on a weekend or weekday.
Now, the Giants and Sharks are experimenting with pricing methods that other teams and event promoters are watching closely.
For this season, the Sharks teamed up with OptionIt, a Portland, Ore., startup, that sells options to buy tickets for future games at face value. The buyer can later exercise that option or sell it to another buyer.
The Sharks, which receive a cut of the option price, offered 20 tickets per game during the regular season and playoffs, a sliver of the HP Pavilion's seating capacity of 17,562 for hockey.
Sharks fan Jessica Welker of San Jose paid $114 in November for the option on a pair of tickets to what would be the franchise's first-ever Stanley Cup Finals home game. She figured those tickets would be nearly impossible to find at face value if the Sharks made it to the NHL's championship round.
"All my friends were skeptical," said Welker, who exercised that option on Monday. "They thought it was crazy that I paid $114 because they thought there was no way the Sharks would make it to the Stanley Cup Finals. To me, it was worth it. Obviously, it would be a once-in-a-lifetime opportunity."
However, it's also a gamble. If the Sharks lose to the Chicago Blackhawks in the Western Conference Finals, she loses the $114.
The alternative would be to pay more to brokers on secondary markets like eBay or StubHub. This week, tickets to G1 of the conference finals were offered on StubHub for $1,212 each, according to SeatGeek.com, a new site that tracks and forecasts the prices of tickets on secondary markets.
Contingency plan
OptionIt could be valuable, for example, for a fan planning in November to go to a regular season game in February, but not absolutely certain he or she can attend, said Mark Mastalir, chief executive officer.
OptionIt has similar deals with the NHL's Washington Capitals, the NBA's Boston Celtics and the NFL's Baltimore Ravens.
Some of the options come with extras, such as a ride on the Zamboni machine or the chance to meet a player.
Malcolm Bordelon, Sharks executive vice president of operations, said the team will evaluate OptionIt after the season, but is generally pleased with the results.
The team might consider option plans for other arena events, such as the SAP Open tennis tournament or mixed martial arts matches.
"We typically don't do things first, but this was actually easy to do," Bordelon said. "There's no cost to us and it's another avenue for people who want to purchase tickets."
Joris Drayer, a professor of sports management at the University of Memphis, said OptionIt could catch on only if fans "understand what they're getting and what they're not getting."
"The model isn't there to be a great benefit to fans, it's there to be a revenue generator for the team," Drayer said. "But I don't think it's a disservice to fans. It's got a chance, but the education process with that model is a little more difficult."
Drayer, a former marketing and promotions employee for the Oakland A's, said the "dynamic pricing" formula the Giants are using this season could spread quickly.
"Everyone's watching what the Giants are doing," Drayer said. "They're the guinea pigs not only for baseball, but for all sports."
The Giants and most major league teams already employ a variable pricing plan, setting prices months in advance to reflect factors such as the drawing power of the opponent and whether it's a weekend game.
In 2009, the Giants went a step further, becoming the first to use technology from Austin, Texas, startup Qcue Inc. to adjust prices on about 2,000 outfield seats at AT&T Park.
The system adds other factors, including whether the opposing team is on a hot or cold streak, whether a marquee player is closing in on a record or on the disabled list, or whether the forecast is for rain or sun.
Expanded experiment
Stanley said the experiment generated about $500,000 in incremental revenue, so the Giants expanded dynamic pricing this season to all 41,500 seats.
Stanley and his crew spend about an hour a day looking over Qcue's recommendations, which are based on algorithms that automatically crunch the data.
Sometimes the team is aggressive and tries to boost sales for a low-demand game by dropping prices to as low as $5.
Other times, bumping prices up 25 or 50 cents per ticket also spurs sales.
"It's like the stock market," Stanley said.
Drayer said that extra 50 cents can really add up over the course of the long home season, in addition to the added income from parking and concessions that wouldn't come in if the seat remained empty.
But ticket prices vary widely. A lower box seat for a Tuesday night in June against the Colorado Rockies, not usually a big draw, was priced at $30 (down $1 from last week), while that same seat for a Sunday afternoon matchup with the popular Boston Red Sox was priced at $89.50. In the middle was a Saturday match against the cross-bay rival A's costing $65.75.
Still, Stanley said, the Giants aren't trying to match prices on the secondary market. Similar lower box tickets for that Sunday Giants-Red Sox game were going for $355 each on StubHub.
"We're not gouging," Stanley said. "We're not sticking it to people. While we increase prices, we're not getting greedy."
Barry Kahn, Qcue's co-founder and chief executive officer, said the NHL's Dallas Stars also used dynamic pricing and the company could have 10 teams on board by September when the basketball and hockey seasons start again.
Benny Evangelista
Buying a ticket to a game is becoming more like watching the stock market.
For example, San Jose Sharks fans can buy "options" on future Stanley Cup playoff tickets.
Meanwhile, the price of a San Francisco Giants ticket might rise 25 cents on any given day based on market variables like supply and demand - or whether Tim Lincecum is pitching.
