Future of Calgary's Experience Economy

EXECUTIVE SUMMARY

The spread of COVID-19 resulted in the authentic and still generate revenue may closing of all non-essential organizations. then be in a position to further leverage One of the hardest hit sectors was the these innovations for sustained growth. The collocated live experience economy. discussion paper considers three questions: Collocated live experiences are those sectors 1) Can innovative business models where a minimum of 50% of products or developed, tested, and implemented services revenue is dependent on both the during the pandemic trigger a live experience producer and their structural change in live experiences? customers being collocated in the same physical space. The collocated live 2) Will these innovations offer experience economy incorporates nine comparative, superior, or inferior sectors, including organized sport, active value to customers? recreation, arts and culture, food services, 3) Can a more stable and sustained live retail and personal care services. In pre- experience business model be COVID-19 Calgary, this included almost developed? 15,000 organizations employing 152,000 people. In this paper, we examine the factors that influence a customer’s decision to adopt or The consequences of COVID-19 mitigation measures have been not only the forced reject innovations in live experiences and closure of many collocated live experiences, the impact this will have on the financial but also the explosion of innovations, as sustainability of specific sectors. No LX organizations sought to engage their producer could have prepared for the customers through alternative means. At a unprecedented impact of a global pandemic. global level, examples of innovations include Nor could they have anticipated the Michelin Star restaurants offering food devastation that COVID-19 would have on delivery, museums providing robotic tours, the CLX industry. However, these same NASCAR hosting virtual races with their entrepreneurs and small business owners do drivers, and musicians live streaming control the decisions that will influence their concerts. future. To support these organizations, we There remains a fundamental question of provide a diagnostic framework for live whether entire sectors of our city have experience organizations to evaluate their pathways to sustainability. The many future. Finally, we use this framework to innovations sparked by the COVID-19 map a series of potential innovation pandemic also triggered a strategic pathways for diverse sub-sectors of the live reorientation for these organizations. Those experience economy, from film festivals, to who can develop innovations that are fitness centres, to restaurants and retail. .

2AUTHORS

Dr. David J. Finch Professor & Senior Fellow Institute for Community Prosperity Mount Royal University / Active City Collective

Rob Leduc Community Engagement Coordinator ActiveCITY Collective

Dr. David Legg Professor, Department of Health and Physical Education Mount Royal University / Active City Collective

Dr. Nadège Levallet Assistant Professor, Strategy University of Guelph

Dr. Norm O’Reilly Professor & Director, International Institute for Sport Business and Leadership University of Guelph

Patti Pon President & Chief Executive Officer Calgary Arts Development

Dr. Simon Raby Assistant Professor & Associate Director, Institute for Innovation & Entrepreneurship Mount Royal University

Mathew Stone Founding Partner, Stone-Olafson

Thanks to our research assistants Amy Chornoboy and Thomas Finch

TABLE OF CONTENTS

1. When the Live Experience Economy meets a Pandemic………… 5 2. The Influence of the Live Experience……………………………………… 6 3. The Influence of the Live Experience Customer……………………. 8 o Albertan’s View of the Live Experience Economy………. 11 4. The Role of the Live Experience Producer……………………………… 14 5. Innovation Pathways for Live Experience Producers……………… 15 6. Mapping the Path Forward………………………………………………………. 17 7. Appendices………………………………………………………………………………. 18 a. Calgary’s Live Experience Economy………………..……………….. 18 b. Live Experience Case Studies……………………………………………. 19 o Stageit: Monetizing VX Concerts o Matt Masters: Curbside Concerts o VLX Physical Therapy o Online Grocery Shopping Explodes o Drizly: Alcohol Ecommerce Service o Meal-Kit Growth o Restaurants Diversify o Travelers Seek Control of Visiting Experiences o The National Theatre: Revolutionizing Fundraising o Trolls World Tour: The End of Cinema? o Tele-Medicine Comes of Age c. Innovation Pathway Snapshots………………………………...…….. 23 o Film Festivals o Blockbuster Films o Large Venue Concerts o Philanthropic Fundraisers o Gyms & Fitness Centres o Recreational Team Sports o Recreational Individual Sports o Global Tourism o Dine-In Restaurants o Luxury Retail o Local Retail

o Physiotherapy o Tertiary Education d. Live Experience Innovation Framework……………………………. 37 e. Glossary……………………………………………………………………………… 39 f. Notes………………………………………………………………………………….. 42

Special Thanks to our Partners

WHEN THE LIVE EXPERIENCE ECONOMY MEETS A PANDEMIC

In March 2020, the spread of COVID-19 resulted in closing of all non-essential organizations in Alberta. The result was 361,000 Albertans losing their jobs and another 330,000 employees working zero hours in April.1 Alberta’s unemployment rate was 13.4% in April, jumping to 15.5% in May, the 2nd highest in Canada after Newfoundland.2 One of the hardest hit sectors was the collocated live experience (CLX) economy. The CLX includes those sectors where a minimum of 50% of products or services revenue is dependent on both the live experience (LX) producer and their customer being collocated in the same physical space.3 The CLX economy incorporates nine sectors, including retail, active recreation, arts and culture, and personal care. In pre-COVID-19 Calgary, Figure-1: The LX Economy in Calgary the CLX sectors incorporated almost by % of Employees 15,000 LX producers, employing 152,000 4 people (refer to Figure-1 & Appendix A). Some LX producers were able to pivot Moreover, two-thirds of LX producers in their business models fully or partially, the city have five or fewer employees. while others suspended operations, hoping to reopen with a return to ‘normalcy’. Those who adapted their LXs “The CLX includes those sectors where a varied from altering their distribution to minimum of 50% of products or services reassessing the sustainability of their revenue is dependent on both the entire business model. Examples include experience producer and their customer Michelin Star restaurants offering delivery, being collocated in the same physical space.” museums providing robotic tours, NASCAR hosting virtual races with their drivers, 5

and musicians live streaming concerts. As are seeing sales recover to pre-pandemic well, tourist destinations provided virtual levels.7 live tours and virtual appointments could The many VLX innovations sparked by the be made with physiotherapists who then COVID-19 pandemic may trigger a guided self-treatment. The unique COVID- strategic reorientation for these LX 19 conditions thus forced CLX producers producers.8 Those who can develop to evaluate their offer and deliver value to innovations that are authentic and still customers in sometimes new and generate revenue may then be in a innovative ways including virtual live position to further leverage VLX experiences (VLX). The result has been innovations for sustained growth. As a not only the forced closure of the CLX, but result, three questions are addressed in also the concurrent expansion of the VLX this discussion paper: by existing or new LX producers. How LX producers responded to this is the focus 1) Can VLX business models developed, then for the remainder of this discussion tested, and implemented during the paper. pandemic trigger a structural change in the CLX economy? As the economy reopens in June and July, many of the government-directed 2) Will VLX offer comparative, superior, guidelines and policies alongside public or inferior value to the LX customer? health authorities include the 3) Can a more stable and sustained VLX implementation of physical distancing business model be developed? guidelines that will increase CLX operating costs, while reducing revenue and To examine these three questions, this fundamentally altering the experience. For discussion paper explores the evolution of instance, the capacity of many restaurants LX, the resulting impact on customer is as low as 40% of their pre-pandemic value, and the risks and opportunities capacity due to physical distancing.5 facing the LX producer. Moreover, larger capacity LX producers in the arts (e.g., Theatre Calgary, Alberta Ballet), large events (e.g., consumer shows and conventions), professional “Those who can develop innovations that are sports (e.g., Stampeders, Flames) and authentic and still generate revenue may tertiary education (e.g., universities) will then be in a position to further leverage VLX remain closed to live audiences due to the innovations for sustained growth.” challenges of adhering to physical distancing guidelines. As a result, the Conference Board of Canada is forecasting a 40% contraction in the Calgary accommodation and food services sector and a 20% decline in the arts and culture sector in 2020.6 THE INFLUENCE OF THE There is a fundamental question of EXPERIENCE whether entire sectors of the Calgary CLX In the 1990s, as products economy have sustainable pathways to and services became reopening. Of particular concern are the increasingly commoditized, two-thirds of Calgary’s LX producers with managers faced challenges less than five employees which possess to differentiate their products limited liquidity to sustain extended and services. financial disruption. As evidence of this, only 17% of small businesses in Alberta In response, marketers sought to transform their products and services into

experiences with the goal of developing a competitive advantage, while maximizing revenues. During this period, a concept emerged: time is the LX economy currency. A customer’s time is finite and therefore a scarce resource of significant potential economic value. Thus, viewing a customer’s time as a currency reframes both the operational and economic dimensions of LXs. Given the vast diversity of the LX economy, researchers have studied it from varying perspectives. First, some view the level of active participation by a customer through a critical lens.9 For example, passively enjoying live theatre is a dramatically different participatory CLX than camping with friends and family.10 As a result, how LX customers perceive value Figure-2: The Experience Cycle will also be calculated differently. their business: CLX dependency and LX Second, other researchers suggest that centrality. ‘experiences’ are not a discreet moment in time, but rather a holistic cycle that must CLX Dependency: The first factor is an be leveraged by LX producers11 (Figure-2). evaluation of whether the value of the CLX This lens suggests that producers must is dependent on physical collocation of the invest as much in the pre and post customer or customers and the LX dimensions of a LX as they do in producer. In some sectors, physical delivering the actual LX. By adopting this collocation is essential. For example, view, LX producers recognize that these playing recreational hockey demands LXs are often anchored in a social value physical collocation of players. In other and customer’s identity.12 As a result, cases, there are viable virtual alternatives producers must create opportunities for to physical collocation that may offer people to intertwine and amplify LX similar or even superior value. As an customers’ engagement. example, watching professional sports can be achieved by being physically present in In this discussion paper, we contend that the same location as the competition LX producers focus on two essential (e.g., arena, golf course). However, fans factors when evaluating the impact of also have the option of watching this COVID-19 and sustainable pathways for same LX at home or in a bar with friends.

