Investing In Entertainment?

The business of entertaining the masses has certainly changed over the years. So much emphasis has been placed on other ventures (crypto, tech, etc.) that one very lucrative sector has slipped by almost unnoticed. Who knew that Live Entertainment was such a lucrative venture? Only the savvy investors have looked beyond the "usual suspects" and found opportunities in entertainment investing.

It seems that the real benefits of investing in the performing arts these days come from the artist's ability to "perform live". The artist that has not only built an audience, but has the ability to "sustain" their fan base via live performance appears to be the secret to success. Let's look at Wall Street for some clarity. LiveNation (LYV), the world's largest live entertainment entity, quietly posted $10.4 Billion in revenues for 2017 according to Billboard - that's even after a 4th quarter plagued by lawsuits (they allegedly went awry on a streaming venture with Songkick). That's an almost 24% increase over prior year.

The amazing thing is that no other company in the sector comes even a close second. This is a clear indication that the opportunity exists for disruption. In addition, the Live Nation model is focused on larger, more prominent artists such as Taylor Swift, Jay-Z, Beyonce` and The Rolling Stones; however, there are thousands of other smaller acts and genres that would generate a very lucrative return - without as much overhead and expense, that don't even hit their radar. For the sake of reference, the Jay-Z and Beyonce "On the Run" tour, as of August, 2018 has earned $150 million dollars (USD).

Companies such as W G Entertainment Group, LLC are more conservative, have less overhead and their productions are not as elaborate. In addition to ticket sales, they enhance their revenue streams by partnering with various brands to tastefully bring under-marketed products to their audiences - worldwide. By 2023, they project that they will (conservatively) generate roughly $870 million in net revenue. A much smaller piece of the pie, but more than enough to share. They simply leverage part of their performance space to promote high-end consumer goods and services to their audiences via sponsored "green room" and post-performance meet and greets. Their experiential audiences are affluent and more likely to make a purchase decision based on the programming choices. Depending on the arrangement, a single brand could benefit from having their products and services marketed via multiple artists social media and web outlets - at a fraction of the cost of a traditional marketing campaign.

This is a perfect opportunity for private equity firms and holding companies that have brands that are not quite ready for a 30-second "Super-bowl Sunday" ad spot to introduce their products and services to consumers. "We have the the benefit of working with some of the best musicians in the world. These are veteran artists that have toured extensively and have presented live events all over the world for more than 20 years. They each have a track record of professionalism and artistic excellence" says W G Entertainment CEO, Ed Lovell Grace.

If the concept is so simple, one has to wonder why more investors are not taking advantage of this opportunity. Well, it appears that most investors simply are not aware, whereas others, are just not comfortable stepping "out of the box" and into to uncharted territory.

And then there are even more that have an established formula and are unwilling to break tradition - even at the risk of losing money. The irony is that the very concept of investing is taking a risk. I've heard it said that "to be unwilling to take a risk is the same as saying I don't want to play the game". A wise man once said "you can't win - if you don't play". Although the most savvy of investor may take every precaution to mitigate risk, the tightest of grip on the "tech and crypto glass" has failed; the glass still slipped from their fingers. Try something new - or keep sweeping up broken glass?

There is a story circulating that I thought personified the determined tech investor perfectly:

Instructor: "This is the 15th time you have hit the ball in the water - perhaps golf is not your game"

Student: "This is the only game I know"

Instructor: "If you can't keep the ball out of the water, perhaps you don't know the game as well as you think!"

The US Live Entertainment Market is estimated to be at $18.3 Billion Dollars in 2017 -up from $17.2 in 2016 (according to selectusa). The trend of a 25% year over year increase is projected to continue at least through 2021; so the question becomes will investors take advantage of the opportunity or will Live Nation continue to "run the table" on live entertainment and retain all the spoils for themselves?