The year 2023 has been marked by high inflation rates, affecting the prices of various goods and services. However, one sector that has seen a particularly sharp increase is the entertainment industry, where live events such as concerts, sports, and museums are becoming more expensive than ever. This phenomenon, dubbed as ‘funflation’, is driven by several factors, such as pent-up demand, limited supply, rising costs, and changing consumer preferences.
Pent-up Demand for Live Experiences
One of the main reasons behind the surge in live event prices is the pent-up demand for live experiences, especially after the Covid-19 pandemic. Many people who were stuck at home for months or years are eager to go out and enjoy themselves, creating a high demand for tickets. According to the U.S. Bureau of Economic Analysis, U.S. consumers will likely spend $95 billion this year on tickets for concerts, movies and sporting events, up 23% from all of last year, and 12.5% greater than the $84.4 billion spent on the same entertainments in the pre-pandemic year of 2019.
Some of the most popular live events in 2023 include the tours of Billie Eilish, Coldplay, Justin Bieber, John Mayer and the Weeknd, as well as the NBA, NHL, and NFL games. These events are attracting huge crowds, and often selling out in minutes. For example, the average ticket for an NFL match up, not including playoff games, costs roughly $151, according to SeatGeek data. However, in the secondary market, where many of these tickets are bought and sold, the average resale price per ticket jumped roughly 28% for sporting events and about 45% for concerts since the start of the pandemic. The average resale price of an NFL ticket, for example, rose to $237 from $198.
Limited Supply and Rising Costs
Another factor that contributes to the high prices of live events is the limited supply and rising costs of hosting them. Due to the pandemic, many venues, artists, and teams had to cancel or postpone their events, resulting in a loss of revenue and a backlog of scheduled shows. Moreover, many venues have reduced their capacity or implemented safety measures, such as social distancing, masks, or vaccination requirements, to comply with the health guidelines and regulations. These factors limit the number of tickets available for sale, and create a scarcity effect, driving up the prices.
Additionally, the costs of producing and delivering live events have also increased, due to the inflationary pressures on various inputs, such as labor, food, transportation, and equipment. For instance, restaurants, which have been under pressure since the very start of the pandemic, are charging more for meals to combat ongoing staffing challenges and higher food costs. Most have had to raise wages to attract workers on top of paying more for ingredients and that means menu prices look a little different now. Overall, the cost of eating out rose 6% over the last year, also the highest jump since 1982, according to the U.S. Department of Labor. Similarly, gas prices, alone, are up a whopping 58.1% over the past year, and that’s just to get to where you are going. These rising costs are passed on to the consumers, who have to pay more for their tickets, food, drinks, parking, and merchandise.
Changing Consumer Preferences
A third factor that influences the prices of live events is the changing consumer preferences, especially among the younger generations. According to a report by Eventbrite, 78% of millennials prefer to spend money on experiences rather than things, and 69% believe that attending live events makes them feel more connected to other people, the community, and the world. These preferences reflect the value that consumers place on live events, and their willingness to pay more for them.
Furthermore, consumers are also becoming more selective and discerning about the quality and uniqueness of the live events they attend. They are looking for more personalized, immersive, and interactive experiences, that cater to their interests, passions, and values. For example, some consumers are willing to pay extra for VIP packages, meet-and-greets, backstage tours, or exclusive merchandise, that enhance their enjoyment and satisfaction. Others are seeking out niche or alternative events, such as festivals, comedy shows, podcasts, or esports, that offer them something different and memorable. These trends indicate that consumers are not only paying more for live events, but also expecting more from them.
The Future of Live Events
The rise of ‘funflation’ poses both opportunities and challenges for the entertainment industry, as well as the consumers. On one hand, it shows that there is a strong and growing demand for live events, and that consumers are willing to pay a premium for them. This could encourage more innovation, creativity, and diversity in the live event market, and create more value for both the producers and the consumers. On the other hand, it also raises the question of affordability and accessibility, and whether live events are becoming too expensive or exclusive for some segments of the population. This could create a gap between the haves and the have-nots, and undermine the social and cultural benefits of live events.
The future of live events will depend on how the industry and the consumers adapt to the changing market conditions, and how they balance the trade-offs between price and quality, supply and demand, and exclusivity and inclusivity. As the world recovers from the pandemic, and the economy stabilizes, live events will continue to be an important and enjoyable part of our lives, but they may also require more planning, budgeting, and prioritizing than before.