Therefore, this LX is simultaneously both a Consequently, to be competitive, all LX CLX and a VLX. producers must understand how their LX customers (or potential customers) LX Centrality: The second essential calculate value.13 The importance of this factor is examining how central the value simple calculation is further amplified of an organization’s products or services when consumers are provided new or are on delivering a LX. In some cases, the innovative approaches for the delivery of LX is the core product being offered (e.g., value that is either equivalent or superior live theatre). However, in other cases, the value. In a non-experience context, the LX may be supplemental to an displacement of a landline telephone with organization’s core product or service. An a smartphone is an example of how an example is a golf club manufacturer innovation (smartphone) delivers superior holding an exclusive golf clinic with a value to the existing product (landline) touring professional for top customers. offered by an incumbent. The manufacturer’s core product is the golf club and hosting a golf LX provides supplemental value to the customer. “In some sectors, physical collocation is This factor is of particular importance as it essential…. In other cases, there are viable causally links to LX producer revenues. In virtual alternatives to physical collocation the example above, the majority of live that may offer similar or even superior theatre revenue is driven through CLX value.” ticket sales. Therefore, suspension of live performances immediately impacts the core revenue streams of a theatre Over decades researchers have examined company. In contrast, little or no revenue the process of how and why some of the golf club manufacturer is dependent innovations are adopted and others are on customer clinics. Rather, these clinics rejected. Outcomes of this research are a platform for potential competitive identify five fundamental questions that advantage for the manufacturer and enable us to understand how a customer increased value for their customers. In the compares the value delivered by an next section, we consider the process of innovation, relative to the incumbent how a LX customer calculates value. product or service:14 1. Relative advantage: Does the innovation offer superior value THE INFLUENCE OF THE LIVE compared to the incumbent product or EXPERIENCE CUSTOMER service? In the simplest terms value is 2. Compatibility: Is this innovation defined as: aligned to the customer’s motivations, Value = Price - Cost including values and needs?

3. Complexity: How difficult is it for the Based on this, researchers then clustered customer to understand and adapt to these customers into five stages, ranging this innovation? from innovators and early adopters on one 4. Triability: Is it possible for a customer end to laggards on the other. Each cluster to test and experiment with this is influenced by a range of factors that innovation before adopting it? trigger the adoption (or rejection) of an innovation. 5. Observability: Does the innovation provide tangible results to support a customer’s decision to adopt or reject it? “Over decades, researchers have For example, in Table-1, we consider examined the process of how and why these five questions when comparing a some innovations are adopted and landline phone and a smartphone. others are rejected.” Table-1: Innovation Adoption

Relative advantage: Yes. People leave their For example, early adopters are Does the innovation home and can still customers who are willing to pay a higher offer superior value communicate with price to be one of the first people to use compared to the others. incumbent? an innovation. In turn, these early adopters trigger more people to also Compatibility: Is this Yes. People want to be adopt the innovation by demonstrating its innovation aligned to able to access others comparative value to the incumbent. In customer’s values and when they are not contrast, laggards are traditionalists who needs? home. resist the adoption of new ideas and are Complexity: How It depends. For some, not willing to pay a higher price for it. difficult is it for the this transition was Importantly, research finds that once the customer to understand easy. For others, it was ‘tipping point’, where the majority has and adapt to this complex. adopted an innovation, has been reached, innovation? accelerated adoption occurs through social Triability: Is it Yes. People could contagion (e.g., network effects). As such, possible for a customer borrow other people’s the adoption or rejection of an innovation to test and experiment smartphones or try a should be viewed as a multi-dimensional with this innovation free version of an app. decision influenced by the five factors and before adopting it? the five stages described earlier.15 Observability: Does Yes. People could talk To understand the variety of innovation the innovation provide to friends and family pathways available to them, LX producers tangible results to who have a support a customer’s smartphone to must first understand how their LX decision to adopt or understand its value. customers calculate value. Building on reject it? existing interdisciplinary research,

Figure-3: Why do some innovations stick?

Figure-3 maps additional factors that in getting a haircut. In contrast, hedonic contribute to a LX customer’s calculation value is the pleasure associated with the of value, and how this contributes to the LX. Hedonic motivation may include items adoption or rejection of a LX innovation. such as social, knowledge, escapism, entertainment, or novelty.17 In this model, a customer’s LX behaviours are derived from a decision to adopt or LX Influencers: These are the variables reject a LX innovation. This decision is that contribute to attitude formation. anchored in the attitudes this customer These include previous experiences, forms associated with the relative value of subjective social norms, and social the LX innovation. In turn, their attitudes identity. These also include external are then the outcome of the interaction of influences from trusted information LX motivations and influencers. Last, this sources, including people and media.18 model includes a dynamic feedback loop, Moreover, contextual factors related to recognizing that past engagement with a the customer are important moderators.19 LX can and will influence future LX For example, is it arts or sport? Is it for motivations, attitudes and behaviours. adults or children? Finally, the socio- demographic characteristics of the Next are some of the important customer can moderate adoption components of the process model located attitudes.20 on the bottom portion. LX Innovation Attitudes: These are LX Motivations: These can be clustered composed of the many perceptions into two broader categories of value, associated with the five discrete utilitarian and hedonic.16 Utilitarian value; embedded factors in the model discussed is the practical value associated with the previously: relative advantage, LX. For example, there is a practical value

compatibility, complexity, triability and reminder that current enthusiasm levels observability.21 may not immediately translate into ticket LX Innovation Decision: Here, the sales/participation in the short term, individual chooses to adopt or reject an despite what claimed intentions are. innovation at a given moment in time. Planning should reflect a longer timeframe for returning to normal activity levels. For LX Behaviours: These can be clustered sports and recreation, many LX producers into several major categories that would are already working on plans to ramp up, be considered positive outcomes for the LX producer: (1) Observe a LX (e.g., but they also must be prepared to adapt if watch a LX on TV); (2) Attend a LX (e.g., future waves materialize and activities purchase tickets to a festival); (3) need to be scaled back again. Participate (e.g., participating in a yoga COVID-19 Impact: Albertans who class); (4) sharing a LX (e.g., posting LX live in communities with a higher-level of photos and reviews on social media). COVID-19, are more likely to be hesitant Albertan’s Views on the than others. Experience Economy

Stone-Olafson, in collaboration with community partners, developed a longitudinal investigation exploring how COVID-19 is reshaping Albertans’ attitudes and behaviours towards the CLX. A total of 1,348 Albertans participated in the first wave of research collected between May 21, 2020 and June 2, 2020. This research provides additional insight into the experience customer attitudes and behaviours and what it may mean for LX producers. Click HERE to access the full study.

Contextual Factors:

The Experience: As per Figure-4, Albertans engaged in a diverse range of experiences. At a general level, arts and culture customers are less comfortable and more hesitant to re-engage compared to sports and recreation LX customers. For Figure-4: What do we Experience? arts and events LX producers, it is a

Experience Motivations virtual “replications” of activities (such as exhibits or tours) because they just do not The primary motivations for attending and satisfy the same motivations. LX participating in experiences are social and producers must recognize there will be experiential (refer to Figure-5). The need opportunities to continue VLX post- for social connections and the absence of restrictions, but in most sectors, it will them reflects a surge in enthusiasm for complement, not displace their core CLX. renewing LX. However, this enthusiasm will not reflect actual behaviours on its Experience Influencers: own. The other key motivations that Almost half (46%) of respondents report cannot be overlooked are related to health reduced income. This will influence the (mental and physical) and education. capacity to invest in the LX. Moreover, the Ultimately, organizations will need to research suggests attitudes vary based on deliver on these motivations as part of gender and age. For example, Albertans their innovation pathway. 18-34 and women are more hesitant to the reopening than other cohorts. LX Innovation Attitudes Many Albertans are showing signs of fatigue and few VLX substitutions are able to meet their core social motivations. For example: o 81% of respondents ‘value the social connections I have more than ever.’ o 72% agreed ‘I’m getting tired of the substitutes for all the things I used to do.’ o This juxtaposition reflects the importance of the primary social motivators driving participation in the Figure-5: Perceived Benefits of LX CLX, as well as the contextual influence of the pandemic itself (social However, there is a limit to how effective isolation). This same research found that is long term; most people are notable proportions of Albertans showing signs of fatigue and substitutions (80%) engaging in a range of VLX are not likely to last in their current form. efforts during the pandemic. This Furthermore, whatever social elements covered a range of activities, but at can be replicated, there is no substitution the top of the list was a social activity for the experiential elements of most to stay connected with their social activities. Albertans are least engaged in groups.