Technology is transforming the way tickets are sold, and these two Bay Area sports franchises are on the cutting edge.
"Within five years, I think everyone will be doing something like this," said Russ Stanley, vice president for ticket sales and services for the Giants.
Years ago, tickets to sporting events and other forms of live entertainment were simply priced by location - the closer to the field, ice or ring, the higher the price. But in the past decade, the Giants and other teams helped usher in an era of "variable pricing," which valued tickets using other factors such as the drawing power of the opposing team and whether the game was on a weekend or weekday.
Now, the Giants and Sharks are experimenting with pricing methods that other teams and event promoters are watching closely.
For this season, the Sharks teamed up with OptionIt, a Portland, Ore., startup, that sells options to buy tickets for future games at face value. The buyer can later exercise that option or sell it to another buyer.
The Sharks, which receive a cut of the option price, offered 20 tickets per game during the regular season and playoffs, a sliver of the HP Pavilion's seating capacity of 17,562 for hockey.
Sharks fan Jessica Welker of San Jose paid $114 in November for the option on a pair of tickets to what would be the franchise's first-ever Stanley Cup Finals home game. She figured those tickets would be nearly impossible to find at face value if the Sharks made it to the NHL's championship round.
"All my friends were skeptical," said Welker, who exercised that option on Monday. "They thought it was crazy that I paid $114 because they thought there was no way the Sharks would make it to the Stanley Cup Finals. To me, it was worth it. Obviously, it would be a once-in-a-lifetime opportunity."
However, it's also a gamble. If the Sharks lose to the Chicago Blackhawks in the Western Conference Finals, she loses the $114.
The alternative would be to pay more to brokers on secondary markets like eBay or StubHub. This week, tickets to G1 of the conference finals were offered on StubHub for $1,212 each, according to SeatGeek.com, a new site that tracks and forecasts the prices of tickets on secondary markets.
Contingency plan
OptionIt could be valuable, for example, for a fan planning in November to go to a regular season game in February, but not absolutely certain he or she can attend, said Mark Mastalir, chief executive officer.
OptionIt has similar deals with the NHL's Washington Capitals, the NBA's Boston Celtics and the NFL's Baltimore Ravens.
Some of the options come with extras, such as a ride on the Zamboni machine or the chance to meet a player.
Malcolm Bordelon, Sharks executive vice president of operations, said the team will evaluate OptionIt after the season, but is generally pleased with the results.
The team might consider option plans for other arena events, such as the SAP Open tennis tournament or mixed martial arts matches.
"We typically don't do things first, but this was actually easy to do," Bordelon said. "There's no cost to us and it's another avenue for people who want to purchase tickets."
Joris Drayer, a professor of sports management at the University of Memphis, said OptionIt could catch on only if fans "understand what they're getting and what they're not getting."
"The model isn't there to be a great benefit to fans, it's there to be a revenue generator for the team," Drayer said. "But I don't think it's a disservice to fans. It's got a chance, but the education process with that model is a little more difficult."
Drayer, a former marketing and promotions employee for the Oakland A's, said the "dynamic pricing" formula the Giants are using this season could spread quickly.
"Everyone's watching what the Giants are doing," Drayer said. "They're the guinea pigs not only for baseball, but for all sports."
The Giants and most major league teams already employ a variable pricing plan, setting prices months in advance to reflect factors such as the drawing power of the opponent and whether it's a weekend game.
In 2009, the Giants went a step further, becoming the first to use technology from Austin, Texas, startup Qcue Inc. to adjust prices on about 2,000 outfield seats at AT&T Park.
The system adds other factors, including whether the opposing team is on a hot or cold streak, whether a marquee player is closing in on a record or on the disabled list, or whether the forecast is for rain or sun.
Expanded experiment
Stanley said the experiment generated about $500,000 in incremental revenue, so the Giants expanded dynamic pricing this season to all 41,500 seats.
Stanley and his crew spend about an hour a day looking over Qcue's recommendations, which are based on algorithms that automatically crunch the data.
Sometimes the team is aggressive and tries to boost sales for a low-demand game by dropping prices to as low as $5.
Other times, bumping prices up 25 or 50 cents per ticket also spurs sales.
"It's like the stock market," Stanley said.
Drayer said that extra 50 cents can really add up over the course of the long home season, in addition to the added income from parking and concessions that wouldn't come in if the seat remained empty.
But ticket prices vary widely. A lower box seat for a Tuesday night in June against the Colorado Rockies, not usually a big draw, was priced at $30 (down $1 from last week), while that same seat for a Sunday afternoon matchup with the popular Boston Red Sox was priced at $89.50. In the middle was a Saturday match against the cross-bay rival A's costing $65.75.
Still, Stanley said, the Giants aren't trying to match prices on the secondary market. Similar lower box tickets for that Sunday Giants-Red Sox game were going for $355 each on StubHub.
"We're not gouging," Stanley said. "We're not sticking it to people. While we increase prices, we're not getting greedy."
