Jupiter: Downturn May Impact Movies, Pay TV, Not Internet
- by Mark Walsh @markfwal, October 2, 2008
People may go to the
movies less often and drop pay cable TV channels, but they're not likely to cut broadband service in uncertain economic times. A new JupiterResearch study that examines how entertainment spending will be affected by the downturn found that nearly one-third would cut back on moviegoing, and 12% would cancel premium cable channels such as HBO and Showtime.
But only 2% would cut off their Internet service to reduce expenses in tougher times. "It is noteworthy that broadband has reached this core status, joining the list of utility services along with electricity, phone and cable that consumers consider vital to the household," according to the report written by Jupiter analyst Bobby Tulsiani.
Since the last recession in 2001, the study also noted that entertainment options on the Web have exploded. "Not only are sites like MTV and TBS richer with content and programming, but they have full TV shows and clips available online," according to the report. "Even access to free full-length movies has grown online, with sites like Hulu and Jaman offering hundreds of full-length high-quality movies."
With consumers more likely to stay at home, Jupiter also viewed the downturn as an opportunity for video on-demand services, which have been slow to gain traction. It also noted that the margins on VOD programming can be 30% to 40% higher than DVD sales or rentals.
A separate report released by SNL Kagan Thursday, however, came to a different conclusion about moviegoing during economic declines. It found theatrical box office revenues hit a gross record of $9.7 billion domestically in 2007, eclipsing the $9.3 billion mark reached in 2002.
"When the going gets tough, consumers go to the movies," said Derek Baine, a senior Kagan analyst, in a statement. "Historically, theaters have been fairly recession proof, and this year looks to be no exception."
So, what about the Jupiter findings? Tulsiani agreed that any weakness in box-office receipts resulting from the souring economy has not become evident yet. But he added that the true test would come this fall--whether the cineplex would lose at-home alternatives like VOD, the Internet and DVDs would begin to cut into trips to the local cineplex.
