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April 17, 2009

Consumers Say Entertainment Spending Steady: Is it?

By Gary Kim, Contributing Editor

Most consumers plan to hold steady or increase their entertainment spending in 2009, according to The NPD Group. The big issue is whether consumer behavior matches stated consumer intentions. So far, NPD indicates, subscription services such as broadband access and multi-channel television have held up. But it appears consumers might be trimming spending in some areas, such as newspapers, magazines and video game purchases.

Some 75 percent of consumers said they will spend the same amount or more on digital music downloads as they did in 2008.
Some 73 percent of consumers expect to spend the same amount or more on theatrical movies. Last year, only 66 percent of survey respondents said they would spend the same or more last year, says NPD.
But there already are some signs consumers are not behaving as they say they will. Sixty-five percent indicated they will spend the same or more on video games, and sixty percent will spend the same or more on CDs. But overall U.S. video game sales fell 17 percent in March to $1.43 billion, NPD also notes. Video game software sales dropped 17 percent to $792.8 million in the month, while hardware sales fell 18 percent to $455.6 million.
NPD reports that 51 percent of consumers surveyed purchased a DVD or Blu-ray disc in the prior three months. Purchasing a console or portable video game ranked second at 36 percent, followed by purchasing a CD at 31 percent.
Current per capita spending on entertainment in the U.S. is $160 per month, with the bulk of that spending going to dedicated subscriptions mostly related to TV and Internet access. Despite predictions that consumers would trim entertainment subscriptions, the only notable decline in spending NPD observed were for magazines and newspapers.
One should always pay attention to what people do, not what they say. As first quarter earnings reports start to trickle in, we’ll have to see whether fourth-quarter behavior, which showed that consumers were not disconnecting subscription services, will continue to hold up.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Stefania Viscusi

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