Is the Entertainment Industry Recession-Proof?

High gasoline prices and the pullback in consumer spending are impacting Americans' entertainment habits -- but not the way you'd think.

Perhaps the entertainment industry overall really is recession-proof: People may be skipping their vacations, but a "staycation" these days means watching more TV and playing more video games.

TV sales are continuing to rise: the number of TVs shipped to retailers in the U.S. and Canada grew 26 percent to 9.3 million units in the second quarter, compared to the first quarter of this year. Sales of fancy LCDs grew 52 percent.

Now, to be fair, while the number of TVs are growing, people are buying smaller sets and paying less for them. DisplaySearch, which reports these numbers, saw huge growth in TVs in the 19-inch to 32-inch range.

Videogames: Not Kid Stuff

In other entertainment news, more grownups are playing videogames. Ibis World, a market research company, is reporting that more women and older adults are joining the stereotypical teen boys in playing games.

The overall video game sector is expected to grow 9.5 percent this year, with women now comprising 38 percent of U.S. gamers, up from 33 percent five years ago. And now the average player is 35 years old, with almost a quarter of gamers over 60. Game and console makers are paying attention to their audience, bringing out more music games like Rock Star which appeal to a wide demographic range of music tastes.

And new games like Bratz Rock Angels and Dora the Explorer target the younger female audience.

Great Dark Way?

But there is one part of the entertainment industry that is suffering: Broadway. So far, ticket sales aren't particularly hurting. But there's concern that the dip in ticket sales that happens every September will be particularly deep this year. The real issue is Wall Street investors pulling out of productions they were backing.

A revival of "Godspell" is likely getting shut down due to backers backing out. Even Harry Connick Jr. can't get his production off the ground: "Nice Work If You Can Get It" was indefinitely postponed because producers couldn't reach a good deal.

Some productions are getting shut down for reasons other than economic pressures. But if money were plentiful, the environment might be more favorable.

Comments

[Jessica Hagy:]

Thank you Julia for another post that offers a business insight into the media and entertainment world. I always love reading your posts and this entry proves no exception. I thought it was especially interesting how you mentioned that "staycations" are adding to the Entertainment Industry's resilience to recession. Though many people across the blogosphere have hypothesized that just as it was in the Great Depression, (frightening, that our current economy is being linked at all to the Great Depression) the escapism of entertainment will maintain its resistance to a poor economy. You mentioned that you believed television and video games would benefit directly from the consumerism of "staycations" but I have to wonder if television is really that strong right now, especially after generally less-than-impressive season network debuts. Though, as you mentioned, video game sales continue to benefit from the "staycation" cutbacks, I think entertainment will really benefit across the board.

As News Corps' CEO Rupert Murdoch recently said, "We are no longer dependent on the strength of one market or medium." Hopefully, the recession resistance will extend to all entertainment mediums and effectively keep at least one industry "safe" in the current economy.

I also thought it was interesting that you specifically noted the fact that "the number of TVs shipped to retailers in the U.S. and Canada grew 26 percent to 9.3 million units in the second quarter." With the strength of TV sales and the presumed success of TV and video games, I presume that the film industry must be taking a larger economic hit than TV and video games. Obviously films depend on much larger budgets and expensive advertising; have you noticed a large descrepancy between the recession immunity of the TV industry and the film industry?

2008 Sep 30 02:26 PM