Regression Analysis of the U.S. Dance Studio Industry

The US performing arts industry includes about 9,000 companies and has combined annual revenues of about $14 billion. While the major companies include the Metropolitan Opera Association, San Francisco Symphony or Boston Symphony Orchestra, two-thirds of all arts companies have annual revenue under $500,000 (2011, First Search). Since the 50 biggest companies account for less than 30 percent of revenue, it can be stated that this industry is very fragmented. A fragmented market has a low concentration of companies so that the industry comes very close to conditions of perfect competition. Further, within this industry only a small proportion can be assigned to dance studios, schools and halls which will be analyzed in more detail later. There are about 600 dance companies by the end of 2009 which are mostly small, independent schools run by sole proprietors. The revenues are generated mostly through the operation of dance studios, schools and public dance halls or ballrooms. This means that the main stream of cash flow comes from dance instructions for people interested either in dancing as leisure or professional activity. According to Dun & Bradstreet, about 54,000 people were employed in more than 14,850 establishments in the late 2000s (2009, Business High Beam). With regard to entry barriers, it can be claimed that dancing is a very multisided recreational activity. It can be split in different styles from show-dancing over ballet to ballroom dancing and requires a lot of specialized knowledge which diminishes new entry strongly. Compared to others, the reputation of a dancing studio seems to be an additional possibility to differentiate. Thus, it enhances further barriers as the reputation of the owner depends on the fact if he or she has trained good and well-known dancers in order to attract new clients. Therefore, depending on consumers preferences switching costs for consumers are ambiguous and can lower new market entrances. But on the other side, there...