Barry Kahn, Qcue's co-founder and chief executive officer, said the NHL's Dallas Stars also used dynamic pricing and the company could have 10 teams on board by September when the basketball and hockey seasons start again.
Thursday, April 29, 2010
Tickets.com Partner Spotlight: Qcue Names Vice President of Business Development
Qcue, the dynamic pricing engine for live entertainment events, today announced the appointment of Eric Freeland as vice president of business development, where he will lead the company’s client acquisition and partnership efforts.
Freeland joins Qcue from StubHub, where he was responsible for all aspects of business development supporting the company’s multi-year sponsorships with professional sports teams and NCAA Division I schools.
Sports teams, concert promoters and venues use Qcue's software to set the right price at the right time based on shifting market conditions. By enabling fans to purchase fair-priced, face-value tickets directly from a team’s box office, Qcue’s dynamic pricing solutions ensure a more consistent, high-value experience coupled with greater price transparency and choice-of-seat flexibility.
An expert in client prospecting and value creation, contract negotiation and project management, Freeland supported StubHub’s sponsorship negotiation with 24 Major League Baseball clubs leading to an exponential year-over-year sales increase in the company’s biggest market. He also launched StubHub’s first non-sports integration with Tickets.com for a major venue, spanning all live entertainment events at HSBC Arena in Buffalo, New York.
“Eric did an amazing job at StubHub as they transformed the ticketing industry and changed the perception of how teams can serve fans and increase revenues,” said Barry Kahn, CEO of Qcue. “Dynamic pricing represents the next step in bringing technology to live event ticketing benefitting teams and fans alike. We are excited to bring Eric on board as someone who has done this before and has strong relationships with many of our partners, clients and prospects."
“Qcue has quickly established itself as a leading innovator in the ticketing industry, helping teams and venues maximize revenue opportunities while being more flexible and transparent in how they do business,” said Freeland. “I’m excited to join the team and continue to capitalize on this incredible market opportunity.”
About Qcue
Qcue is reinventing the primary ticket marketplace with the world’s only dynamic pricing engine for live entertainment events. Sports teams, concert promoters and venues use Qcue’s patent-pending technology to set the right price at the right time and provide the best value for fans, from the date of on-sale to the date of the event. Customers and partners include the San Francisco Giants, the Dallas Stars, Major League Baseball Advanced Media and Tickets.com. Founded in 2007, Qcue is based in Austin, Texas. For more information on Qcue, visit www.qcue.com.
Freeland joins Qcue from StubHub, where he was responsible for all aspects of business development supporting the company’s multi-year sponsorships with professional sports teams and NCAA Division I schools.
Sports teams, concert promoters and venues use Qcue's software to set the right price at the right time based on shifting market conditions. By enabling fans to purchase fair-priced, face-value tickets directly from a team’s box office, Qcue’s dynamic pricing solutions ensure a more consistent, high-value experience coupled with greater price transparency and choice-of-seat flexibility.
An expert in client prospecting and value creation, contract negotiation and project management, Freeland supported StubHub’s sponsorship negotiation with 24 Major League Baseball clubs leading to an exponential year-over-year sales increase in the company’s biggest market. He also launched StubHub’s first non-sports integration with Tickets.com for a major venue, spanning all live entertainment events at HSBC Arena in Buffalo, New York.
“Eric did an amazing job at StubHub as they transformed the ticketing industry and changed the perception of how teams can serve fans and increase revenues,” said Barry Kahn, CEO of Qcue. “Dynamic pricing represents the next step in bringing technology to live event ticketing benefitting teams and fans alike. We are excited to bring Eric on board as someone who has done this before and has strong relationships with many of our partners, clients and prospects."
“Qcue has quickly established itself as a leading innovator in the ticketing industry, helping teams and venues maximize revenue opportunities while being more flexible and transparent in how they do business,” said Freeland. “I’m excited to join the team and continue to capitalize on this incredible market opportunity.”
About Qcue
Qcue is reinventing the primary ticket marketplace with the world’s only dynamic pricing engine for live entertainment events. Sports teams, concert promoters and venues use Qcue’s patent-pending technology to set the right price at the right time and provide the best value for fans, from the date of on-sale to the date of the event. Customers and partners include the San Francisco Giants, the Dallas Stars, Major League Baseball Advanced Media and Tickets.com. Founded in 2007, Qcue is based in Austin, Texas. For more information on Qcue, visit www.qcue.com.
Monday, April 5, 2010
Venues Today: Dynamic Prices
Understanding the difference between today’s biggest firms
By Dave Brooks
Venues Today - April Issue
REPORTING FROM LONG BEACH, CALIF. — It was the perfect puzzle for the 100 or so ticketing experts who had gathered at Tickets.com’s Executive Summary last February.
After five stellar, mostly sell-out seasons, the perennial Phoenix Suns found themselves in a bit a slump in the National Basketball Association. As John Walker, team VP of Business Development, explained, 2009 was the year the team traded away star Shaquille O’Neal and missed the playoffs. Renewal rates dipped from the high 90s to 60 percent at the beginning of the 2010/2011 season, and Walker realized he had a problem on his hands.
