A revamped South by Southwest — one that's smaller and playing out across Austin neighborhoods — goes into full flight Friday.

Why it matters: A lot is riding on the fest overhaul, both for the bottom line of SXSW itself and for the Austin hotel and restaurant industries that rely on the annual influx of visitors.

By the numbers: SXSW said 309,300 people attended the 2025 festival, down from 417,400 in 2019. Attendance numbers this year are expected to be on par with last year, SXSW organizers tell Axios.

• Short-term rental bookings are down 23% across Austin during SXSW this year compared to the festival period last year, according to data from AirDNA, a short-term rental data company.

Driving the news: SXSW is two days shorter than in past years, and the Austin Convention Center's redevelopment has pushed panels and other events to a wider mix of hotels, theaters and venues downtown.

Between the lines: SXSW will still host plenty of star power.

• Steven Spielberg is delivering Friday's keynote at 1pm.
• Artists including Lola Young and Charley Crockett are set to perform during the festival.
• The film and TV lineup also includes buzzy screenings, like "Over Your Dead Body" starring Jason Segel and Samara Weaving.

Yes, but: The crisis SXSW faced in 2020, when it was forced to shut down the festival at the last minute, still hangs over the company.

• The following year, SXSW founders sold half of the company to Penske Media Corporation.

What they're saying: Two straight years of almost no income was "not really survivable without outside investment," festival co-founder Nick Barbaro told Texas Monthly's Dan Solomon.

The intrigue: In his story, Solomon raises the specter of Penske moving the event to Las Vegas and its Rolling Stone-branded hotel. (Penske did not immediately return an Axios request for comment.)

• If such a move ever happened, it would prompt profound questions, Jenell Moffett, a Downtown Austin Alliance executive, told him: "'Is Austin not as cool as it needs to be to attract something like this? Are we changing? Who are we?' "

What we're watching: Whether the new, decentralized version of SXSW revives an event still reeling from the pandemic — or further diminishes it.

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SXSW can get expensive fast, but some of the best parties and performances happen outside the badge system.

How it works: Across Austin, hotels, bars, parks and restaurants host free concerts, markets, pop-ups and day parties that are open to anyone willing to wait in line.

• Here are a few worth adding to your calendar.

🎸 Austin Blues Festival SXSW Day Party

Get a preview of the upcoming Austin Blues Festival at Antone's free daytime party noon-6pm Wednesday.

• Free with an RSVP.

🌴 South by San José

One of the longest-running unofficial SXSW traditions returns to Hotel San José with free outdoor shows from emerging artists through tomorrow.

🎉 SXSW community events

SXSW hosts a number of concerts and events that are accessible to those without a badge.

• The community concert at Lady Bird Lake returns to Auditorium Shores featuring Tune-Yards at 5:30pm on Sunday. Free and open to the public.
• The Lumineers will headline a free concert at Moody Amphitheater at Waterloo Park on Monday. RSVP required for entry.
• The new Congress Avenue Block Party tomorrow features a performance from Orville Peck.

Pro tip: Keep an eye on hotel courtyards, breweries and neighborhood venues for pop-ups and daytime shows.

🥤 Sips and Sounds

Christina Aguilera and Calvin Harris will headline the Sips & Sounds Festival at Auditorium Shores tonight and tomorrow night.

• Tickets are available without a badge and start at $65.

More events

🤖 Waymo driverless cars were seen stopping between railroad tracks and crossing gates in Austin. The company said it is temporarily restricting such traversals. (CBS Austin)

🏗️ Urth Caffé's plans to open a location on East Cesar Chavez Street are on hold after a 120-year-old building on the property was demolished. (Austin Business Journal 🔒)

🏫 Austin ISD is considering leasing out campuses slated for closure as officials look for ways to plug a budget deficit. (KVUE)

Smarties: Answer these three questions correctly and you could get a shoutout in our Monday newsletter.

📬 Just reply to this email.

1. Next generation "air taxis" could fly out of Austin within three years. What will be distinct about the aircraft?
2. Name the Austin 3D-printing construction company that will now sell its technology to other builders.
3. Which high-ranking Trump administration official will be holding a fundraiser in Austin later this month, with tickets starting at $100,000 per couple?

SXSW is back and so is our daily panel picker.

How it works: We highlight interesting panels, music showcases and movie screenings each day.

• Here's what's on tap today:

🤖 Test your computational speed in "Are You Faster than a Robot?"an interactive presentation pitting audience members against a robot, hosted by the founders of CrunchLabs and Rivian. 10-11am at the Rivian Electric Roadhouse on South Congress Avenue.

• Spoiler: You're not as fast.

⛳️ Join a chat about the future of sports storytelling, with the head of sports and live entertainment at Meta and a senior director at the PGA Tour, among others. 11:30am-12:30pm at the Marriott downtown, Ballroom D.

🎙️ Catch Nicole interviewing Audible executives and producers about what makes a compelling podcast at the Marriott downtown, Ballroom F, 2:30-3:30pm.

🍿 Watch "We are the Shaggs," a documentary about three sisters in the 1960s who formed a band at the behest of their dad, who was convinced they'd become rock stars. At the Alamo Drafthouse on South Lamar at 3pm.

🎶 Jam to Southern California garage rock band Violet Minefield at Hotel Vegas at 7:15pm.