LAS VEGAS (KLAS) — Sphere is working on a show that will “blow your socks off,” but officials say an announcement won't be made until this summer. Jim Dolan, Sphere's CEO and executive chairman, admits it's a tease.
“When we debut the second attraction, you're going to see something you've never seen before,” Dolan said Friday, adding that it will feature a “significant AI component” and will be the centerpiece of Sphere's show. It has been revealed that the game will be built on a system of experience and immersion.
Following the success of Postcards from Earth, which has averaged over $1 million in daily ticket sales since its debut in October, Sphere Entertainment is looking to attract returning customers who have seen Postcards and are ready to start something new. I look forward to inviting you.
“Now that we've reached our annual goal for postcards, we need to introduce new content, and that new content has to be able to, you know, attract people. So, let's be honest, postcards… It has to be better than the cards,” Dolan said, explaining what Sphere has revealed about the Las Vegas market. Visitors tend to come back once a year, often during conventions or events, but are looking for something new. He called Las Vegas a cyclical market and an international market.
And with the upcoming NHL Draft and Sphere's first corporate event (Hewlett-Packard), this innovative venue isn't standing still.
Dolan said he expects hearing to start along with sight.
“We think there's more to the exosphere. We think this year, maybe this summer, we'll be able to add an audio component to Exosphere, which will of course expand the medium further. So we're still pretty bullish on the exosphere,” he said.
Video coming from the outside of the Sphere has already captivated Las Vegas, along with airline passengers lucky enough to get the best window seats. It captured the world's attention and planted the seeds for another sphere. Dolan said discussions are ongoing in several markets, but he can't say yet where the next Sphere will be. Wherever it is completed, Dolan hopes to begin construction next year.
“If you ask a yak herder in Siberia about Las Vegas, he knows what Las Vegas is. This globe is now a showcase for Las Vegas, and what we put on the globe will attract worldwide attention. We collect them,” Dolan said. “It's not just the advertising, but the art and other things we're doing there. One of the interesting things that happened when we opened Exosphere was that when you turned it on, you could see that it was facing the Sphere. When you book a room, there's an extra charge at the casino or hotel. That doesn't happen with billboards.”
For this reason, sponsorship, or advertising, has become its main business, and the company continues to strive to increase revenue from this aspect. Dolan said Sphere is starting to get repeat business with sponsors, which he thinks is a very good sign. “Exosphere's strong performance continues,” he said.
When asked if he would sell the naming rights to Sphere, he said, “I won't rule it out of consideration, but it would be a big number.''
Postcard From Earth boosted the company's “third quarter” revenue for the first three months of 2024, or the first since Sphere opened on September 29, 2023. Dave Burns, the new Executive Vice President, Chief Financial Officer and Treasurer, said Sphere had revenues of $170.4 million and adjusted operating income of $12.9 million. Postcard performed 257 times during the quarter, including 15 after U2's residency ended. Phish and Dead & Company resides in the company's fourth quarter.
Overall, Sphere Entertainment reported revenue of $321.3 million and total adjusted operating income of $61.5 million. The company posted an operating loss of $40.4 million. Comparisons to last year at this point are complicated by the fact that Sphere didn't open until September 29th.
Although details are not disclosed, Sphere's largest cost comes from selling, general and administrative expenses (SGA), which includes marketing, advertising, rent, and utilities. Other costs were incurred from corporate overhead and Sphere Studios' content development costs.
The company is also losing revenue from MSG Network, a regional sports network that Dolan is dedicated to despite financial challenges.
Investors attending the earnings call asked Dolan about progress on building another sphere. He said what the company learned in Las Vegas could allow it to build the next version more cheaply and scale it depending on the market. The seating capacity in Las Vegas is 18,600, which can be increased to 20,000 using the floor. But the next Sphere could be even smaller, perhaps seating around 5,000.
“Building a sphere is not like building a McDonald's,” Dolan says.
One of Sphere's biggest challenges in increasing profitability is hosting multiple shows in a day. Postcards are issued during the day when music residencies are scheduled, but the company is working to do more. Corporate events and electronic dance music shows could play a bigger role.
On June 18, Sphere will host Hewlett-Packard's HPE Discover 2024 keynote, hosted by President and CEO Antonio Neri. The first corporate event can set the stage for future events related to conventions and product releases on a spectacular stage.
The 2024 Upper Deck NHL Draft will be the first event to be broadcast live from Sphere on June 28 and 29.