Art and Culture Business Model

1. Where is the production risk higher-in Opera or the film industry ? What make you think so?

As a first approach, one could think that both industries face a lot of similar risks as they both relate to art industry:

 First, if we refer to the Maslow pyramid, art is not a need of first necessity, as a result, this industries are highly sensitive to economic situation. Ultimately, attendance in both cases is vulnerable to incomes, unemployment rate, and morale.

 In addition, they both share the nobody knows principle: uncertainty is a common feature. There is no simple formula for success, revenue forecast seems like an impossible mission because at the end it is always the audience who makes a movie hit or an opera success. A movie or an opera success will depend on a great array of factors: the weather, the political situation or the social spirit of the period of time, other movies displayed concurrently, opera or entertainment exhibition taking place at the same time...

 Moreover, the Motley crew principle is also valid in both cases , coordination appears as key concern and a core competencies for opera of film producers . They all have to put together disparate assets which creates an "edifice complex": Opera and Movie involve more than 125 professions from technical staff, artists to administrative crew: A single weak actor can endanger the whole production. The operational risk is very high in both cases as it relies on many individuals. The personality of producers has also a crucial impact on the final result.

 Finally, in both cases, each production is unique and new which creates uncertainty and rises the amount of risk.

However, despite these similarities, these two businesses have a lot of differences which impact the nature and amount of risk. At the end of the day, I would say that movie industry seems more risky given the amount at stake, the extremely high level of variance in revenues, the competition and the difficulty of predicting outcomes for individual movies.

 Opera Production has many specific risks due to the characteristics of this art. For instance, artistic risk is high given the "live" aspect: it is difficult to have back up plan in case of last minute dismissal or failure of a key performer. Regarding finance, Return on Investment is limited by ticket sales revenues based on restricted scenes and seats, as a result, it is really difficult to reach strong profitability in this industry. On the other hand, the business model facilitates mitigation of financial risk: additional funds (donors, contributions or subsidies) secure revenue stream: Financial return is less conditioned by artistic success! In addition, many operas are sold before their creation, which once again mitigate the level of risk. Finally, efficient securing technics can ensure a minimum level of attendance and revenues: tickets sold in advance for the whole season, a traditional repertory gives an insurance of audience given the social composition of public (old and conservative)...As a conclusion, Opera production remains a risky and not easy profitable business but enjoys some securing environment combined with a better predictability.

 On the contrary, movie production appears to be much more volatile and hazardous : there is no typical movie because box office revenues do not converge to an average! All business requires guessing but prediction of moviegoers

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