While the gap between LX customer Rather they engage in multiple motivations, what is being offered, and experiences ranging from arts and culture the outcomes may exist, at least half to sport and recreation. This suggests an (51%) say they are ‘…enjoying a lot of the opportunity to explore increased new ways organizations are working to collaboration across LX sectors to keep me connected.’ This represents an maximize value. opportunity for producers as they are effectively reaching half the market 100 (larger in major urban centres) when they 98 may not have reached any at all if not for 96 a turn to VLX. Moreover, depending on 94 contextual variables (i.e., length of the 92 pandemic) this may be more critical as 90 37% say they are avoiding most of their Engaged % 88 86 usual activities. 84 The impact for LX producers can 82 potentially last long term. When asked 80 about what VLX activities they are likely Observe Attend Participate to consider post-pandemic, 36% of respondents will consider engaging in Figure-6: Forms of Engagement these same VLX activities post-pandemic. LX Behaviours Almost all Albertans are engaged in 80 experiences as either observers, attendees, or participants (refer to Figure- 60 6 and 7). An observer engages in virtual experience ranging from watching sports on TV to listening to podcasts. Attendees 40 physically attend an experience (e.g., Engaged % music festival) A participant is actively 20 engaged in the experience (e.g., travel, dance class). 0 Overall, 94% of respondents identified No XP Single XP Two XP Multipe they are engaged in two or more types of XP experiences. This identifies the importance of adopting a more holistic Figure-7: Multiple Experiences view of experience customers going forward. This is because few Albertans are customers of a single type of experience.

THE ROLE OF THE LIVE the sharing of resources and data (e.g., EXPERIENCE PRODUCER open ventilator designs, vaccine development), collaborative fundraising The final factor we (e.g., One World at Home), collaboration must consider is among competitors in developing related to the reopening plans (e.g., Apple and Google competencies of the LX partnering on COVID-19 contact tracing producer in responding technology) and engagement of LX to the impacts of customers as co-creators of innovations COVID-19. A LX (e.g., Ford’s ‘built to lend a hand’ producer’s competitive campaign). position is rooted in its ability to acquire As noted, COVID-19 offered several capabilities that are both valued and pathways for LX producers. The first path scarce. This may include tangible assets, was defensive. This path included LX such as facilities or intangible assets, such producers suspending operations to wait as processes and talent. However, out the COVID-19 storm and hope for a research suggests that in turbulent times, return to pre-COVID-19 normalcy. The a LX producer’s ability to develop new, or second path involved LX producers reconfigure existing capabilities is critical innovating through VLX.26 In some cases, to their sustainability.22 LX producers possessed an existing VLX The ability for a LX producer to respond to capability. In this scenario these LX the shock of COVID-19 demands both the producers often expanded the VLX organization and their management offering during the closure. Examples of possess an adaptive capacity.23 Traditional this include local retailers, with pre- closed innovation models are often highly existing ecommerce capabilities, or dine- structured and lacking flexibility,24 in restaurants leveraging third-party whereas today, LX producers are engaging platforms such as Skip-the-Dishes. customers and other stakeholders as co- In other cases LX producers who had no creators of innovation, thus enabling the previous VLX capability were determined LX producer to expand access to external to innovate. For example, with live music resources. venues being closed globally, thousands This open innovation system provides of musicians migrated to monetizing increased capacity to accelerate intimate VLX concerts via platforms such development, reduce costs and as Stageit (refer to Appendix B). Similarly, exponentially increase and diversify the physiotherapists leveraged existing people engaged in the design, specialized platforms to provide VLX development, and delivery of innovation.25 treatments. In some cases the VLX During the pandemic, we have seen displaced the CLX fully, while in other increasing open innovation both within cases the VLX enhanced or complemented and outside the CLX economy, including the core CLX. 14

INNOVATION PATHWAYS FOR LX PRODUCERS

Based on this discussion the innovations resulting from COVID-19 paper, we propose that LX on their organization and sector. The producers answer the objective is to offer a multi-level following questions when perspective to map alternative innovation exploring the implications of pathways.27

Table-2: Mapping the Innovation Pathway

The Live Experience The LX Customer The LX Producer

1. How dependent is the value 1. What motivates your 1. Could the VLX innovation of your core product or customers to consume this displace the traditional CLX service on the LX? CLX? by offering equal or greater perceived value for your 2. How dependent is physical 2. How does the VLX customers? collocation on the delivery of innovation align with your the LX? customer’s motivations and 2. Could the VLX innovation their perception of value? complement the traditional 3. What are the VLX CLX and offer you innovations that emerged or opportunities to grow the were accelerated by the market? pandemic? 3. Do you, as the incumbent LX producer, possess the competencies to respond to the new dynamics in the sector?

How does the VLX innovation impact the traditional CLX business model?

In order to help understand this guide, Appendix C presents 13 snapshots from across the nine LX economy sectors.28 Further, the table below provides two sample innovation pathways.

Table-3: Examples of Innovation Pathways

Questions Blockbuster Films Large Venue Concerts

The Live Experience

How dependent is the value of your • Enhanced by physical • Enhanced by physical core product or service on the LX? collocation, not dependent on it. collocation, not dependent on it.

How dependent is physical collocation • The value of the movie is • The value of the concert is on the delivery of the LX? dependent on the LX. dependent on the LX.

What are the VLX innovations that • Simultaneous release of films in • Intimate 60-minute blended VLX emerged or were accelerated by the theatres and home viewing. concerts. pandemic?

The LX Customer

What motivates customers to consume • Entertainment • Entertainment this CLX experience? • Social • Social • Exclusivity/uniqueness

How does the VLX innovation align with • It delivers on a customer’s • Detracts social motivation. your customer’s motivations and their motivation for entertainment • Enhances intimacy and perception of value? but is limited for social. uniqueness. • Lower economic barrier to adoption. • At home viewing negatively impacts immersive nature of cinema experiences.

The LX Producer

Could the VLX innovation displace the • Limited displacement • Potential displacement traditional CLX by offering equal or greater perceived value for the customer base?

Could the VLX innovation complement • Complementary • Complementary the traditional CLX and offer you opportunities to grow the market?

Do you, as the incumbent LX producer, • Cinemas are not competitively • Traditional role of concert possess the competencies to respond positioned to provide streaming promoters will be disrupted. to the new dynamics in the sector? entertainment.

How does the VLX innovation impact the traditional CLX business model?

How does the VLX innovation impact • Content distribution will • The attraction of an intimate the traditional CLX business model? continue to face accelerated blended concert model will disruption, leading to a become a dominant delivery restructuring of content model post-pandemic. development and distribution, and increasing vertical integration.

MAPPING THE PATH FORWARD

The COVID-19 pandemic has impacted No LX producer could have prepared for Calgary’s CLX and the nine sectors we the unprecedented impact of a global noted in Figure-1. In pre-COVID-19, these pandemic. Nor could they have sectors incorporated in Calgary almost anticipated the devastation that COVID-19 15,000 workers, with two-thirds of the LX would have on the CLX industry. However, producers having less than five these same entrepreneurs and small employees. Though this sector was business owners do control the decisions decimated, the global closure of the CLX that will influence their future. economy has led to many of these LX This discussion paper offers a framework producers considering innovations. This to enable LX producers to evaluate a path has included implementing alternative forward by considering three dimensions: models to deliver their LXs, generate (1) the live experience; (2) LX customer; revenue and engage customers, resulting (3) and LX producer. In some cases, the in the expansion of a VLX economy. market dynamics may lead some of these LX producers to fully exit CLX. In other “This discussion paper serves as an open cases, LX producers may see a path forward that blends both CLX and VLX into invitation to those, regardless of whether a unique and compelling value your passion is arts, culture, food, sport proposition. Finally, the path forward for or recreation, to collaborate in unlocking some CLX sectors will be virtually identical our city and region’s future potential.” to the path that got them here. What will be needed is patience, financial prudence, planning, and a focus on short and long- While the wage subsidy has kept many LX term sustainability. producers functioning, there is little doubt that COVID-19 has and will continue to There are many in the community who impact Calgary’s CLX economy. However, share a common passion about Calgary a significant question remains on whether becoming a leader in the LX economy. To the innovative alternative delivery models this end, this discussion paper serves as developed during the pandemic will an open invitation to those, regardless of trigger a structural change in the CLX whether your passion is arts, culture, economy. Is the value offered by VLX food, sport, or recreation, to collaborate in comparable or superior to that of the CLX, unlocking our city and region’s potential and will it displace it? as a leader in the LX economy.