“Suddenly, I’m looking at 3,000 to 5,000 tickets per night that I had to sell, and some of these games were going to be difficult at their current price,” Walker said before the audience gathered for the presentation on Market Ticket Pricing he had been commissioned to moderate.
“I really don’t want to piss off season ticket holders by lowering prices on low demand tickets, but I will still have the high demand games as well. Whenever the Lakers come to town, the price of the tickets double and even triple, and there are plenty of people who will still pay for it.”
Walker said he will dynamically price his tickets for next season under a few simple principals. Low demand games will be priced cheaper — this will give the season ticket holder a little breathing space on resale. For more expensive seats, he will raise the value of the ticket.
For season ticket holders, the cost of season tickets won’t change much, since the lower priced tickets will offset the cost of the higher priced tickets in the package.
Had he just engaged in dynamic pricing? Perhaps, in its simplest form. The practice was a hot topic at this year’s International Ticketing Association (INTIX) conference and set the stage for a healthy discussion at Executive Summit.
But just what exactly does it mean to dynamically price one’s tickets? Is it simply a matter of more correctly pricing tickets for high and low demand games, or does it mean bringing on a software provider like Qcue to crunch the numbers to constantly find the most up-to-date prices?
Or does it mean bringing on a firm with industry staples like Harry Sandler of Digonex, a former Frontline Management executive, who helped bands like The Eagles make huge gains on their ticketing software?
In the next 12 to 24 months, ticketing professionals will continue to have new options for dynamically pricing their tickets: either on their own, or with a technology partner. Venues Today sat down with some of the industry’s top professionals to discuss their options.
WORKING WITH YOUR TICKETING PROVIDER
A dynamic pricing system is only as good as your ticketing company allows it to be.
“Our approach is really about partnering and technology enablement for all of our customers,” said Chief Commercial Officer Derek Palmer of Tickets.com “We’ve been involved with Qcue for several years and have worked with the San Francisco Giants and the Dallas Stars to find a way to add data to the algorithms that Qcue uses, which then provides pricing statistics and pricing recommendations that get placed back into the ticketing system,” Palmer said. “Our company could do the exact same integration with Digonex, although we’re not currently doing it.”
Palmer said the model for Tickets.com is to leave the dynamic pricing question to the client and integrate with the system the client chooses — some systems work better for concerts, while other’s are optimized for sports.
“The main thing as an organization is that you have to make a philosophical decision that this is something you want to implement,” Palmer said. “There will be serious changes, and once you’ve philosophically readied yourself, you bring in the folks who can help you in what you are trying to achieve.”
Palmer said technology should not be a buy-before-you-try proposition, especially when that technology affects serious revenue generators like ticket sales. There are a lot of incentives for early adopters to try out dynamic pricing solutions. Digonex said it offered several free trials of its system during its early phases.
“Organizations gain better intelligence to price their tickets more accurately the first time. This data that Digonex and Qcue bring to bear certainly helps any organization do that. Prior to these two organizations, teams had to mostly rely on historical data, in a more trial and error process,” Palmer said.
Using a dynamic pricing system allows you “to get a lot more elasticity from the ticket price and get closer to what true demand will actually pay,” he said.
QCUE CONTINUES FORWARD
Created by Barry Kahn and a team of economics grad students at the University of Texas, Qcue has gone from being a business contest winner to a major player in the dynamic ticketing space.
At 29, Kahn has helped his company usher in a number of venture capital infusions and state grants. He counts among his clients the San Francisco Giants and the Dallas Stars, along with a number of baseball teams which have yet to publicize their relationship with Qcue.
“There are certain teams out there who don’t want to make a big deal of the fact that they need help better pricing their tickets,” he said.
In his first year with the Giants, Qcue helped the team accurately price about five percent of the seats in the stadium, a move that led to an increase of $500,000 in year-over-year revenue for that same section. In 2010, Qcue will price the entire ballpark, all 41,503 seats, and Kahn said he expects an incremental uptick in team revenue.
“When you realize that season ticket holders occupy half of their stadium, it becomes apparent that we’re working with 10 times the inventory this year. I don’t think it’s unrealistic to expect a proportional increase of incremental revenue,” he said. “This is a multi-million dollar proposition to teams. Whether that is $1 million-$2 million or $5 million-$10 millions depends a lot on the team.”
Kahn charges subscription fees and a revenue sharing model for Qcue software, which is delivered to the customer via a web-application. After logging in, users are given access to a pricing dashboard, which provides real-time pricing recommendations for upcoming games, broken out by seating section. A ticketing professional can simply click to accept Qcue’s recommendations, or adjust one of the systems many pricing variables to bring prices up or down. Maybe the starting pitcher will draw more fans than the system recognizes. Maybe a once lousy opponent has heated up with a new trade or talent signing, and demand for the ticket could spike at any minute. The system gives box office professionals the ability to tweak Qcue’s algorithm and boost revenues.
“We created a map that allows teams to get more out of their ticketing systems,” Kahn said.
