Americans Plan to Spend Less on Entertainment in 2008
As the economy worsens and food and energy prices spike, people’s finances are becoming strained. That’s not good news in anybody’s book, but is cause for special concern in the entertainment industry. Consumers use their disposable income to buy things like CDs and concert tickets, but will tend to cut back on those purchases as costs for basic needs like food, fuel, and housing take up a larger chunk of their total income.
The NPD Group, a major market research firm, has compiled a report that seems to confirm this gloomy outlook. 37 percent of consumers surveyed said they planned to spend less on entertainment in 2008 than in 2007, compared to juts 18 percent who planned to spend more. Only the teenage demographic bucked the trend. 30 percent of teens planned to spend more this year, while 25 percent planned to spend less.
According to Russ Crupnick, analyst for NPD, the results are especially disappointing because Americans have tended to continue spending money on entertainment during hard economic times in the past. “Entertainment has historically been a reasonably recession-proof spending category," he said, "but in the 2001 recession there were a spate of new gaming platforms, DVD was a relatively new format, and music CDs hadn't yet suffered the full onslaught of digital downloading. It appears from our recent consumer surveys that the current economic climate might be more challenging for those who make and sell entertainment products(1).
The survey indicates that Americans are apprehensive about the state of their personal finances and the economy at large and believe the situation will not improve in the immediate future. Unsurprisingly, that anxiety was somewhat muted in those households earning more than $100,000 per year.
As of now, nothing seems to indicate any large-scale collapse of the music industry or the entertainment industry at large. Still, it certainly appears that things are going to get worse before they get better. As Americans tighten their belts further, those selling entertainment products will have to become more and more aggressive to market those products to the public.