APPENDIX A CALGARY’S LIVE EXPERIENCE ECONOMY

Category Definition # Orgs. # Emp.

Food Services This sector comprises LX producers primarily engaged in 3,952 56,468 preparing meals, snacks, and beverages for immediate consumption on and off the premises.

Personal Care This sector comprises establishments engaged in providing 4,108 20,345 personal care and wellness services such as physiotherapy, dentists, and hairstylists.

Retail This sector comprises LX producers primarily engaged in 1,546 19,934 retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise. Store retailers operate fixed point-of-sale locations, located, and designed to attract a high volume of walk-in customers.

Tertiary Education This sector comprises all forms of private and public 1,308 15,475 education from Kindergarten to grade 12. Tertiary education is incorporated in our definition of the LX economy as it is optional, competitive, and a significant portion of this expense is borne by the student.

Organized Sport This sector comprises LX producers delivering activities 1,138 12,081 involving physical exertion and skill as the primary focus of the activity, with elements of competition where rules and patterns of behaviour governing the activity exist formally through organizations.

Accommodation This sector comprises LX producers primarily engaged in 318 7,589 providing short-term lodging for travelers, vacationers, and others. In addition to lodging, a range of other services may be provided.

Arts and Culture This sector comprises LX producers and individuals engaged 1,073 7,367 in producing and delivering arts and cultural experiences including performing arts, visual arts, cultural exhibitions, and films.

Active Recreation This sector comprises LX producers delivering engagement for 504 6,971 the purpose of relaxation, health and well-being, or enjoyment with the primary activity requiring physical exertion. They are often spontaneous in nature and participant led, with a low level of organization and limited structure.

Support This sector comprises LX producers engaged in activities that 722 4,021 support the day-to-day operations of other LX economy producers. This includes transportation of passengers, management and representation of talent, and administration of hosting people.

Other This sector comprises LX producers engaged in special 99 2,218 events, amusement, and gambling facilities and services.

APPENDIX B LIVE EXPERIENCE INNOVATION CASE STUDIES

Stageit: Monetizing VX Concerts which musicians from across Canada can Over a decade ago, be booked to play in front of people’s Stageit was homes. A 45-minute show costs a flat launched as a $200, can be booked online, and has been platform for artists more successful than Masters ever to monetize live predicted. Now with over 100 concerts streamed concerts. The concept was performed in Calgary alone, and Masters innovative, presenting an intimate saying he’s received hundreds of further medium for fans and a lucrative one for requests, it is clear that Curbside artists; however, it took a pandemic for Concerts has thrived in quarantine. It is both groups to realize this. difficult to say if this home-delivery model will continue to flourish when traditional The Stageit business model is simple. delivery methods are once again available, Artists hold 30 to 60-minute VX concerts however consumer interest is clear. and receive 65-80% of the revenue. Cash can come from pre-purchased tickets or tips, and for its cut Stageit covers all VLX Physical Therapy broadcasting fees, music licensing fees, Since the COVID-19 bandwidth, web hosting, and credit card pandemic created transactions. barriers for in- After so many years of virtual obscurity person meetings, it Stageit has suddenly found itself with a became urgently roster of artists numbering in the apparent that some thousands, ranging from independent alternative delivery method for vital creators to global superstars like Jon Bon services had to be adopted as quickly as Jovi and Common. By early April, Stageit’s possible. Virtual Therapy allows registered users expanded to 500,000- individuals to seek mental health plus and artists were playing 850 shows treatment from home by connecting per week without leaving their homes. To patients with professionals through online date, the most profitable concerts have hit communication technology. Surprisingly, upwards of $100,000. In the first two online therapy has proven to be equally as weeks of the pandemic, Stageit had nearly effective as face-to-face therapy while doubled its entire 2019 revenue. Although providing additional reach to those with the question of whether VX concerts will geographical or financial barriers. emerge as a profitable substitute for LX Inkblot Therapy, based in Brantford concerts remains an open debate, COVID- Ontario, offers online therapy sessions 19 changed the conversation completely. designed to be convenient, affordable, and confidential, with both registered Matt Masters: Curbside Concerts psychotherapists and social workers. Not only do these sessions cost half the When Matt Masters – A singer-songwriter average price at $75 per hour, but the from Calgary – saw his career threatened first ones are free until an appropriate by the pandemic and its ensuing physical match between patient and therapist is distancing guidelines, he spotted an made. To top this all off, every session opportunity to reinvent the industry. can be submitted to insurance. Enter Curbside Concerts, an initiative in

Inkblot Therapy reports that they are pandemic, Drizly’s profits have followed currently conducting 7 times more weekly the trend, with a reported 300% increase. therapy sessions compared to the first Drizly’s business model is simple week of January, supporting around ecommerce. Using the online platform, the 100,000 people in Canada, and 2,000 user types in their location and searches people in the United States. for items to order. Drizly matches the order to participating local retailers, who Online Grocery Shopping Explodes pick and process the order and fulfill the delivery. Drizly does not take a Instacart is a percentage of the orders, but rather private online charges retailers a monthly fee for their grocery delivery services. They partner with local retailers, service founded and also have an exclusive alliance with in 2012. Despite strong growth the Wine and Spirits Wholesalers of throughout its 8-year existence, the America. pandemic has allowed Instacart to explode in popularity as North American populations moved into self-isolation. The Growth of Meal-Kits The service’s model is simple. You login to HelloFresh is a the Instacart application or web-based publicly traded platform and choose a local store. Next, company that you add items from in-store to your digital was founded cart and select a delivery time. Finally, a in 2011 and is local shopper handpicks the items in your based in Germany. In 2018 the company cart, and delivers them directly to your became the largest meal-kit provider in door. Retail partners set the price of items the United States, while also operating in in the marketplace, and Instacart adds Canada, throughout Europe, Australia and additional fees for service and delivery. New Zealand. The service offers various Various membership options are also plans to choose from, based on dietary available for customers. preferences and size of family, delivering Instacart services more than 5,500 cities pre-measured ingredients to users' doors in North America, and is in partnership on a weekly basis. As a result of COVID- with over 350 grocery retailers, 19, global populations have been forced to amounting to more than 25,000 stores. prepare meals at home regardless of With COVID-19, the app’s popularity saw kitchen experience, making the sudden downloads grow by 218% in the United increase in demand for services like States in March 2020 alone. HelloFresh understandable. The company experienced a 37% increase in revenue during the first quarter of 2020, and Drizly: Alcohol e-Commerce service specifically has seen its United States Drizly is a private retail customer base increase by 88% from last company founded in year in this same time-period. 2012 providing alcohol HelloFresh’s business model capitalizes on ecommerce services in a greater buffer time between customer over 100 markets orders and deliveries than takeaway food throughout North models. With consumers being home more America. The website during the pandemic, many delivery and app-based platform delivers beer, challenges are also avoided, which further wine, and spirits from local retailers to increases the value of the service. It is users’ locations. With the spike of North unclear whether the service will continue American alcohol sales during the to prosper with loosening of COVID-19 restrictions, but their market has been 20

