While the outlook for the live events production industry remains positive, Middle East-based promoters, event managers and rental companies have voiced concerns about the current challenges facing their businesses.
S&Sspoke to some of the local industry’s leading lights about their plans to address these and other issues in 2009.
Thomas Ovesen, managing director of the Middle East arm of entertainment production giant AEG Live
What steps, if any, is AEG taking to adapt its business in light of the current economic downturn?
The industry here consists of a mix of large and small operators with different agendas.
I can only speculate as to how other operators will approach the current economic downturn, but from our perspective, we plan to implement a ’buy smart’ philosophy rather than reducing the number of events we do.
While we might face issues with ticket sales and envisage that the high ticket prices will have to come down we should also try to use this situation to get our suppliers back in check and perhaps we can make ends meet that way.
Can you foresee the possibility of promoters pulling resources together and working in collaboration (to an extent) given the challenging circumstances?
I wouldn’t rule out that some smaller operators may align themselves with some of the more established companies, as even the bigger companies will have to look at smaller jobs they may have dismissed in the past as not feasible.
How important are audience numbers in this mix?
Ensuring audience numbers remain high is not a goal in itself, but making a profit is. Therefore, I think we will be more critical when assessing large scale events and artist fees, while smaller events, and in particular a higher frequency of smaller events, could be a good way to offset a couple of bigger more risky events. I’m sure there will be an even longer queue of promoters trying to do business with the few government entities still investing in live music events in the region – safe commission-based business or talent brokerage might be seen as the saviour for some operators that are living on margins.
What type of events do you expect to bring to market in 2009?
In a weakened market more commercial and ‘safe’ events remain the best bet. However, that is pretty much how we have operated up until now, so I think you will see a few operators cutting back on events in general, trying to sell their services to government entities instead of risking their own monies, while others will plan on smaller events than usual. I think AEG will do both, while still promoting some of the iconic top artists that we have touring in other parts of the world.
Do you think the formation of an industry lobby group would help in promoting transparency?
I don’t think we need an industry body to achieve this. However, we could do with a united front when dealing with the local rules and regulations, local legislation or lack of the same and the way our industry, if regulated by the authorities, would allow us to get more organised pricing and quality levels with suppliers and so on.
How do plan to tackle the escalating cost of sourcing and renting equipment?
In the past we have had to live with suppliers charging what they want simply because they can. Now that suppliers will be struggling to maintain their 2007-2008 level of business, it’s time for us as an industry to reverse that trend and force prices down. The suppliers that have maintained their support will of course still benefit from loyal business bookings, but I think a lot of changes will happen regarding key industry suppliers within the sound, lighting and logistical services sector.
What new ventures does AEG plan to invest in this year?
AEG will be buying smart when it comes to events and acquisitions. In regards to staff, we now have a unique opportunity to put together the best possible team and come out of the downturn even stronger than we were before.
Is AEG keen to establish permanent venues in the Middle East?
We do have plans, but as to what we will need to wait and see what materialises and how many of the alleged future venue owners will be able to proceed with their projects. AEG is the leading arena management company globally, so I would be surprised if we were not involved with some form of arena project within the coming few years.
Do you think local promoters can pull resources together and work in collaboration (to an extent) to ensure the longevity of the live events market in the region?
There are international organisations, such as the International Festivals and Events Association, which is based in the UAE for this specific reason.
I also noticed such collaboration in 2008, with organisers asking others to organise their VIP areas and so on. Why not? We are not many, so why not help each other?
Promoters can’t forget that we are all in competition with each other, but competition is good for the audience as it promotes content diversity and so on.
How will you diversify the level and type of content you bring to, or promote in the region to ensure that audience numbers are kept high?
As we organise festivals it enables us with the opportunity to create new on-site activities to attract all ages and types of event goers. At last year’s Desert Rock we hosted the world premiere of the suspended bar, in addition to the Infusion dance tent and the arts and crafts area for children.
