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Proof of Resistance
December 5, 2008

It gives a lot of comfort, this idea that the movie business, home entertainment in particular, is recession-proof. Or if not immune, then at least resistant.

There has to be a niggling fear in many minds, however, that the current (official, finally) recession hit so suddenly and so dramatically that conventional wisdom just might not apply.

Not so, says Adams Media Research, which in a new report uses figures dating back to the ’30s to show that media revenue has, in fact, been recession-resistant.

In the report, “Media markets: Just how recession-resistant are they?,” Adams maintains that combined spending by consumers and advertisers has grown at a 7.1% CAGR from 1936 to the present; that consumer-paid models like movie tickets and packaged media generally stand up better in recession than advertising models; that economic downturns seem to have little impact on media technology adoption (think Blu-ray); that even if this recession is worse than other post-war downturns, media will still fare better than other businesses; and whatever the depth of the recession, history suggests that markets driven by consumer spending and that are getting a technology update like high-def have the best chance of outperforming the overall economy.

Specific to packaged media, the growth of both music and videogames has slowed during some recessions and not others, while new technologies seem to have an overriding impact on growth. Videogames sales grew significantly around the 2001 recession, for instance, due to the introductions of the PlayStation 2, Xbox and GameCube consoles.

DVD’s introduction in 1997 helped the overall video business continue to grow at high single-digit rates through the economic downturn of 2001.

Adams believes that Blu-ray is on track to replace DVD, but not as fast as DVD replaced VHS, and expects high-def disc revenue (including HD DVD) to account for 7.4% of video revenue this year.

Though the industry may fall slightly short in 2008 and 2009 as a result of the recession, Adams, like many studios, expects Blu-ray and downloads to return home entertainment to growth by 2010. At that point, according to Adams, Blu-ray will represent about one-third of packaged movie sales, before growing to one-half by 2012 and about 80% by 2015.

Posted by Marcy Magiera on December 5, 2008 | Comments (0)