DIGONEX MAKES AN ENTRANCE
The Digonex team, led by Sandler and CEO Jim Eglen, made a splash in February when the Cleveland-based firm signed the Cleveland Cavaliers as the first team in the National Basketball Association to bring in an outside variable pricing consultant to help set their prices for the second half of the 2009/2010 season.
“In some reality, what the Cavs have within their Flash Seats component and the Veritix system is ideal for dynamic pricing and it seems like the logical place to start,” said Handler.
Elgen describes Digonex as a market-driven system that doesn’t use forecasting or predictive analytics as the primary driving force of their core technology, but instead looks at market conditions. The company has its own software platform, but works with venue clients in more of a consulting role, helping teams set prices in advance and on the fly.
“We’ve got a smart pricing solution and it learns as it goes,” Eglen said.
Digonex comes to the table stacked with big names. Eglen’s brother Jeff is a former partner at global management giant Accenture. Mike Wanchic, music director and band leader for John Mellencamp, will serve as VP of Digital.
“We’ve got about 25 people and everyone does what they have to to get the job done,” Eglen said.
By Dave Brooks
Venues Today - April Issue
REPORTING FROM LONG BEACH, CALIF. — It was the perfect puzzle for the 100 or so ticketing experts who had gathered at Tickets.com’s Executive Summary last February.
After five stellar, mostly sell-out seasons, the perennial Phoenix Suns found themselves in a bit a slump in the National Basketball Association. As John Walker, team VP of Business Development, explained, 2009 was the year the team traded away star Shaquille O’Neal and missed the playoffs. Renewal rates dipped from the high 90s to 60 percent at the beginning of the 2010/2011 season, and Walker realized he had a problem on his hands.
“Suddenly, I’m looking at 3,000 to 5,000 tickets per night that I had to sell, and some of these games were going to be difficult at their current price,” Walker said before the audience gathered for the presentation on Market Ticket Pricing he had been commissioned to moderate.
“I really don’t want to piss off season ticket holders by lowering prices on low demand tickets, but I will still have the high demand games as well. Whenever the Lakers come to town, the price of the tickets double and even triple, and there are plenty of people who will still pay for it.”
Walker said he will dynamically price his tickets for next season under a few simple principals. Low demand games will be priced cheaper — this will give the season ticket holder a little breathing space on resale. For more expensive seats, he will raise the value of the ticket.
For season ticket holders, the cost of season tickets won’t change much, since the lower priced tickets will offset the cost of the higher priced tickets in the package.
Had he just engaged in dynamic pricing? Perhaps, in its simplest form. The practice was a hot topic at this year’s International Ticketing Association (INTIX) conference and set the stage for a healthy discussion at Executive Summit.
But just what exactly does it mean to dynamically price one’s tickets? Is it simply a matter of more correctly pricing tickets for high and low demand games, or does it mean bringing on a software provider like Qcue to crunch the numbers to constantly find the most up-to-date prices?
Or does it mean bringing on a firm with industry staples like Harry Sandler of Digonex, a former Frontline Management executive, who helped bands like The Eagles make huge gains on their ticketing software?
In the next 12 to 24 months, ticketing professionals will continue to have new options for dynamically pricing their tickets: either on their own, or with a technology partner. Venues Today sat down with some of the industry’s top professionals to discuss their options.
WORKING WITH YOUR TICKETING PROVIDER
A dynamic pricing system is only as good as your ticketing company allows it to be.
“Our approach is really about partnering and technology enablement for all of our customers,” said Chief Commercial Officer Derek Palmer of Tickets.com “We’ve been involved with Qcue for several years and have worked with the San Francisco Giants and the Dallas Stars to find a way to add data to the algorithms that Qcue uses, which then provides pricing statistics and pricing recommendations that get placed back into the ticketing system,” Palmer said. “Our company could do the exact same integration with Digonex, although we’re not currently doing it.”
Palmer said the model for Tickets.com is to leave the dynamic pricing question to the client and integrate with the system the client chooses — some systems work better for concerts, while other’s are optimized for sports.
“The main thing as an organization is that you have to make a philosophical decision that this is something you want to implement,” Palmer said. “There will be serious changes, and once you’ve philosophically readied yourself, you bring in the folks who can help you in what you are trying to achieve.”
Palmer said technology should not be a buy-before-you-try proposition, especially when that technology affects serious revenue generators like ticket sales. There are a lot of incentives for early adopters to try out dynamic pricing solutions. Digonex said it offered several free trials of its system during its early phases.
“Organizations gain better intelligence to price their tickets more accurately the first time. This data that Digonex and Qcue bring to bear certainly helps any organization do that. Prior to these two organizations, teams had to mostly rely on historical data, in a more trial and error process,” Palmer said.
Using a dynamic pricing system allows you “to get a lot more elasticity from the ticket price and get closer to what true demand will actually pay,” he said.
QCUE CONTINUES FORWARD
Created by Barry Kahn and a team of economics grad students at the University of Texas, Qcue has gone from being a business contest winner to a major player in the dynamic ticketing space.
