Tickets to PAX Prime are becoming increasingly hard to come by. Two years ago, the Seattle event sold out in six hours. Last year, it took about an hour and fifteen minutes. This year the massive gaming convention completely sold out in just 54 minutes.

Every year there are more and more people who want to go to PAX but are unable to get tickets. This leads to lots of questions about why the organizers run ticketing the way they do, and why don’t they do this or that differently to make the process more “fair.”

In order to get a better understanding of the thinking, planning, and strategy that goes into PAX ticket sales, we turned to Robert Khoo, President of Operations at Penny Arcade. Robert has run 20 PAX events to date (11 Prime, 6 East, 2 Australia, and 1 South), and is the brains behind the business side of the Penny Arcade empire.

GeekWire: What’s the biggest challenge you face with the ticket sales process for PAX?

Khoo: The fundamental problem is that supply is vastly outstripped by demand. In other words, there are more people that WANT to go to PAX than can fit inside of a PAX. It’s frustrating for everyone involved, because no matter what system or solution we do, there are always going to be disappointed folks that can’t get into the show.

Roughly how much would you estimate demand for tickets outstrips supply? 3x? 5x? 10x?

Khoo: It’s hard to model out, but for PAX Prime in Seattle, I’d say it’s anywhere between 5-10x.

Outside the convention center it feels like there is a lot of scalping going on, but compared to the total number of tickets sold I suspect it is actually a very small percentage. Do you have any quantified data on the number or percentage of tickets that are scalped?

Khoo: That’s always a challenge for us, because seeing someone with a stack of badges or scrolling through auction after auction on eBay is such a visceral datapoint. But without context, it becomes a battle of perception vs. reality, with the truth being less than 1% of all badges we see being sold via third parties.

Since we’re dealing with organized scalping groups, when given advance notice they are able to mobilize teams, friends, and family members to purchase en masse. By not giving warning, it allows a higher percentage of badges to be sold to real fans of the show. A common reaction of those who wanted tickets but couldn’t buy them is to decry your ticketing system as “unfair.” Armchair convention organizers seem to think that if you tried this “one weird trick,” all of the perceived issues with ticketing would vanish.

Let’s go through some of the suggestions you hear the most.

First, why don’t you announce ahead of time when you’ll be selling tickets?

Khoo: Since we’re dealing with organized scalping groups, when given advance notice they are able to mobilize teams, friends, and family members to purchase en masse. By not giving warning, it allows a higher percentage of badges to be sold to real fans of the show. This isn’t conjecture – we have over 20 PAXes under our belt at this point and therefore a tremendous amount of data to support this.

What about releasing tickets in phases?

Khoo: This unfortunately doesn’t address the fundamental problem of demand outstripping supply – all this would do is move badges from one group of folks to another while allowing the scalping groups to recover and regroup after each phase.

How about a ticket lottery?

Khoo: Ignore for a moment that a lottery doesn’t fix the supply and demand problem. When you think about a lottery, it extends the purchasing window, benefiting scalpers more than anything else. Scalpers could, over time, flood the submission box, profile creation, or whatever means we’d use to collect entries, and ultimately, you’d have a higher percentage of scalpers purchasing badges than before.

With scalpers reselling tickets for ridiculous prices on eBay, why not tie each ticket sale to an individual and require photo ID to pick them up?

Khoo: We’ve run the numbers behind this, and even with a hundred pickup stations, it would take between 2-3 hours on Friday morning to pick up a badge. So yes, this would be effective, but like everything, there’s a trade off. It would inconvenience 100% of attendees to solve a problem that impacts 1% of badges sold. We’d win the war on scalpers but make the on-site experience much, much worse.

Louis C.K. has supposedly come up with a way of selling tickets that completely got rid of scalpers. Why don’t you just do what he did?

Khoo: We actually do something similar only are FAR more aggressive. When we find something that trips any of our red flags, we cancel the order and all orders associated with that person. The language for badge limits is clear on the purchase page, and anyone that wants to abuse that takes the risk of having ALL of their orders cancelled and being blacklisted from buying in the future. And yes, we reissue these reclaimed badges to the public.

Why not at least cut down the number of tickets you can buy at once (e.g. 2 instead of 4)?

Khoo: This negatively impacts families and groups of friends. The badge limit used to be eight badges per order, but we found the happy medium on this was four.

Now that there is a West Coast PAX, an East Coast PAX, and a Central PAX, have you thought about limiting sales of some of the tickets to each PAX to people in the states that are closest to each event? (e.g. NFL playoff tickets often do this, only people with a CC billing address in WA, OR, and ID could buy tickets to the last Seahawks playoff game at CenturyLink)

Khoo: 90% of our sales for Prime come from the west coast, so this really wouldn’t solve our problem.

Since there’s so much demand for PAX Prime, why don’t you move it to a city with a big enough convention center to handle larger events?

Khoo: Easier said than done! Besides how incredibly angry Seattleites would be, there are only a handful of convention centers on the west coast that could handle PAX. And it’s not just size you need to consider: think about hotel inventory, calendar availability, conflicting city events, etc. Trust me when I say that all options have been explored.

Isn’t this just basic economics? When demand outstrips supply you just raise prices until they reach equilibrium. Why not increase prices a lot more than you already have?

I’m glad you bring up the economics to this, because within that context, there are only a few ways you can “solve” the problem of an equilibrium price that is higher than the solved price.

Increase supply. We attempt to do this by adding more shows, adding additional days, and of course, adding more venues like the Benaroya, Paramount, Grand Hyatt, Olive 8, etc. so we can increase capacity. Decrease demand. People laugh when I say this, but we can legitimately try to make the show worse. We can invest less in the quality of the event, and make people want to come to it less. I personally do not subscribe to this solution. Increase Price. And this is what you’re touching on here. I get this “solution” suggested to me quite a bit, and yes, there is validity to it. If scalpers didn’t see the profits they do, they wouldn’t be incentivized to participate in the first place. But it brings up the pickle we are often in, which is that pesky tradeoff again. Yes, we’d get to line our pockets with money for days, but we like to think of PAX as the show for the every-gamer, and if we didn’t keep badges affordable, it’s not fair to those that can only afford our current price.

Are there any other behind the scenes insights that you’d like to add about the process of selling tickets for the northwest’s biggest and most popular convention?

Khoo: I know the hate mail I get is the vocal minority, but let me put this out there: We’re on the same team. I want you to get badges from us. I don’t want scalpers to get all of the badges. I assure you we work VERY hard to ensure this, even if perceptually it looks like “all of the badges” were acquired by resellers.

When you look at all of the solutions above, they’re generally told to me out of frustration because they personally didn’t get a badge. I know I’m going to get pushback for saying this, but moving a badge from one legitimate person to another doesn’t help the bigger problem, which again, is perceived to be larger than it actually is.

<shields face>