NEW YORK — Strong spending by consumers has been a linchpin keeping the U.S. economy out of a recession, and Vivid Seats CEO Stan Chia doesn’t see demand in his industry falling off.
He says customers are still using Vivid Seats to find tickets to concerts, sporting events and the theater even if interest rates are high and sentiment surveys show shoppers say they’re feeling nervous. Vivid Seats’ marketplace allows people to buy and sell their tickets to live events.
Chia said he believes the explosion of pent-up demand for entertainment outside the house following the pandemic has burned out, and trends have returned more to normal. The conversation has been edited for length and clarity.
Vivid Seats’ marketplace allows people to buy and sell their tickets to live events, and CEO Stan Chia doesn’t see demand in his industry falling off in spite of economic worries.
Q: It seems like the economy is riding on whether U.S. consumers can keep spending. How do you see the state of the consumer today?
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A: I think what we can certainly see in our category is live events continues to be one that consumers are prioritizing in their discretionary income.
This category, while it is discretionary by definition, doesn’t behave like others, like buying a new TV. You don’t really think about buying a new TV in the same way as whether you’re going to a Guns N’ Roses concert.
We are now past any point of potential pent-up demand release. What we’re really into is secular trends of the industry that really drive it forward. I think about where the generational priority is on spending. If you think about Gen Z, as they come into purchasing power they have prioritized experiences over goods and services.
You’ve got folks like myself — the Guns N’ Roses references shows I’m a geriatric millennial — I’ve certainly got a little more money than I did 20 years ago, and the bands that I love are touring, and I love the opportunity to go see that.
Q: Can you go back to the idea of pent-up demand? This is no longer just people hungry to go to live events again for the first time after the pandemic shutdowns?
A: Where we fit as marketplace for live events, we are a great barometer for how much demand exceeds supply.
If you go back to maybe 2021, the second half of that year through the first half of 2022, you could look at where our average order size was relative to 2019, for example, and you saw really, really big jumps. That’s where you saw pent-up demand being released. Numerically, just fantastic growth of that magnitude, that’s clearly driven by pent-up demand
In the second half of 2022 and now in 2023, if you were to plot that line, we’re right back on the industry line. The consumer demand is past pent-up demand.
Q: So what do you make of all these surveys where consumers say they’re worried? When will they stop spending?
A: I certainly read and see all the things out there about the strength of the consumer and where sentiment is, but in this category, we’ve continued to see strength.
We’re headquartered in Chicago, Illinois, and the example I like to give, which unfortunately is not going to be true this year, is if the Bears go to the Super Bowl, you’re going to see a lot of fans who want to go to that event. This category in particular has that FOMO-esque truth to it. That’s what continues to drive consumer purchasing.
Q: Are you seeing any differences in consumer behavior? Are football fans spending more than baseball fans? Concert goers in high-income ZIP codes versus lower-income ones?
A: I think fandom just traverses all categories and all demographics. You’ve got a very consistent level of intensity whether you’re talking about sports fans, concert fans, theater fans, comedy fans, down to the team level.
Q: Are you worried that this year’s strength for concerts may be because of a couple of high-profile performers like Beyonce and Taylor Swift? Will next year be a regression to the mean?
A: Taylor Swift and Beyonce are phenomenal artists and performers. We’re just so privileged to see them put on amazing shows this year. I think the beauty of the category is there are always amazing artists out there on tour. We’re in the fourth quarter of the year now, we’re excited to hear about the major acts that are going to be playing next year. We just heard Foo Fighters are going on tour next summer.
Q: Does it bother you that one of the first search-engine results for your company is: Is it safe to buy on Vivid Seats?
A: No. Until we become a household name, and we are on our way there, you’re always going to look and see who is this company. You’ll find we are an award-winning customer service company with a 100% buyer guarantee and a rewards program.
Q: There’s a big pushback by customers against fees getting added at the last screen of a transaction online. Any possibility Vivid Seats will show prices including all fees at the first instance?
A: We are so supportive of all efforts and all legislation that drive transparency in all industries. We’re going to continue to be very supportive of a competitive playing field.
We understand that consumers are looking for value in what they purchase, and I think when you look at what we do — where customers who buy 10 tickets get one (more through a reward credit) — we put our money where the mouth is.
How much do Americans spend on entertainment?
Entertainment ranks #6 on the list of where Americans spend most of their money
Interestingly, despite the radical changes caused by the pandemic, entertainment’s place in household spending has remained. From 2018 to 2021, the spending breakdown of households has remained remarkably stable. Housing expense always tops the list, making up more than 30% of annual spending. There was, however, a marked increase in share in 2020, when housing costs climbed to 34.9% share of household expenses, up from 32.8% the previous two years.
Transportation always comes second, followed by food, personal insurance and pensions, health care, and then entertainment. The spending categories’ seemingly immovable rankings just show the adage certainly holds—the more things change, the more things stay the same.
People’s spending on entertainment took a dip in the first year of the pandemic but has since rebounded
The pandemic changed the way the world operated on a global and individual level. In the beginning, stay-at-home orders affected spending in retail and entertainment venues. As more people also work remotely, transportation expenses also decreased. By the fall of 2021, Deloitte reported that 84% of consumers were spending more time on online entertainment at home rather than going out. Deloitte also noted that streaming services enjoyed a 21% increase in subscribers in the first half of 2021.
As the country adapted to a new normal in 2021, entertainment expenditures rebounded, increasing by 22.7% in 2021. Entertainment expenses made up 5.3% of a household’s budget, the same level it had been in 2018. Entertainment spending was driven by a 60.6% increase in entertainment supplies and equipment, including buying and renting recreational vehicles. The second-largest bump in entertainment was in fees and admissions (for things like movies, plays, and theme parks) at 53.9%.
Pets, toys, hobbies, and buying playground equipment was a popular spending category
The average spending on entertainment in 2021 was $3,568, of which $969 was used for pets, toys, hobbies, and playground equipment. It is apparent that more people were looking for creature comforts during the pandemic, as a Forbes Advisor survey of 2,000 adults revealed that 39% became pet owners in 2021 and 23% in 2022. More people also discovered or rekindled interests such as drawing, writing handwritten notes, and gardening.
Most telling, only an average of $654 was spent on fees and admissions. Before the pandemic, fees and admissions represented 28.5% of the total entertainment expenditure, while in 2021, it only represented 18.3%.
Married couples without children spent the most on entertainment
In the pandemic, married couples without children spent the most on entertainment, using 6.2% of their household budget. A lack of child care expenses means an influx of joint discretionary income and leisure time to enjoy it. The survey did reveal that married couples with children weren’t too far behind, spending 5.8% of their household income on entertainment.
