The Impact of Social Media Activities in Theater Demand

It is well known how theatre performances, as experiential goods, are subject to the ”nobody knows” property (Caves, 2000) which leads to uncertainty in theatre demand. As such, many studies on theatre demand have included subjective quality indicators, like professional reviews or friends and relatives’ evaluations (word-of-mouth mechanisms), in order to correct a prior misspecification of the theatre demand equation. Following this stream of literature, this paper considers an emerging source of information, which is the elec-tronic word of mouth provided by social media. Compared to conventional word of mouth mechanism, social media are endowed with desirable features that may reduce the uncertainty brought by the ”nobody knows” property, as they propagate an enormous, enduring and in real time amount of infor-mation and opinions. This paper aims to test the potentiality of social media in understanding theatre demand. We do this by combining booking data for the period 2010-2016 from the sale system of the Royal Danish Theatre with volumetric data extracted by the oÿcial Facebook page of the theatre. In particular, we take into account the double role of the feedback provide by so-cial media (in terms of likes and comments), looking at two perspectives. The first one considers the distinction between the predictor and influencer role of the eWOM, whereas the second perspective pertains to the interdependent relationship between eWOM and total audience. These different perspectives are analyzed respectively through two modelling approaches: a panel data model and a simultaneous equation system. Final results suggest how the no of likes, rather than the Facebook comments, have both a predictor and influencer role. In addition, the interdependence between Facebook ”likes” and the amount of ticket sold is demonstrated.