opened to the vulnerable population who Travelers Seek Control of Visiting may decide that the cost of using meal-kit Experiences deliveries is worth the peace of mind in RVshare is a avoiding grocery stores. private U.S. recreational Restaurants Diversify vehicle (RV) rental C3 (Creating Culinary marketplace founded in 2013 on the basis Communities) is a of a peer-to-peer business model. RV partnership between owners capitalize on their RV’s downtime - sbe, Simon, and Accor, which can amount to 90% of the year- by which was launched in listing it for peers to rent. With limited early 2020. The company describes itself travel options amidst the COVID-19 global as “a cutting-edge food and beverage restrictions, demand for the flexibility and platform consisting of an array of limited control afforded by RVs has spiked. For service culinary brands.” While the families seeking ways to get away and restaurant industry has seen huge layoffs enjoy a camping experience while also during the COVID-19 pandemic, C3 has self-isolating in a safe manner, renting an been capitalizing on rapidly changing RV is the perfect option. RVshare has seen customer behaviours by investing in the company’s highest booking rates in ‘ghost kitchens’ and mobile delivery. In history since early April 2020, with a fact the company has been leasing closed staggering 650% increase. eateries, and was reportedly looking to hire 1,000 employees to meet the RVshare boasts an inventory of more than demands of opening 138 ghost kitchens 100,000 vehicles, ranging from the by year’s end. smallest travel trailers to the most lavish full-service motorhomes. The inherent Ghost kitchens are locations which flexibility with these options, abandon the traditional brick and mortar accommodating anything from weekend venues to meet more flexible virtual camping adventures to cross-country demands of consumers. These locations trips, bodes well for the company. With function without storefronts, dining summer upon us, survey results have rooms, or even pickup counters, and they shown that 77% of respondents are may be run as a sole entity or share their looking to make travel plans in the coming kitchen space between several months, with 93% of survey participants restaurants. Partnering with delivery indicating a desire to avoid crowds, and companies helps to streamline operations 65% aiming to be surrounded by nature. while also saving on square footage As restrictions due to COVID-19 lessen, overhead, as well as costs associated with people’s behaviours will change as the servers and non-kitchen staff. perceived risk of infection lowers, opting The online ordering market, worth $26.8 instead for more affordable tenting trips. billion, is quickly becoming a staple for the Despite this, the comfort and safety of RV restaurant industry as the fastest-growing camping will certainly be more widely sales source, rising 20% annually in known, which has the potential to keep recent years. In June of 2020, C3 this travel option at high popularity for announced a partnership with years to come. internationally acclaimed Chef Dani García to open two culinary concepts by the end of 2020. While C3 is betting big on their ghost kitchen concept, consumer behaviours coming out of the pandemic will certainly play a role in the company’s success. 21

The National Theatre: Revolutionizing being able to take the lion’s share (80%) Fundraising of profits from home releases, Trolls World Following the Tour created roughly the same revenue United Kingdom’s for Universal as its predecessor, Trolls, National Theatre’s which saw a traditional theatre closure in the face release. Time will tell if the new model will of COVID-19, it prove as profitable, or if it requires looked as though adjustment, but Trolls World Tour proves the very it has potential. traditional revenue streams of live entertainment could not be adapted to a Tele-Medicine Comes of Age digital environment. In response to this Maple is an online threat, The National Theatre at telemedicine Home began; a series of productions service that filmed and formerly distributed via connects patients theatres were premiered free online, with with Canadian- audiences urged to donate. Just one of licensed doctors using video, audio, or those productions, One Man, Two instant message technology. This service Guvnors, surpassed one million views and is primarily used for conditions that do not reportedly drew in more than £50,000 require an in-person visit, reducing the worth of donations. As the productions strain on the healthcare system by were recorded years ago and belong to moving suitable primary care out of the theatre, the costs to stream them hospitals and clinics. Typically, patients have been minimal, drawing in an are in contact with a physician within 2 overwhelmingly positive reception and minutes of logging on and physicians are lucrative fundraising opportunity. able to prescribe medications and write sick notes or referrals at the end of the Trolls World Tour: The End of Cinema? appointment. There exist few Due to the COVID-19 pandemic, stay-at- examples thus home orders and physical distancing have far of concrete forced changes in public medicine. cinematic Accessing healthcare online from home releases on has become more popular during this time home streaming services. Besides a to avoid contact with potentially infected number of prominent indie films, patients for basic health care needs. Hollywood’s move into home releases Maple estimated that they have seen seems to have begun only out of necessity ~500% increase in visits to their website with Universal’s Trolls World Tour. While in a 24-hour period, increasing the wait at first seen as a risky maneuver – one time to 2 hours instead of the regular 2 that stirred up notable friction between minutes. Due to unexpected high demand, movie theatres and movie producers – Maple has hired numerous doctors to Trolls World Tour was ultimately a support their new influx of patients. They resounding success, amassing now have ~1,000 healthcare providers on around $100 million in rental fees, with their platform, which is a significant each rental costing $20. Thanks to studios increase over pre-COVID numbers.

APPENDIX C INNOVATION PATHWAY SNAPSHOTS

SNAPSHOT: FILM FESTIVALS

The Experience deficiencies through exclusive VLX webinars with film makers and tools to • Enhanced by physical collocation share and amplify a customer’s VLX. • The LX is central to the core value The LX Producer: The delinking of proposition physical proximity from the ability to • Festivals shifted to a digital engage in a festival expands the downloaded model for home viewing addressable market exponentially. This offers the potential to diversify revenue Example: We Are One; Toronto streams beyond venue-based ticket sales. International Film Festival; Calgary The risk for the LX producer is losing International Film Festival differentiation in a crowded entertainment The LX Customer: Attending a film market. festival provides two forms of value. First, Future LX Innovation Pathway: We access to film makers provides exclusive predict that traditional CLX-only film insight into the production experience. festivals are at risk of accelerated Second, it reinforces one’s social displacement but have an opportunity to identity.29 Simply viewing at home will expand to a blended delivery festival in negatively impact both the exclusive order to expand both the addressable insight and social value of the film market and revenue streams. festival. However, film festival producers have the potential to overcome these

Film Festival Snapshot Innovation Pathway

SNAPSHOT: BLOCKBUSTER FILM RELEASES

The Experience example, after Universal released Trolls World Tour, AMC terminated their • Enhanced by physical collocation relationship with Universal Studios, • The LX is central to the core value announcing they will no longer allow any proposition Universal Studios films on any of their 11,000 screens. AMC’s sustainability is in • Releasing of blockbuster films doubt, while Amazon and other content simultaneously in theatres and via 48- producers have reportedly shown interest hour digital rental for $20 in diversifying into theatre ownership. A Example: Trolls World Tour; AMC risk is movie releases are focused on kick- starting ticket sales with an event that The LX Customer: In 2019, Americans generates momentum. Producers will have watched fewer films in theatres than any to be conscious of the potential of diluting year since 1927. This suggests home their product with the innovation. viewing continues to displace traditional theatrical releases. However, blockbuster Future LX Innovation Pathway: films are uniquely designed for theatrical Content distribution will continue to face release due to their special effects and accelerated displacement. Simultaneous sound. release of most theatrical content will become the norm, and this will lead to a The LX Producer: The release of restructuring of content development, blockbuster movies outside of a theatre distribution, and increasing vertical has massive implications on the overall integration. business model, including film producers, distributors, theatres, and actors. For

Blockbuster Snapshot Innovation Pathway

SNAPSHOT: MUSEUMS AND GALLERIES

The Experience The LX Producer: COVID-19 has had a significant financial impact on museums • Enhanced significantly by physical and galleries simply because access is collocation restricted. These venues depend on live • The LX is central to the core value visitation, and for segments looking to see proposition the unique materials they may find it in well produced VLX content. Producers will • Museums and galleries introduced VLX have to ensure they maintain that options exclusivity, and new content works to Example: Google Arts & Culture; attract in-person visits. Musée du Louvre Future LX Innovation Pathway: The The LX Customer: Attending a museum VLX, before and during COVID-19, will not or art gallery is driven by a motivation for have a significant displacement impact on knowledge, access to unique or exclusive museums and galleries. We believe that materials, and engagement with experts LX innovations will be complementary and and artists. This could be combined with promote ongoing engagement. other CLX (e.g., tourism).

Museums and Galleries Snapshot Innovation Pathway

SNAPSHOT: PHILANTHROPIC FUNDRAISERS

The Experience The LX Producer: The VLX innovations offer both temporary and long-term • Enhanced by physical collocation benefits. In the temporary sense, the • The LX is central to the core value innovations maintain a share of mind and proposition giving for the cause until traditional CLX offers can resume. Over the long-term, • During COVID-19, organizations the innovations have increased the use of moved fundraisers to VLX. For digital tools to spur giving or bidding for participants that were connected via the purposes of fundraising. VLX tools, meals from local chefs were prepared and delivered, and online Altering the LX may impact giving. auctions were made available. Innovations will have to consider how to mitigate this or substantially ease the Examples: Carya Long-table, ATP; giving process. The Met Future Innovation Pathway: Given the The LX Customer: Motivations to significant social motivation, we anticipate participation are primarily philanthropic displacement is unlikely; however, VLX but supported by social opportunities and channels could emerge as a the promise of exclusive experiences. complementary medium to extend fundraising reach and opportunities.

