Sphere’s next show to use AI; next big step for Las Vegas ‘Exosphere’ is adding sound

LAS VEGAS (KLAS) — Sphere is working on a show that will “blow your socks off,” but officials say an announcement won’t come until sometime this summer. Jim Dolan, Sphere’s CEO and executive chairman, admits that’s a tease.

“You will see something you’ve never seen before when we debut the second attraction,” Dolan said Friday, revealing that it would have “a significant AI component” and build on the central formula for Sphere shows: experience and immersion.

Following on the success of Postcard From Earth, which has over $1 million in average daily ticket sales since its debut in October, Sphere Entertainment is banking on bringing in repeat customers who saw Postcard and are now ready for something new.

“As we hit the annual mark for Postcards we need to have new content in place and that new content, has to, you know, has to be able to draw people in, so it needs to be, honestly, better than Postcards,” Dolan said, describing what Sphere has revealed about the Las Vegas market. Visitors tend to come back once a year — often around a convention or an event — and they’re 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 — the innovative venue isn’t standing still. Dolan said to expect to start hearing along with seeing. “We think there’s more to do with the Exosphere. We think that we’ll be able this year, probably this summer, to be able to add an audio component that goes along with the Exosphere which will make, of course, the medium even more attractive. So we’re still pretty bullish on the Exosphere,” he said.

The video coming off that external surface at Sphere has already captivated Las Vegas — along with lucky airline passengers who end up with the best window seats. It has attracted the world’s attention and planted the seeds for another Sphere. And while discussions are continuing in several markets, according to Dolan, he’s not ready to say where the next Sphere will be. Wherever it ends up, Dolan wants to start construction next year.

“You go ask a yak herder in Siberia about Las Vegas, he knows what Las Vegas is. The sphere has now become the showcase for Las Vegas and what we put on the Sphere garners attention around the world,” Dolan said. “Not just the advertising but the art and the other things we do on there. One of the interesting things that happened when we opened up the Exosphere, when we turned it on, is that the casinos, hotels have a surcharge if you get a room that faces the Sphere. That doesn’t happen with a billboard.”

That makes sponsorships — advertising — a major business, and the company continues to work to build revenues on that front. Dolan said Sphere is starting to get some repeat business with sponsors, which he sees as a really good sign. He described “continued strong performance from Exosphere.

When asked if he would sell naming rights for Sphere, he said, “I won’t take it off the table, but it will be a big number.”

Postcard From Earth drove the company’s revenue during the first three months of 2024 — the company’s “third quarter” after opening Sphere on Sept. 29, 2023. Dave Byrnes, newly installed as executive vice president, chief financial officer and treasurer, said Sphere had $170.4 million in revenue and $12.9 million in adjusted operating income. Postcard ran 257 times during the quarter, which also included 15 shows at the end of U2’s residency. Residencies for Phish and Dead & Company are in the company’s fourth quarter.

Overall, Sphere Entertainment reported $321.3 million in revenues with total adjusted operating income of $61.5 million. The company posted an operating loss of $40.4 million. Comparisons to last year at this time are complicated by the fact that Sphere didn’t open until Sept. 29.

While details weren’t revealed, Sphere’s biggest costs come from selling, general and administrative expenses (SGA), a category that includes marketing, advertising, rent and utilities. Other expenses came from corporate overhead and costs for Sphere Studios content development.

The company is also losing revenue to its MSG Network, a regional sports network that Dolan remains committed to despite financial challenges.

Investors on the earnings call asked Dolan about progress on building another Sphere. He said what the company learned in Las Vegas will allow it to build its next version cheaper, and possibly change the scale depending on the market. In Las Vegas, seating accommodates 18,600 and goes as high as 20,000 when the floor is used. But the next Sphere could be smaller — possibly as small as 5,000 seats.

“Building a sphere isn’t like building a McDonald’s,” Dolan said.

One of the biggest challenges to increasing the profitability of Sphere is hosting more than one show in a single day. Postcard runs 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 address from President and CEO Antonio Neri. The first corporate event could set the stage for future events tied to conventions or product releases on a spectacular stage.

The 2024 Upper Deck NHL Draft will be the first event televised live from Sphere on June 28-29. The Vegas Golden Knights have the 19th overall draft pick. The San Jose Sharks have the first pick.

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