In 2019, the live events industry was booming. Concert promoter Live Nation reported over $11.5 billion in revenues1 (Statista), and the industry as a whole was expected to continue its impressive growth in 2020. No one could have predicted the true impact that the global pandemic would have. Despite strong Q1 numbers, the industry essentially shuttered overnight as people sought safety from the virus in their homes.
For music artists this was devastating. Concert revenues have historically made up the majority of an artist’s income and for the biggest superstars, this can represent as much as 75% of their total earnings. According to Pollstar, this resulted in a staggering $9.7 billion in losses. As the months drew on with little end in sight, the pandemic forced a complete reinvention of the live events category and paved the way for the adoption of new technologies and digital solutions to increase fan engagement and elevate the experience. TechNexus has actively monitored how this space has evolved over the past year, from legacy band-aid solutions, to new ventures and platforms digitizing the existing concert experience, to unique solutions that are shattering the boundaries of virtual events as we’ve ever known them.
What we saw first…Legacy Providers quickly disappointed
There is no experience quite like going to an in-person live event. From the moment you find out your favorite artist is playing in your city, to the day of, it’s filled with unparalleled excitement. Unfortunately, linear live streams have a hard time replicating those feelings of anticipation and excitement. Early in the pandemic, artists turned to Twitch, YouTube, Facebook, and Instagram to fulfill their live streaming needs. However, it quickly became apparent that legacy streaming platforms were not sufficient for this problem. These platforms were never built to host high production quality audio and video experiences. They lacked the ability for artists to engage with their fans or provide secure ticketed events. This created a perfect window of opportunity for many entrepreneurs to create new ventures and transform the way artists could perform virtually and connect with fans.
Then, The Wave of New Entrants
Over the course of 2020, dozens of live streaming platforms emerged to recreate and reinvent the concert experience within the bounds of our cultural “new normal”. Several others, who once operated in other aspects of live events (like ticketing), pivoted or expanded their operations to now include a live streaming component. As new tools emerged, so did several challenges:
- Can they scale to handle large audiences?
- Can they offer a high-quality experience that fans will pay for?
- Can artists generate a meaningful revenue stream from these solutions?
Entering 2021 many tools have now plateaued with moderate success due to their lack of innovation around the artist & fan experience, but several stand out because they were able to overcome these challenges.
One solution, Moment House, promises high quality, geo-fenced experience for core fans. They emphasize the exclusivity of the events by calling them “Moments”. Another startup, Headliner, originally developing a concert ticketing platform, pivoted to live streaming in the early days of the pandemic and now offers an ultra-low latency solution with unparalleled fan interactivity. Major artists are rapidly adopting these solutions including Justin Bieber, who used Moment House & Venewlive for his New Year’s Eve show which attracted millions of views and tested the systems’ ability to scale (after overcoming some initial technical difficulties they ended up reaching and supporting over 4M viewers on the platform). While in November, artist Lil Yachty debuted a 3D live stream on Headliner complete with 3D avatars, special guests, merch sales, and more.
What began as small scale live streams have rapidly become full-blown media productions; Dua Lipa performed a Thanksgiving day live stream on Live Now, which cost almost $1.5Million and took over 5 months to produce. She sold almost 285,000 tickets (far beyond the reach of a single stadium show) at a reasonable price for fans, $18.50/ticket, making it a very profitable event. Not only have these platforms proven an ability to produce high-quality events, but have also proven that they can successfully monetize.
Now major incumbent providers in the concert space are also embracing digital events. Live Nation has taken a majority stake in concert live streaming platform Veeps, while Sony Music recently invested in live streaming platform Maestro. In recent months, Shure also announced Next Sound Sessions, a virtual performance series powered by startup Gramrphone.
Beyond digitizing the experience, what’s next for virtual concerts?
No longer are artists confined to only performing on a stage or venue, but can now take their performances beyond the limitations of what we had ever considered “traditional live streaming.” They are embracing AR/VR to enhance their performances and gaming platforms as new “venues.”
Concerts within gaming worlds were a relatively new concept prior to 2020, with gaming platform Fortnite being one of the first to bring virtual concerts into their immersive world. In Feb 2019 (~1 year pre-Covid) more than 10 million people tuned in to see Marshmello play a concert in Fortnite. They repeated this experience in 2020 when more than 12 million people tuned in to see Travis Scott. Now, Fortnite is looking to double down on the success of these in-game concerts by developing a state-of-the-art production studio in LA to produce more of these experiences and turn Fortnite into a “Tour Stop” for artists. Fortnite isn’t the only gaming platform getting in on the virtual concert experience either. Roblox, a popular gaming platform for younger kids, has announced big plans to make Music Experiences a core part of their platform.
Clearly, major gaming platforms such as Fortnite and Roblox are advantaged with their technology and animation expertise in developing these concerts. However, there are several startups emerging to help artists develop experiences themselves. Wave, a VR concert production platform partnered with Warner Music Group and Roc Nation, and raised $30 million in 2020 to enable music artists to perform in VR. In August, Wave powered the “The Weeknd Experience”, an innovative TikTok live stream that drew over 2M unique viewers.
French startup Granola Studios creates a DIY version of virtual reality concerts by building a virtual world venue and providing artists with the broadcast technology to help animate, ticket, and launch their live stream to fans. These platforms allow artists to push the boundaries of what it means to host a virtual event, taking users into fully interactive worlds where they can play, connect, and enjoy the performance.
Are Virtual Concerts here to stay?
The past year allowed for immense experimentation for both artists and consumers, and after many tests, the benefits of virtual concerts are now crystal clear. It creates new revenue streams for artists, allowing them to monetize the moments in between their in-person tours. This can look like a virtual album launch party, a “live” music video performance, or an immersive virtual reality experience. Beyond selling tickets to these events, further monetization through fan interactivity during shows can also be captured. For example, fans can pay for the limited edition “digital skins” during in-game concerts, or pay to have a video of themselves featured on-screen during the live stream.
There are also major operational benefits to these virtual concerts as they have much less overhead costs than required to produce an in-person show. For both fans and artists, it provides a freedom from the constraints of traveling to physical locations; Artists can go live from wherever they want and not have to be concerned about crowd capacity, fans can tune in from anywhere in the world as long as there is an internet connection.
There is no doubt that virtual concerts are an unavoidable part of the future of live events. While live shows will most certainly return when it is safe to do so (that communal, human experience can not be replaced), 2020 has proven that artists are ready to embrace digital events, that the technology is in a place where it can deliver quality experiences and fans are willing to pay. Digital and Real Life concerts are not mutually exclusive but will work in tandem, unlocking a whole new set of fan interactions, creative experiences, and revenue streams for artists.
If you have any thoughts on the virtual concerts experience, or if you’re building something in the space, I’d love to hear from you, shoot me a note at firstname.lastname@example.org