Philanthropic Fundraisers Snapshot Innovation Pathway

SNAPSHOT: LARGE VENUE CONCERTS

The Experience This offers an ability to diversify revenue streams beyond venue-based ticket sales. • Enhanced by physical collocation This could include new revenue streams • The LX is central to the core value such as advertising, sponsorship, media proposition partnership, and pay-per-set tickets. Live attendance at these small venue concerts • During COVID-19, artists tested will be an extreme premium. The in- smaller more intimate venues and person experience is unique and offers simulcast formats. opportunities to see/hear the artist in new Examples: Verzuz; Garth Brooks; ways. Watch for innovations that impact Uncancelled Music Festival; this. StageIt; Live From out There; Future LX Innovation Pathway: We Drive-in concerts predict that this sector will be under The LX Customer: The value of large pressure of accelerated displacement as venue concerts is highly contextual. For the attraction of an intimate blended example, the CLX of a singer-songwriter is concert model will become a dominant vastly different than a rock band anchored delivery model post-pandemic. Exceptions in a pyrotechnical stage show. However, will be large venues, such as festivals, the draw of intimate venues has been that deliver diverse forms of value, proven in the Las Vegas residency model. including multiple intimate stages, spontaneous jam sessions, and activities The LX Producer: This model expands that provide social value unique to a CLX. the addressable market exponentially.

Large Venue Concerts Snapshot Innovation Pathway

SNAPSHOT: GYMS AND FITNESS STUDIOS

The Experience launched its Ironman VR platform for at- home training and competition. Gym and • Enhanced signficantly by physical fitness studios incorporate a significant collocation social dimension, which is difficult to • The LX is central to the core value displace. proposition The LX Producer: Many gyms and • With the closure of gyms and fitness studios (e.g., YMCA) are non-profit or studios, individuals migrated to in- have thin margins. Loss of members could home options at an increased pace, challenge the sustainability of their including home gyms and VLX fitness business model. classes Margins for facilities are generated by the • It remains too early to judge the value added by facilities and instructors. impact of COVID-19 on fitness, but Having these available online at a reduced research suggests many Canadians cost can impact that. struggled to maintain their fitness Future LX Innovation Pathway: levels.30 COVID-19 may permanently transition Examples: Peloton; YMCA360; some LX customers to at-home fitness Fitnessondemand247; Nike delivery options, but in general this is in a Training Club; Samsung Health; CLX halo. Thus, there may not be a Zwift significant structural change as the social drivers of gyms and fitness classes cannot The LX Customer: Fitness incorporates easily be displaced virtually. In the short- both a utilitarian and hedonic value. term, there will likely be increased During the pandemic, VLX training demand for outdoor fitness options. VLX platforms and home gym sales exploded. and outdoor fitness options may emerge Peloton paid digital subscribers increased as extensions of gyms and studios. 64% in a single quarter.31 Certain Overall, gyms and studios need to focus offerings, previously not part of the gym on amplifying the CLX social value of their and fitness studio market, entered the at- programming. home market, such as Ironman, which

Gyms and Fitness Centres Snapshot Innovation Pathway 28

SNAPSHOT: RECREATIONAL TEAM SPORT

The Experience value. Utilitarian value (fitness) can be replaced; however, the hedonic and social • Enhanced by physical collocation value cannot be easily displaced by VLX or • The LX is central to the core value solitary options. proposition The LX Producer: The vast majority of • During the pandemic, leagues recreational sport leagues are non-profit transitioned to VLX to engage their community organizations. Therefore, the members. Others transitioned to business model of these leagues enables esports and board games. Finally, scalability as they have few fixed costs. recreational athletes trained at home Thus, the business model impact will be and, where permitted, did so in small marginal. groups that allowed physical Future LX Innovation Pathway: distancing to be maintained. COVID-19 should have no structural Examples: Victoria Sport & Social impact on the sustainability of recreational Club; Calgary Minor Soccer team sports, however, this sector needs Association; Home Court to ‘double down’ on enhancing CLX opportunities for its’ participants. The LX Customer: Recreational sports incorporate utilitarian, hedonic, and social

Recreational Team Sports Snapshot Innovation Pathway

SNAPSHOT: RECREATIONAL INDIVIDUAL SPORT

The Experience distance in most individual sports. Some activities, such as swimming, will be • No dependency on physical collocation. slower to return. • The LX is central to core value The LX Producer: COVID-19 has led to proposition. ceased or postponed operations for most • Individual oriented sports that require of these LX producers. Like team sports, access to public facilities (e.g., golf, the risk is extremely low because the tennis, swimming) were largely shut activity is dependent on physical down during the pandemic. LX collocation. However, the delay in access innovation was largely limited to at may force participants to find other home training and VLX coaching and activities and not return to these simulations, but due to resource activities. limitations of these LX producers, the Future LX Innovation Pathway: VLX coaching was typically via email or Although the current impacts are very video call. high, COVID-19 should have limited long- Examples: Kronos Triathlon Club term structural impact on the sustainability of individual recreational The LX Customer: The social, sports, however, similar to team sports, competitive, enjoyment and fitness this sector needs to ‘double down’ on benefits stopped during COVID-19 but are enhancing CLX opportunities for its expected to return quicker than other participants. segments due to the ability to social

Recreational Individual Sport Snapshot Innovation Pathway

SNAPSHOT: GLOBAL TOURISM

The Experience perceived risk and long-term financial impact on service providers. Global • Dependent on collocation tourism requires access and participation. • The LX is central to the core value Restrictions heighten risk over the short- proposition term and decrease interest over the long term. Producers will have to watch • With the closure of most tourist innovations that attempt to replace venues worldwide, many venues experiences instead of encouraging them. introduced interactive VLX tourism options Future LX Innovation Pathway: The VLX tourism introduced during COVID-19 Examples: Faroe Island Tourism; will not have a significant displacement Helsinki; Google Treks; Kenai impact on CLX tourism. Rather, LX Fjords; Holy City 360; Airbnb LXs innovations will be complementary and The LX Customer: Pleasure travel provide a tool that will ‘double down’ on incorporates a significant hedonic and engaging potential tourists until CLX travel social dimension. Virtual travel is a teaser. becomes feasible. The LX Producer: COVID-19 will have significant impact on global tourism due to

Global Tourism Snapshot Innovation Pathway

SNAPSHOT: DINE-IN RESTAURANTS

The Experience already thin margins. Delivery services (e.g., Uber Eats), though increasing • Enhanced by physical collocation revenue streams for dine-in restaurants, • The LX is central to the core value often absorb all margins. proposition While physical collocation is key to the • With the closure of dine-in overall experience, having the food restaurants, many venues migrated to available anywhere increases the risk of a combination of curbside pick-up or losing customers. Producers have to delivery services (e.g., Skip the watch innovations that elevate the food Dishes) or diversified into retail (e.g., too highly and ensure a balance between specialty grocery and liquor). physical traits (atmosphere, service, etc.) and food quality and experiences. Examples: Fran Bartone- Prodromou; Skip the Dishes Future LX Innovation Pathway: This sector is highly contextual and, depending The LX Customer: The value of dine-in on the restaurant, may straddle on their restaurants varies significantly by ‘double down’ ability, thus accelerating audience and type of restaurants. Some disruption and eventual exit. However, the restaurants are purely utilitarian in delivery and curbside innovations, which nature; the value of others is more increased significantly during the hedonic and social. pandemic, may emerge as a The LX Producer: COVID-19 has had a complementary revenue stream. continued impact on dine-in restaurants, Restaurants may also diversity into including mandating physical distancing potential retail operations for specialty and expansive cleaning upon reopening. grocery and liquor. These measures increased the operating costs for many smaller, single revenue stream restaurants, challenging their

Dine-In Restaurants Snapshot Innovation Pathway 32

SNAPSHOT: LUXURY RETAIL

The Experience digital marketing. Luxury consumers are accustomed to a high standard of • Enhanced by physical collocation service in stores; the emphasis, then, • The LX is central to the core value should be on creating a personalized proposition digital LX of the same quality. • Most luxury retail was forced to close. Examples: Louis Vuitton; Dior The result is that luxury goods sales The LX Customer: The value of luxury plunged by 80% in April 2020 retail is highly hedonic and social. compared to 2019.32 The LX Producer: 20 to 30% of industry • In response to COVID-19, luxury retail revenues are generated by customers tried a variety of strategies. For making luxury purchases outside their example, Dior live-streamed on Weibo home country. In many cultures, luxury the catwalk show for its 2020 shopping is an integral part of the tourism autumn/winter women’s collection in experience. A risk exists that customers Paris. Louis Vuitton launched a flee the segment in-person in favour of Valentine’s Day exclusive pop-up store VLX due to convenience and savings in China via a WeChat mini program potential.. that allowed customers to place orders online. The brand moved pre-sale Future LX Innovation Pathway: This consultations and post-sale customer sector is facing an accelerated disruption services online. Despite the outbreak, and is highly vulnerable to the reopening Louis Vuitton doubled its online sales of the global tourism sector. To survive, compared to last year’s Valentine’s this sector will need to expand into season.33 Luxury retails will need to alternative delivery, including VLX and step up personalization efforts in forms of luxury virtual personal shopping.

