Wizard seeks to balance fan experience against costs, and looks to expand
Wizard World Comic Con returned to Philadelphia this past weekend, one of over a dozen pop culture fan fests the company plans to host around the U.S. this year. During the event, I spoke with Wizard Entertainment president and CEO John D. Maatta about the company’s current status and future plans.
Since taking the helm of the company three years ago, Maatta has sought to reduce expenses while bolstering revenues from the company’s live events. While the company has trimmed its operating losses in recent years, it still struggles to turn a profit consistently.
While Maatta sees great value in live entertainment, the former WB television executive also hopes to move the company into a broader array of media and entertainment products.
An edited version of our conversation follows.
It’s been a year since we last talked. How has the year been?
We’ve had a great year in many ways. We just finished producing the Ghostbusters event in the Sony lot this past weekend. And we have a lot of different business initiatives we’re working on. It’s been a jam-packed year.
But you’re still finding it challenging to get revenues to exceed the expenses of the live shows?
There are so many video images that we’re exposed to every day in the digital age — we get video all day long on our phones and a thousand channels on television — that the live event has become all the more important.
It’s going back to the campfire. As we’ve gotten more insular with our phones and our exposure to digital content, people want experiences. It’s a great time for live events. The major entertainment companies are looking to live events as a way to touch the fans.
When I have a meeting with somebody, I always say we could do this by Skype, we could do it by phone — but there’s nothing like a live experience.
Live events, one of the oldest forms of entertainment, is ascendant again. I was in Pompeii last year and I saw the coliseum there.
I hope a comic con hasn’t gotten as bad as a gladiatorial contest!
Not as bad. Romans had not [just] the gladiators, but a lot of plays and live entertainment.
Aren’t live events expensive relative to the revenue they generate?
There is a tension in producing live events cost effectively.
When we put on a live event, there is not a negative we’re buying. We’re not buying a two-million-dollar television pilot that, if it goes on the air, is going to endure for the rest of our lives. On Sunday night all this is going to be swept up.
Producers of live events just have to be judicious about how they produce the events and what kind of events are being produced.
How do you do that?
We’ve worked very, very hard. It’s a balance.
Celebrity costs are very high. You have to balance the fan experience against the cost. It does no good to have a huge top line, then have the middle of the P&L eviscerate the revenue, and you end up with nothing. A number of promoters around the country have learned that it’s a very exacting business.
Although you’ve reduced your operating deficit in recent years, you’re still negative in terms of costs exceeding revenue for the live events.
We were off the first quarter by $143,000. We’ve come so far in the last year.
There are two things for a company like this. There is corporate overhead, which we now are running very, very efficiently. And, then, in terms of each event being a different accounting unit, we’re running extremely efficiently as a company — and still producing huge entertainment value.
You’re also carrying some debt load that’s affecting your bottom line. Are there plans to address that?
There’s only one debenture, and that’s held by the chairman of the company. It’s not an obstacle to us but, at some point, we will take care of that. It’s a relatively small amount. That particular item will be taken care of and there will be no debt.
You mentioned one of your key cost factors is the price of celebrities. What’s that model? Do you pay them a flat rate or give them a guarantee against their revenues from autographs and photos?
The model is typically a minimum guarantee, but it’s often a huge amount.
A lot of shows effectively become autograph shows where fans come, wait in line, get autographs, and there is no other entertainment value. What we’ve tried to do in the last three years is have an experience that goes beyond photographs and autographs.
Celebrities are paid a minimum guarantee — an amount against what they will collect in revenue.
If they go over that amount, it doesn’t cost you anything; if they’re under, you make up the difference?
Correct. But because the minimum guarantees are so high, it often just becomes a pass-through of money. The promoter just takes money, passes it to the celebrity, and there’s no profit made.
At true autograph conventions, where there are only high-priced celebrities and no other entertainment, you’re paying such a high price for the celebrity, the ticket prices have to be high. I don’t think that’s a good model.
I think an all-around entertainment experience is really, really important.
When we talked a couple of years ago, you seemed focused primarily on middle-tier markets. This year, you’ve announced a show in Los Angeles and one in the Bay Area. What’s the plan in terms of that mix?
Very small markets are more challenging. There are a large number of middle markets in America that aren’t served by this kind of entertainment.
Every year we look all across the country at cities big, medium, and small, to look for opportunities. It’s not formulaic. It’s just pick and shovel work to try to figure out where there might be a desire for this kind of entertainment.
We’re doing mostly mid-market cities. Although this year we’re expanding to the Bay Area, as you mentioned, because a show left, and I think there could be an opportunity there.
Earlier you mentioned other entertainment activities. Last year, we discussed your plans to move beyond live events to include media development. What’s happening there?
This is just a great platform and we have a huge amount of fan support. But, for a business like this, it would be optimal to have an adjunct that creates content that would endure after the shows are over. It’s a natural adjunct to what we’re doing.
Companies such as comic book publishers have intellectual property that might work well in other forms. You don’t really have that. Where would you get the content to expand along these lines?
As you probably know, we filed an S-1 registration statement. We’re looking for partners in M&A activity. The content would probably come through an acquisition, and we would move more broadly in entertainment to have the live piece and also the content production piece. I’m not saying it’s going to work out. It’s something we’re looking at. That was my background — television production. So, I’m interested in that.
Live events are fantastic. A natural adjunct to it is the creation of broad-based entertainment.
Are you looking at a comic book publisher or a small indie press as a potential acquisition?
Complementary businesses would be entities engaged in production already: television, motion pictures, comic books, companies involved in other live events would be a natural companion. Those are the kinds of things we’re looking at. It’s not easy to find the right combination.
In terms of the convention itself, as I said, I think the live event space is vibrant, and I’m really pleased in the direction we’ve taken.
As you’ve pointed out, the balance is to create an ecosystem that is sustainable in terms of the costs versus support that we get in revenue.
I think we’re succeeding in that. We’re growing. We’ll have more shows next year. Our plan is to go to 20, 21 shows next year. I think a show every three weeks or so is the right amount.
What else should we expect in the future from Wizard Entertainment?
We have a huge amount going on in terms of the company — things that are visible at the shows and things we’re working on. It’s been an exciting time.
I think there’s demand for this kind of entertainment, and the trick is to get the balance right between what was a traditional comic con, which morphed into an autograph show, and now to morph into a more generalized festival with music and the core of comics and cosplay. But, also, to have a more robust kind of entertainment. And that’s what we’re trying to do.