At 29, Kahn has helped his company usher in a number of venture capital infusions and state grants. He counts among his clients the San Francisco Giants and the Dallas Stars, along with a number of baseball teams which have yet to publicize their relationship with Qcue.
“There are certain teams out there who don’t want to make a big deal of the fact that they need help better pricing their tickets,” he said.
In his first year with the Giants, Qcue helped the team accurately price about five percent of the seats in the stadium, a move that led to an increase of $500,000 in year-over-year revenue for that same section. In 2010, Qcue will price the entire ballpark, all 41,503 seats, and Kahn said he expects an incremental uptick in team revenue.
“When you realize that season ticket holders occupy half of their stadium, it becomes apparent that we’re working with 10 times the inventory this year. I don’t think it’s unrealistic to expect a proportional increase of incremental revenue,” he said. “This is a multi-million dollar proposition to teams. Whether that is $1 million-$2 million or $5 million-$10 millions depends a lot on the team.”
Kahn charges subscription fees and a revenue sharing model for Qcue software, which is delivered to the customer via a web-application. After logging in, users are given access to a pricing dashboard, which provides real-time pricing recommendations for upcoming games, broken out by seating section. A ticketing professional can simply click to accept Qcue’s recommendations, or adjust one of the systems many pricing variables to bring prices up or down. Maybe the starting pitcher will draw more fans than the system recognizes. Maybe a once lousy opponent has heated up with a new trade or talent signing, and demand for the ticket could spike at any minute. The system gives box office professionals the ability to tweak Qcue’s algorithm and boost revenues.
“We created a map that allows teams to get more out of their ticketing systems,” Kahn said.
DIGONEX MAKES AN ENTRANCE
The Digonex team, led by Sandler and CEO Jim Eglen, made a splash in February when the Cleveland-based firm signed the Cleveland Cavaliers as the first team in the National Basketball Association to bring in an outside variable pricing consultant to help set their prices for the second half of the 2009/2010 season.
“In some reality, what the Cavs have within their Flash Seats component and the Veritix system is ideal for dynamic pricing and it seems like the logical place to start,” said Handler.
Elgen describes Digonex as a market-driven system that doesn’t use forecasting or predictive analytics as the primary driving force of their core technology, but instead looks at market conditions. The company has its own software platform, but works with venue clients in more of a consulting role, helping teams set prices in advance and on the fly.
“We’ve got a smart pricing solution and it learns as it goes,” Eglen said.
Digonex comes to the table stacked with big names. Eglen’s brother Jeff is a former partner at global management giant Accenture. Mike Wanchic, music director and band leader for John Mellencamp, will serve as VP of Digital.
“We’ve got about 25 people and everyone does what they have to to get the job done,” Eglen said.
Thursday, November 5, 2009
Austin Technology Incubator's Qcue Receives $1 Million Investment From State of Texas
The State of Texas has awarded $1,000,000 to Qcue, a member company of the Austin Technology Incubator, through the Texas Emerging Technology Fund (ETF). The investment was announced today at the Gulf Coast Regional Center of Innovation and Commercialization.
Qcue develops dynamic pricing software that helps sports and entertainment organizations adjust ticket prices to evolving market conditions. In early 2009, Major League Baseball’s San Francisco Giants became the first professional sports franchise to implement Qcue’s dynamic pricing solution. The success of the Giants’ dynamic pricing initiative has led to deals with other major league organizations, including a recent announcement with the National Hockey League’s Dallas Stars.
“This investment from the State of Texas makes a big statement about the positive impact innovative pricing strategies can have on consumers and local economies,” said Barry Kahn, CEO of Qcue. “We look forward to helping more organizations implement creative, cost-effective pricing strategies to get more fans out to ballparks and stadiums across the country.”
Qcue joined the Austin Technology Incubator in May 2008. “Qcue is what the Emerging Technology Fund is all about: taking innovation from the university environment and getting it into companies where it can have a breakthrough impact,” said Isaac Barchas, Director of The Austin Technology Incubator.
The ETF is a $200 million initiative created by the Texas Legislature in 2005. Qcue was awarded the funds after an in-depth analysis of the company’s market and financial opportunity, technology potential, management team and economic impact to Texas.
About Qcue
Qcue is reinventing the primary ticket marketplace with the world’s only dynamic pricing engine for live entertainment events. Sports teams, concert promoters and venues use Qcue ‘s patent-pending technology to set the right price at the right time and provide the best value for fans, from the date of on-sale to the date of the event. Customers and partners include the San Francisco Giants, Dallas Stars, Major League Baseball Advanced Media, and Tickets.com. Founded in 2007, Qcue is based in Austin, Texas. For more information on Qcue, visit www.qcue.net.
About The Austin Technology Incubator
The Austin Technology Incubator is a nonprofit unit of The University of Texas at Austin that harnesses business, government and academic resources to provide strategic counsel, operational guidance and infrastructure support to its member companies to help them transition from early stage ventures to successful technology businesses.