Luxury Retail Snapshot Innovation Pathway 33

SNAPSHOT: LOCAL RETAIL

The Experience significant pressure from global ecommerce prior to the pandemic. The • No dependency on collocation forced transition to ecommerce may have • No dependency on the core value a lasting impact on how and where proposition customers make future purchases. • Local (non-essential) retail was closed The LX Producer: A significant portion of in most jurisdictions during the a retailer’s operating expenses is tied to pandemic. Few local retailers retail lease space. possessed significant ecommerce Future LX Innovation Pathway: This capability.34 As a result of the sector is facing an accelerated CLX exit pandemic, many local retailers and has two pathways. Many local responded by introducing some retailers will shift from a traditional brick ecommerce capability. and mortar retail model to a blended Examples: Digital Mainstreet, Pilot ecommerce model (i.e., click and mortar) Coffee Roasters that will diversify revenue streams and expand the addressable market. Some The LX Customer: Motivations will vary local retailers may transition to an dramatically by category and customers. ecommerce only model. Local retailers were already facing

Local Retail Snapshot Innovation Pathway

SNAPSHOT: TERTIARY EDUCATION

The Experience The LX Producer: VLX delivery has a negative impact on all CLX revenue- • Enhanced by physical collocation generating assets. This includes • Highly interdependent with the core residences, on-campus retail, food value proposition services, and parking. Moreover, international students compose a • All accredited education systems from significant portion of some academic kindergarten to postsecondary institutions’ revenue streams.36 migrated to VLX delivery. Future LX Innovation Pathway: We The LX Customer: Motivations will vary anticipate that COVID-19 will accelerate dramatically by student profile and the disruption of tertiary education by program. Research suggests that the advancing the migration of some forms of majority of postsecondary students do so learning to VLX. This will be defined by to support their professional goals and the relative advantage of one delivery perceive value in social components of method over another and be tied to learning, including networking and face- specific learning outcomes. The result will to-face collaborative activities.35 VLX does be that much tertiary education will not deliver a comparable value. evolve to a blended model.

Tertiary Education Snapshot Innovation Pathway

SNAPSHOT: PHYSIOTHERAPY

The Experience Examples: Cloud Go Health; Fifth Ave Physio; Physitrack • Dependent on collocation The LX Customer: Physiotherapy is a • Highly interdependent with the core utilitarian need and a necessity for many value proposition patients. • All physiotherapists were closed during The LX Producer: VLX physiotherapy the pandemic due to social distancing. may emerge as a complementary tool to In response, many shifted to VLX CLX physiotherapy, which will provide appointments. Common VLX minimal displacement. treatments include self-mobilization, education, ergonomics, exercise Future LX Innovation Pathway: This prescription and progressions of sector is in the CLX halo and therefore, exercises. Progress is tracked on a CLX physiotherapy will remain the secured app. dominant delivery method.

Physiotherapy Snapshot Innovation Pathway

APPENDIX D LIVE EXPERIENCE INNOVATION FRAMEWORK

To expand beyond the summary questions 2. How important is tradition to your in the manuscript, below are a series of customers? questions for a management team to use 3. What evidence does your organization when assessing the opportunities and have that your organization’s threats associated with a VLX. customers are open to (or not) to The Experience innovations? 1. How central is this CLX to your 4. How complex is the VLX relative to the organization’s core business? traditional CLX? 2. Do any of your direct competitors 5. How convenient is the VLX relative to generate the majority of their the traditional CLX? revenues through a VLX delivery 6. How accessible is the VLX relative to model? the traditional CLX? 3. How important is tradition to the 7. Is it possible for LX customers to try culture of organizations in your CLX the VLX with little risk? sector? 8. Is it possible for LX customers to 4. How important is tradition to you observe others using the VLX before personally? they use it? 5. How embedded is tradition within the 9. Is it possible for LX customers to culture of your organization? assess the value of the VLX before The LX Customer committing to using it? LX customers are motivated by different 10. To what degree are you meeting their factors, so explore value drivers and the key motivations for engaging in the relative proportion of your LX customers. first place? 1. What motivates your customers to engage in your organization’s CLX? a. Is it a necessity? b. Is it a luxury? c. Is it a CLX that promotes social interaction? d. Is it a CLX that promotes social media amplification? 37

The LX Producer 1. What proportion of your revenue over 2. Could the VLX complement the the previous three years is related traditional CLX and offer opportunities directly to a CLX? to grow the market? 2. What proportion of your revenue over 3. Was the VLX unique to only the the previous three years is related to pandemic and provides little or no hosting activities with 100 or more value to a customer once social people physically collocated in a single distancing rules are removed? space? 4. Does your organization possess the 3. How dependent is your product or competencies (e.g., digital capabilities) service value on delivering a LX? and culture to respond to the new dynamics in your sector? LX Innovation Pathway 5. Are competing organizations better Based on your responses above, what is positioned with their competencies and your overall assessment of the value of culture to respond to the new the VLX relative to your traditional CLX? dynamics in your sector? 1. Could the VLX displace the traditional

CLX by offering equal or greater perceived value for the majority of your customer base?

APPENDIX E GLOSSARY

Accommodation: This LX economy including performing arts, visual arts, sector comprises LX producers primarily cultural exhibitions, and films. engaged in providing short-term lodging Collocated LXs (CLX): Incorporates LXs for travelers, vacationers, and others. In where the LX customer and LX producer addition to lodging, a range of other are collocated physically. services may be provided. Diffusion of Innovation: Developed in Active Recreation: This LX economy 1962, by Everett Rogers to explain how an sector comprises LX producers delivering idea, behavior, or product gains engaged in for the purpose of relaxation, momentum and spreads through a health and well-being or enjoyment with population. The result is that this new the primary activity requiring physical idea, behavior, or product displaces what exertion. They are often spontaneous in previously existed. A critical element is nature and participant led, with a low level that a person must perceive the idea, of organization and limited structure. behavior, or product as new or innovative. Adoption Attitudes: In the context of an It is through this that diffusion is possible. adoption attitude, attitude can be viewed The diffusion of innovations defines five as a composite construct composed of the factors that contribute to a customer’s many perceptions associated with the five decision to adopt or reject an innovation. discrete embedded factors in the model 1. Relative advantage: Does the discussed previously: relative advantage, innovation offer superior value to compatibility, complexity, triability and me compared to the existing observability alternatives? Adoption Decision: The individual 2. Compatibility: Is this innovation chooses to adopt or reject an innovation aligned to my values and needs? at a given moment in time. 3. Complexity: How difficult is it for Arts and Culture: This LX economy me to understand and adopt this sector comprises LX producers and innovation? individuals engaged in producing and 4. Triability: Is it possible for me to delivering arts and cultural experiences test and experiment with this innovation before I adopt it?

5. Observability: Does the innovation perceptual map of what Pine and Gilmore provide tangible results to support defines as the four realms of the my decision on whether to adopt or experience economy. reject the innovation? LX Influencers: These are the variables LX Behaviours: Here, we cluster that both media and moderate the behaviour into four major categories that formation of an attitude. Innovation would be considered positive outcomes for attitudes are based on the evaluation of the LX producer seeking that behaviour: information from a wide range of Observe a LX; Attend a LX; Participate in fragmented sources over time. This a LX; Sharing a LX. includes previous direct experience, media consumption, subjective social norms, and Experience Economy: The term that social identity. Moreover, contextual first emerged in 1998 in an influential factors related to the individual are Harvard Business Review article by Pine and Gilmore.37 Pine and Gilmore observed important moderators. For example, is it that both products and services were arts or sport? Is it for adults or children? becoming increasingly commoditized, the Finally, the socio-demographic result was a difficultly for marketers to characteristics of the LX customer have differentiate their product in a competitive been identified to moderate LX attitudes. market. These authors argue that increasingly commoditization, demand LX Motivation: Motivation can be that marketers transform product and clustered into two broader categories of services into meaningful LXs as a value, utilitarian and hedonic. Utilitarian mechanism to ensure maximum economic value is the practical value associated with value. Pine and Gilmore argue that the the LX. For example, there is a practical foundation of the experience economy is value in getting a haircut. In contrast, the currency of time. Time is finite and hedonic value is the pleasure associated therefore a scarce resource of significant with the LX. Hedonic motivation may potential economic value. Thus, like any include items such as social, knowledge, other scarce resource, there is a market escapism, entertainment, or novelty. to exchange time for value. Pine and Gilmore view experiences as the Food Services: This LX economy sector intersection of two variables. The first is comprises LX producers primarily engaged the level of participation by experience in preparing meals, snacks, and customer. The second variable is the level beverages, to customer order, for of connection of an experience to the immediate consumption on and off the customer. These range from absorption to premises. immersion. Absorption is when an experience occupies a customer’s mind, Innovation Pathway: Future strategic whereas immersion is when the customer options at the level of a LX economy becomes part of the experience itself. sector or LX producer. These two variables combine to provide a 40

