Is the era of the mega-fest dead?

We’re deep into the COVID-19 crises and it’s natural to wonder what things will look like on the other side.  Event professionals are struggling with a completely decimated industry and are looking towards the long road of rebuilding ahead of them.  So what lies ahead?

First a quick caveat – I don’t normally like to make predictions since it usually amounts to guesswork. All things considered, it’s way more important to be nimble regardless of where things go rather than try to plan for an uncertain future.  So take any predictions with a grain of salt.  Also, this is a US-centric view, so things might be different around the world.

But now that that’s out of the way, here goes nothing:

MY PREDICTION: the Big festival era Is over.

Some of the established ones like Coachella and Bonnaroo will, of course, keep going.  They are well run (for the most part), have a highly regarded brand, and money in the bank.  There may still be rough waters ahead for them but are positioned relatively well to pick things back up in 2021 or 2022.

But we’re not going to see a new mega-festival like those pop up for a long time, even after the COVID-19 crisis is long behind us.

There are a few reasons why that’s the case. Let’s dive in:

1. The Economic recovery won’t allow for it

There’s been a lot of discussion about how the economy is going to rebound after the coronavirus crises.

Early evidence is uncovering a recovery described as “K-shaped”.  Put simply, this means there’s going to be winners and losers as we head into the new economy.  The rich feel little effects from the crash and are actually able to increase their wealth (this is the upward slope of the K).  The rest of us are disproportionally hurt from the COVID-19 fallout and will experience lasting effects (the downward slope of the K).

What does this mean for festivals?  Well, it’s not good.  The demographic makeup of a large festival is exactly the people most affected by a depressed economy.  This will have a ripple effect for a long time. When looking at countries that are further along in their recovery efforts, discretionary spending is down by up to 59% for large purchases.

This effect will be especially felt by events, which have significant other headwinds they are facing as well.  It will be even more critical to understand your audience’s circumstances and price your festival accordingly.

» Read More: How to Price An Event.

In most cases, this all means that price sensitivity goes up and your ticket prices will have to go down.  However, there can be several creative opportunities that open up.    I believe there will be room for high-dollar, highly-curated smaller events that capitalize on the upward slope of the K — the people who actually did better during the COVID-19 recession.    Knowing that some have more disposable income than ever before opens the door for events where everyone is a VIP and I think we’ll see more of that in the future.

2. The residual effects After Coronavirus

We’re in this for the long-haul.  There is considerable data suggesting that the coronavirus virus doesn’t end with the vaccine.  We need as much as 70% of the population to be immune, either through vaccination or by getting COVID-19, before we reach herd immunity.  Some predict we’ll be well into 2021 before that happens.

Public health standards will be on the mind and being in a large crowd will ‘feel wrong’ for a while after.

Even after we’ve reached that point, the reality is that consumer behavior will have changed permanently.  Public health standards will be on the mind and being in a large crowd will ‘feel wrong’ for a while after.

This is something future events have to take into account during their planning period.  While flushable port-o-potties are the envy of every event producer (and they legit are amazing) we’re going to have to go well beyond that to show attention to cleanliness moving forward.  And even beyond site ops, your public health and safety communication strategy will have to be highly effective or you risk losing a significant amount of sales.

The issue with massive festivals is that crowds are unavoidable and any sort of crowd control/management solution is likely ineffective at scale.  Even with a foolproof plan, the optics will matter regardless of the actual risk of infection.  That’s going to be an uphill battle for any massive events and a major deterrent from starting one for the foreseeable future.

3. it was happening anyway

If you look at where the American festival industry was heading as a whole, the trend away from mega-events is apparent.  In order to understand why that was happening you have to look at the economics of it all.

Festivals are very cash-intensive.  You need a lot of money to pay for artist deposits, marketing expenses, staffing and vendors, infrastructure costs, and much more.  Historically, investors paid the initial cash outlay to get going.  As the event approached, ticket sales would increase and you would be able to use that revenue to pay the remainder of your expenses.  Although it is a risky model to operate under, investors were happy to take on that additional risk due to festivals being a high cashflow and ‘sexy’ business.

Younger festivals are especially susceptible to high risk since they typically don’t make any profit for the first 4-5 years.  Revenue rarely surpasses its expenses until it has brand equity, a loyal fanbase, streamlined operations, and preferred vendor and artist rates.

While it could take years to get there, once an event achieves that level, the profit-margin grows significantly and everyone makes their money.  Or at least that’s the theory.

Although this is how we got many of the best festivals today, the business model usually doesn’t work anymore.  Over time more events started popping up, which meant more competition in the market.  More competition led to decreased ticket sales and increased artist and vendor rates.  Revenue started shrinking, while expenses kept going up.  Things got riskier and the private equity flowing in started drying up.

All this resulted in the festival bubble popping and a new type of model emerging.  In this new type of event, producers were more conservative with their money, opting to slowly build organically over many years.  They also started relying less on star-studded lineups and more on the overall experience, which required less cash to get off the ground.  These smaller events naturally grew out of a newly risk-averse environment and are paving the way for the future.

So even taking COVID-19 out of the equation entirely, the risk profile of launching a new large festival is too high for investors.  We were heading to a future where fewer mega-festivals exist simply because it wasn’t a viable business model anymore.

What lies ahead

So, what does this all mean for the festival industry?  Ultimately, events aren’t going anywhere.  The need for us to gather, share experiences, and celebrate together are the building blocks of culture and it’s innate to us.

However, what we will see is the end of the massive festival and the faster adoption of smaller, curated ones.

I hope we can start rebuilding our industry within the context of this new era. Many of the incredibly talented people behind-the-scenes will shift to working these smaller events and this will bring a new level of professionalism, polish, and craft to them.  The creativity behind them will increase immensely as the formula for music festivals is applied to hybrid events that blend multiple industries (shout-out to Gridlife for an expert blend of motorsports and music).

Experience will become the new currency rather than how many artists you can fit on the bill.

The goods news in all this: If I’m optimistic about anything these days, it’s that our industry can deliver a top-notch experience better than anyone else on the planet, so hopefully we’ll be swimming in this new currency.