At the Back 2 School festival we included games like ‘dunk the teacher’ and at the Urban Desert festival we had graffiti walls, a fake tattoo parlour and so on. Other services, including free bus shuttles are always appreciated and are an extra value-added benefit to increase ticket sales.
Regarding promotions, we have just revamped Desert Rock’s festival’s image with the help of TBWA/RAAD and Christian Scheurer, the designer behind the Matrix and Final Fantasy.
So far it’s generated a lot of buzz online since we revealed the artwork in January, and we are waiting to see if this approach helps us reach-out to new audiences.
What type of shows and performers can we expect to see come to the region in 2009? Where is the market demand coming from?
From our side, the market demand is coming from Desert Rock’s metal fans. Every day, we receive dozens of e-mails requesting for particular rock bands and we keep a record of them to ensure we are keeping-up with these trends.
How will you tackle, or trim down the growing rate of operational and rental costs from your local business partners?
We started to contract production jobs to companies outside of Dubai in 2008 and will continue doing so in 2009.
Even with having to pay the shipping and travel costs for the staff, the rate of operational and rental costs still remains more cost effective than to for us to use companies in Dubai, and also more professional, with better quality products and services.
What new ventures will CSM look to invest in through 2009 and beyond?
In 2008, we organised two festivals in South Africa. This year, we are branching out into Hollywood under the name of Scorpio International, which will specialise in music, reality TV and movies.
In the UAE, CSM will continue its event organisation. The end of 2009 will mark CSM’s 10th anniversary, so diversifying seems like a natural thing to do at this moment.
Why? Free markets don’t encourage this, and the market is set either by the client or consumer demand rather than the actions of the promoter, and certainly not by the rental company.
Do you think the formation of an industry lobby group would help in promoting transparency?
This is always a good idea and has been tried locally since 1996, but has proven to be difficult to introduce. Now there are several organisations attempting to do this, which makes it less likely to be a representative body – as a result, confidence is low.
How do you think the local promoters and rental companies are placed to deal with the current economic challenges?
Rental companies that are carrying medium to heavy debt ratios and have not already made the investment in owned premises will find the going particularly tough – these fixed costs will be onerous as it will restrict the company’s ability to adapt its client portfolio and will also result in the failure to maintain imperative technological investments.
What new ventures is Gearhouse looking to invest in through 2009 and beyond?
Gearhouse will move forward with the development of HD production offerings, in conjunction with digital transfer technologies to further push the quality of production levels in the region.
Given the costs of overheads, will you still be focusing your attention on the Dubai/Abu Dhabi market or looking to expand further into the greater Middle East region to create new revenue streams?
Sixty percent of our business happens outside the UAE and this diversity will assist us should the country’s economic downturn become significant.
To date the industry has not yet been too affected by the downturn and it appears most industry players are enjoying decent revenue flows.
It’s critical that pricing remains at a sensible level to encourage further investment, while not encouraging further debt.
Dropping pricing to win business is short term and never produces the right results.
What are the key challenges facing your business at the moment?
Organisers want set up times to be reduced as they generally pay per day for the venue and therefore want the work done in the shortest time possible.
This is not unreasonable, but there are limits to what can be achieved in certain timeframes. More problems occur when venue organisers book shows too close together without due consideration for the timescales involved in erecting and dismantling temporary stages and supporting site structures.
We have seen substantial growth in the events industry over the last few years and dealing with multiple events on the same weekend for example has become the norm rather than the exception.
How can the main issues be addressed in your view?
They can be dealt with by improving the planning of some events and getting decisions made sooner. As a supplier investing in equipment, these initiatives will help speed-up the build times and enable suppliers to have bigger stocks of equipment available to cater for simultaneous events.
What do you make of the lack of permanent large-scale venues available in the region?
The industry would definitely benefit from the establishment of a permanent venue. Somewhere that could house some temporary infrastructure.
A theatre-type production does not suit a large open space and large concerts do not fit in to constrained spaces. The type of production and layout varies enormously from one event to the other.
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