Since its founding in 1989, ATI has worked with over 200 companies, helping them raise close to $750 million in investor capital. ATI is a key program of the IC² Institute at The University of Texas at Austin. For more information, visit www.ati.utexas.edu.
About The Gulf Coast RCIC
HTC serves as the Gulf Coast Regional Center of Innovation and Commercialization (Gulf Coast RCIC) for Texas Governor Rick Perry’s Emerging Technology Fund, assisting small to mid-size technology firms expediting the commercialization of new life-changing inventions and improving research at Texas universities. To date, the Gulf Coast RCIC helped 16 Gulf Coast region companies raise nearly $15 million in grants from the Fund.
Qcue develops dynamic pricing software that helps sports and entertainment organizations adjust ticket prices to evolving market conditions. In early 2009, Major League Baseball’s San Francisco Giants became the first professional sports franchise to implement Qcue’s dynamic pricing solution. The success of the Giants’ dynamic pricing initiative has led to deals with other major league organizations, including a recent announcement with the National Hockey League’s Dallas Stars.
“This investment from the State of Texas makes a big statement about the positive impact innovative pricing strategies can have on consumers and local economies,” said Barry Kahn, CEO of Qcue. “We look forward to helping more organizations implement creative, cost-effective pricing strategies to get more fans out to ballparks and stadiums across the country.”
Qcue joined the Austin Technology Incubator in May 2008. “Qcue is what the Emerging Technology Fund is all about: taking innovation from the university environment and getting it into companies where it can have a breakthrough impact,” said Isaac Barchas, Director of The Austin Technology Incubator.
The ETF is a $200 million initiative created by the Texas Legislature in 2005. Qcue was awarded the funds after an in-depth analysis of the company’s market and financial opportunity, technology potential, management team and economic impact to Texas.
About Qcue
Qcue is reinventing the primary ticket marketplace with the world’s only dynamic pricing engine for live entertainment events. Sports teams, concert promoters and venues use Qcue ‘s patent-pending technology to set the right price at the right time and provide the best value for fans, from the date of on-sale to the date of the event. Customers and partners include the San Francisco Giants, Dallas Stars, Major League Baseball Advanced Media, and Tickets.com. Founded in 2007, Qcue is based in Austin, Texas. For more information on Qcue, visit www.qcue.net.
About The Austin Technology Incubator
The Austin Technology Incubator is a nonprofit unit of The University of Texas at Austin that harnesses business, government and academic resources to provide strategic counsel, operational guidance and infrastructure support to its member companies to help them transition from early stage ventures to successful technology businesses.
Since its founding in 1989, ATI has worked with over 200 companies, helping them raise close to $750 million in investor capital. ATI is a key program of the IC² Institute at The University of Texas at Austin. For more information, visit www.ati.utexas.edu.
About The Gulf Coast RCIC
HTC serves as the Gulf Coast Regional Center of Innovation and Commercialization (Gulf Coast RCIC) for Texas Governor Rick Perry’s Emerging Technology Fund, assisting small to mid-size technology firms expediting the commercialization of new life-changing inventions and improving research at Texas universities. To date, the Gulf Coast RCIC helped 16 Gulf Coast region companies raise nearly $15 million in grants from the Fund.
Monday, October 19, 2009
TicketNews Guest Commentary: The myths about dynamic pricing
By Barry Kahn
TicketNews.com
I was recently asked to be a panelist at the upcoming Ticket Summit 2010 and it made be think back to the last two Ticket Summit events that I’ve attended.
The first was the conference’s second year. Back then, Alfred Branch was the lone reporter for TicketNews, StubHub was the controversial young company, and there were only three representatives from the primary market (although once you consider that Fred Rosen was retired and Qcue was in its infancy, there was actually just one, Derek Palmer of Tickets.com).
Fast forward to this past July. StubHub’s president gave a keynote address, the New Jersey Nets had a booth, and Qcue was the controversial young company. In fact, our pricing panel stirred up such a healthy debate on what dynamic pricing really is and how it affects brokers and season ticket holders, that I thought it would be appropriate to revisit the three the biggest misconceptions raised during the discussion.
“With dynamic pricing, I won’t be able to resell my tickets for bad games since teams will just drop prices.”
What if I told you that prices are more likely to rise than fall over time, even for the worst games? Dynamic pricing is about being smarter with pricing, not just dynamic. That means that at the start of the season, a game played on Tuesday night against the last place team will start at a lower price than a game played on Saturday afternoon against your archrival. And there isn’t much that can happen to that Tuesday night game to make it worse. Sure it can rain, but barring that, prices will only move up as tickets sell and the game becomes, with any luck, better than it looked on paper.
You’ve always known that those games had different values because you could sell them for different prices -- but with dynamic pricing, you can’t pretend you paid the same price for them anymore, because you didn’t. Once you consider your real cost for those low value games, you’ll quickly realize that you can sell them at a fair price and dynamic pricing helps.
“I just found an interesting blog post about dynamic pricing for Giants tickets. For the first two games, it looks like ticket prices increased leading up to the game. Under the dynamic pricing model, don’t prices generally go down as the game approaches?”
