11/07/2007 02:10 pm ET Updated May 25, 2011

Opera at the Movies: An Economics Lesson

A master of the obvious once pointed out that reality has a habit of intruding on even the most elegant of theoretical constructs. So just when you figure that you have a seen a need and created a market to address that need - and have neatly cornered that market - globalization intrudes to ruin the party.

It is almost enough to cause even the most jaded observer to manifest a slight bit of sympathy for Peter Gelb, general manager of the Metropolitan Opera in New York City. Gelb came to the Met with a long and storied background in the fields of arts management and video production, and his venture in broadcasting Met productions to movie theaters throughout North America has been perceived as a smashing success. Opera at the Movieplex was the Met's idea, and in the 2006-2007 season it had a monopoly. If you wanted to see a broadcast of a grand opera on the big screen, the opera you saw was from The Metropolitan Opera.

But as any classically trained economist will tell you, monopolies don't last long - and this one may have lasted shorter than most. The competition has come from an opera house with an even longer and more storied history than the Met's, and a house that is not merely an "international player" - it is the house that defines opera to much of the world: The Teatro alla Scala of Milan.

La Scala has announced plans to broadcast seven productions in movie palaces in North America. Five of the productions are its own, one is from the Teatro del Maggio Musicale in Florence and one is from La Fenice in Venice. According to a press report on November 6, 2007, fifty-six theaters have already signed on and more can be expected. Unlike the Met's broadcast operation - in which a particular opera is broadcast (often live) in multiple locations at the same time - La Scala's plan allows the show times to vary by theater. La Scala's broadcasts include Verdi's Aida, La Traviata and La Forza del Destino; Puccini's Il Trittico and La Rondine, Wagner's Tristan und Isolde, and Donizetti's Maria Stuarda.

At roughly the same time, England's Glyndebourne Festival has announced that it has teamed up with the British arm of Odeon cinemas to broadcast a series of operas in England and Wales. It will probably not be long before the major opera houses in San Francisco, Chicago, Washington, Los Angeles, Vienna, Berlin, Buenos Aires and London join the party. In each case, it is likely that the broadcasts will be "live on tape" (to use an archaic phrase) in order to accommodate the time zone requirements of the movie theater venues. After all, if you are already recording your productions and preparing them for video release, the additional cost of crafting or joining a network is small. What is commonly called the "cost of entry" into the market is not large.

Should La Scala's experiment be a commercial success, it is a safe bet that other major international opera houses will jump onto the bandwagon quickly. If this is in fact the case, it can safely be predicted that the principles of classical economics will be in full, florid operation. Within eighteen months movie theaters will have a glut of available supply, and theaters could, if they wish, broadcast a different opera from a different opera house each night (with, of course, a Saturday matinee as an added bonus). The real question is whether there will be enough people to buy the tickets and fill the seats. Although the market may be vast, it is simply not that vast.

The genius of Peter Gelb's movie theater broadcast scheme was that it took a well-regarded product (Metropolitan Opera productions), added sophisticated production values, and made it available for audiences in movie theaters throughout North America. Others have realized that the Met does not have a monopoly on the "product" and that the market having been prepared, they can jump into it with minimal effort and, likely, a cost structure that is far more efficient than the Met's.

Interestingly, the Met has always benefited from a near-monopoly in its broadcast ventures. Saturday afternoons from December to April were Met Broadcast times, and the "competition" from other sources (primarily National Public Radio's World of Opera) was trivial. The Met has, to date, had the opera at the movies market to itself, but that is about to change, and it cannot be predicted how it will fare in the face of competition from houses equally prestigious - such as the Teatro alla Scala.

As the previously quoted master of the obvious has remarked, how this all plays out remains to be seen. It is unlikely that news of La Scala's venture has caused whoops of glee at Lincoln Center.