The need for the Playhouse arose as Perth's main theatre, His Majesty's Theatre was considered too large to provide a feasible venue for locally produced live-theatre productions, and had been functioning principally as a cinema since the early 1940s.
Because His Majesty's Theatre was considered too large for local live theatre performances, which had been its primary function since the early 1940s when it had largely become a cinema, the Playhouse was needed to offer an alternative venue for these productions.