LX Customer: Individuals who consume activity exist formally through LXs from one of the nine identified LX organizations. sectors. Personal Care: This LX economy sector LX Centrality: This reflects how central also comprises establishments engaged in the delivery of a LX as part of its core- providing personal care and wellness value proposition. In some cases, an services such as physiotherapy, dentists, organization’s core value proposition and and hairstylists. the LX are highly interdependent (e.g., Retail: This LX economy sector comprises live theatre). In other cases, the LX may LX producers primarily engaged in be supplemental to an organization’s core retailing merchandise, generally without product or service. For example, a golf transformation, and rendering services club manufacturer holding an exclusive incidental to the sale of merchandise. golf clinic with a touring professional for Store retailers operate fixed point-of-sale top customers. locations, located, and designed to attract CLX Economy: Includes nine sectors a high volume of walk-in customers. where a minimum of 50% of its product or Support Services: This LX economy services revenue is dependent on both the sector comprises of LX producers engaged LX producer and their customer being in activities that support the day-to-day collocated in the same physical space. The operations of other LX producers. This LX economy includes nine sectors, includes transportation of passengers, including retail, active recreation, management and representation of talent, organized sports, food services, arts and and administration of hosting people. culture, accommodation, tertiary education, personal care, and support Tertiary Education: This LX economy services. sector comprises all forms of private and public education after primary CLX Producer: An organization that (Kindergarten to 12). Tertiary education is develops and executes CLXs. incorporated in our definition of the LX Organized Sport: This LX economy economy as it is optional, competitive and sector comprises LX producer delivering a significant portion of this expense is activities involving physical exertion, skill borne by the student. as the primary focus of the activity, with Virtual LXs: Incorporates LXs where the elements of competition where rules and LX customer and LX producer are not patterns of behaviour governing the physically collocated.

NOTES

1 Fischer, M. (2020, June 15). Commentary: Canadian universities rely on foreign students. What if China called its students home? Global News. https://globalnews.ca/news/7057654/china-students-canada/ 2 Gilligan, M. (2020, June 6). Alberta’s unemployment rate spiked to 15.5% in May, remains among highest in Canada. Global News https://globalnews.ca/news/7030279/alberta-unemployment-rate-may-2020/ 3 Smidt-Jensen, S., Skytt, C. B., & Winther, L. (2009). The geography of the experience economy in Denmark: Employment change and location dynamics in attendance- based experience industries. European Planning Studies, 17(6), 847-862. 4 For this study, we exclude primary education and healthcare from the scope of the live experience economy. 5 The Canadian Press. (2020, June 12). Caution abounds as Alberta eases huge raft of COVID-19 restrictions. CBC. https://www.cbc.ca/news/canada/calgary/alberta- eases-huge-raft-of-covid-19-restrictions-1.5609308 6 Conference Board of Canada. (2020, May 12). Major city insights: Pandemic reshapes economic picture for Canadian cities - Calgary. https://www.conferenceboard.ca/ focus-areas/canadian-economics/major-city-insights/calgary 7 Nassar, H. M. (2020, June 16). Sales low despite half of Canadian small businesses reopening: CFIB. CityNews. https://edmonton.citynews.ca/2020/06/16/sales-low- canadian-small-businesses/ 8 Tushman, M. L., & Romanelli, E. (1985). Organizational evolution: A metamorphosis model of convergence and reorientation. Research in Organizational Behaviour, 7, 171- 222.; Van De Ven, A. H., Polley, D. E., Garud, R., & Venkataraman, S. (2013). The innovation journey. Oxford University Press. 9 Pine, B. J., & Gilmore, J. H. (1999). The experience economy: Work is theatre & every business a stage. Harvard Business Press. 10 Pine, B. J., & Gilmore, J. H. (1999). The experience economy: Work is theatre & every business a stage. Harvard Business Press. 11 Close, A. G., Finney, R. Z., Lacey, R. Z., & Sneath, J. Z. (2006). Engaging the consumer through event marketing: Linking attendees with the sponsor, community, and brand. Journal of Advertising Research, 46(4), 420-433. 12 Sotiriadis, M. D. (2017). Sharing tourism experiences in social media: A literature review and a set of suggested business strategies. International Journal of Contemporary Hospitality Management, 29(1), 179-225. 13 Boswijk, A., Thijssen, T., & Peelen, E. (2007). The experience economy: A new perspective. Pearson Education.; Pine, B. J., & Gilmore, J. H. (1999). The experience economy: Work is theatre & every business a stage. Harvard Business Press.

14 Refer to diffusion of Innovation Theory, including: Rogers, E. M. (2010). Diffusion of innovations (4th ed.). Simon and Schuster.; Greenhalgh, T., Robert, G., Macfarlane, F., Bate, P., & Kyriakidou, O. (2004). Diffusion of innovations in service organizations: Systematic review and recommendations. The Milbank Quarterly, 82(4), 581-629. 15 Rogers, E. M. (2010). Diffusion of innovations (4th ed.). Simon and Schuster. 16 For additional information on utilitarian and hedonic motivation refer to: To, P.-L., Liao, C., & Lin, T.-H. (2007). Shopping motivations on internet: A study based on utilitarian and hedonic value. Technovation, 27(12), 774-787. 17 Pine, B. J., & Gilmore, J. H. (1999). The experience economy: Work is theatre & every business a stage. Harvard Business Press. 18 Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2), 179-211.; Tajfel, H., & Turner, J. C. (1985). The social identity theory of intergroup behaviour. In S. Worchel & W. G. Austin (Eds.), Psychology of intergroup relations (2nd ed., pp. 7-24). Nelson Hall. 19 Greenhalgh, T., Robert, G., Macfarlane, F., Bate, P., & Kyriakidou, O. (2004). Diffusion of innovations in service organizations: Systematic review and recommendations. The Milbank Quarterly, 82(4), 581-629. 20 Glasman, L. R., & Albarracin, D. (2006). Forming attitudes that predict future behavior: A meta-analysis of the attitude-behavior relation. Psychological bulletin, 132(5), 778- 822. 21 Rogers, E. M. (2010). Diffusion of innovations (4th ed.). Simon and Schuster. 22 Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 20(10/11), 1105–1121. 23 Weber, Y., & Tarba, S. Y. (2014). Strategic agility: A state of the art introduction to the special section on strategic agility. California Management Review, 56(3), 5-12. 24 Chesbrough, H. W. (2003). Open innovation: The new imperative for creating and profiting from technology. Harvard Business Press. 25 Grimpe, C., & Hussinger, K. (2014). Resource complementarity and value capture in firm acquisitions: The role of intellectual property rights. Strategic Management Journal, 35(12), 1762-1780. 26 Vial, G. (2019). Understanding digital transformation: A review and a research agenda. The Journal of Strategic Information Systems 28(2), 118–144. 27 Refer to the appendix for the full framework. 28 Note that in doing so, we are not explicitly evaluating the very real near-term liquidity or cash flow challenges a sector or individual organization may face as a result of the CLX closure.

29 Chiang, L., Xu, A., Kim, J., Tang, L., & Manthiou, A. (2017). Investigating festivals and events as social gatherings: The application of social identity theory. Journal of Travel & Tourism Marketing, 34(6), 779-792. 30 Canseco, M. (2020, June 15). Pandemic has weakened the fitness focus of many Canadians. Vancouver Is Awesome. https://www.vancouverisawesome.com/vancouver-news/pandemic-weakened- fitness-focus-many-canadians-2438003 31 Gurman, M. (2020, May 6). Peloton sales jump 66% on COVID-19 boost for home workouts. Bloomberg News. https://www.bnnbloomberg.ca/peloton-sales-jump-66- on-covid-19-boost-for-home-workouts-1.1432460 32 Chaboud, I. (2020, May 13) How the Covid-19 crisis could remodel the luxury industry. The Conversation. https://theconversation.com/how-the-covid-19-crisis-could- remodel-the-luxury-industry-138137 33 Wang, X. (2020, March 17). Luxury brands’ three best practices in coping with COVID-19. WARC. https://www.warc.cn/newsandopinion/opinion/luxury-brands-three-best- practices-in-coping-with-covid-19/3469 34 McLeod, J. (2020, April 10). Retailers scrambling to respond to a surge in e-commerce orders during pandemic. Financial Post. https://business.financialpost.com/news/ retail-marketing/covid-19-retailers-e-commerce-surge 35 Bhardwa, S. (2017, June 6). Why do students go to university and how do they choose which one? Times Higher Education. https://www.timeshighereducation.com/student /news/why-do-students-go-university-and-how-do-they-choose-which-one# 36 Fischer, M. (2020, June 15). Commentary: Canadian universities rely on foreign students. What if China called its students home? Global News. https://globalnews.ca/news/7057654/china-students-canada/ 37 Pine, B. J., & Gilmore, J. H. (1998). Welcome to the experience economy. Harvard business review, 76(4), 97-105.