If you track prices for tickets on StubHub or the other exchanges, you’ll see ticket prices drop immediately prior to an event. But dynamic pricing is very different from pricing on the secondary market. One element of this is that teams have more tickets to sell, meaning that they’re going to be more conservative with prices earlier in the sales cycle. As more tickets sell, and availability decreases, the prices leading up to a game will actually increase.
If you aren’t convinced that primary and secondary market pricing are different, take a look at group sales. Any team will gladly give you a discount for 25 tickets together because they have 20,000+ seats to sell and bigger sales are advantageous. But that same purchase on the secondary market will cost you a premium because for a broker, 25 seats together is a scarce commodity.
“Dynamic pricing is going to devalue my tickets. The team will just try to undercut me on the secondary market.”
Season ticket holders are the lifeblood of teams, and teams will always protect those loyal customers. Dynamic pricing brings more fans to the game, providing a better fan experience across the stadium, and increasing the resale value of tickets. More tickets sold also means more revenues for teams, which ultimately translates into lower costs for season ticket holders.
Dynamic pricing is really about teams being more intelligent and flexible with pricing – which means protecting your most loyal customers and increasing the value they receive. Increasing attendance and more accurately pricing premium games are two ways in which dynamic pricing achieves those goals.
Barry Kahn is the founder and CEO of Qcue, the world’s only dynamic pricing engine for live entertainment events. Sports teams, concert promoters and venues use Qcue’s patent-pending technology to set the right price at the right time, and provide the best value for fans, from the onsale date right up to the event date. Customers and partners include the San Francisco Giants, Major League Baseball and Tickets.com.
TicketNews.com
I was recently asked to be a panelist at the upcoming Ticket Summit 2010 and it made be think back to the last two Ticket Summit events that I’ve attended.
The first was the conference’s second year. Back then, Alfred Branch was the lone reporter for TicketNews, StubHub was the controversial young company, and there were only three representatives from the primary market (although once you consider that Fred Rosen was retired and Qcue was in its infancy, there was actually just one, Derek Palmer of Tickets.com).
Fast forward to this past July. StubHub’s president gave a keynote address, the New Jersey Nets had a booth, and Qcue was the controversial young company. In fact, our pricing panel stirred up such a healthy debate on what dynamic pricing really is and how it affects brokers and season ticket holders, that I thought it would be appropriate to revisit the three the biggest misconceptions raised during the discussion.
“With dynamic pricing, I won’t be able to resell my tickets for bad games since teams will just drop prices.”
What if I told you that prices are more likely to rise than fall over time, even for the worst games? Dynamic pricing is about being smarter with pricing, not just dynamic. That means that at the start of the season, a game played on Tuesday night against the last place team will start at a lower price than a game played on Saturday afternoon against your archrival. And there isn’t much that can happen to that Tuesday night game to make it worse. Sure it can rain, but barring that, prices will only move up as tickets sell and the game becomes, with any luck, better than it looked on paper.
You’ve always known that those games had different values because you could sell them for different prices -- but with dynamic pricing, you can’t pretend you paid the same price for them anymore, because you didn’t. Once you consider your real cost for those low value games, you’ll quickly realize that you can sell them at a fair price and dynamic pricing helps.
“I just found an interesting blog post about dynamic pricing for Giants tickets. For the first two games, it looks like ticket prices increased leading up to the game. Under the dynamic pricing model, don’t prices generally go down as the game approaches?”
If you track prices for tickets on StubHub or the other exchanges, you’ll see ticket prices drop immediately prior to an event. But dynamic pricing is very different from pricing on the secondary market. One element of this is that teams have more tickets to sell, meaning that they’re going to be more conservative with prices earlier in the sales cycle. As more tickets sell, and availability decreases, the prices leading up to a game will actually increase.
If you aren’t convinced that primary and secondary market pricing are different, take a look at group sales. Any team will gladly give you a discount for 25 tickets together because they have 20,000+ seats to sell and bigger sales are advantageous. But that same purchase on the secondary market will cost you a premium because for a broker, 25 seats together is a scarce commodity.
“Dynamic pricing is going to devalue my tickets. The team will just try to undercut me on the secondary market.”
Season ticket holders are the lifeblood of teams, and teams will always protect those loyal customers. Dynamic pricing brings more fans to the game, providing a better fan experience across the stadium, and increasing the resale value of tickets. More tickets sold also means more revenues for teams, which ultimately translates into lower costs for season ticket holders.
Dynamic pricing is really about teams being more intelligent and flexible with pricing – which means protecting your most loyal customers and increasing the value they receive. Increasing attendance and more accurately pricing premium games are two ways in which dynamic pricing achieves those goals.
Barry Kahn is the founder and CEO of Qcue, the world’s only dynamic pricing engine for live entertainment events. Sports teams, concert promoters and venues use Qcue’s patent-pending technology to set the right price at the right time, and provide the best value for fans, from the onsale date right up to the event date. Customers and partners include the San Francisco Giants, Major League Baseball and Tickets.com.
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