The Business of Entertainment: Recession Resistant?

In the recent wake of government bailouts, spiraling stock markets and crumbling banks, Americans are holding on tight to their pocket books...for good reason. Job cuts are imminent and food and gasoline costs continue to remain fabulously high. But as economic panic blankets the country I have to wonder, will the entertainment industry also take a hit? Is a ten dollar movie suddenly less necessary when your bank has just gone under? Is a premium TV set lower on the priority list?

This week I explored the blogosphere in hopes to find opinions about entertainment's current relationship to the economic recession, as well as trends from Hollywood's business past that may dictate possible outcomes. A common theme that pulsed throughout a large number of blogs was the idea that the Entertainment Industry is resilient to a recession because it offers escapism from the bleakness of reality and hardship. For reference, when the technology bubble burst six years ago, the Dow Jones dropped 22 percent but video gaming revenues increased by as much as 43 percent. Two particular blogs addressed the issue thoroughly and impressively, the first being Open Forum Friday: Is the Movie Industry Recession Proof? published by Sean Dwyer, a video game programmer that runs the "Film Junk Blog" which focuses on movies and music. The blog entry insightfully wonders what the fate of the movie industry will be and how the products of the entertainment industry will be comporomised in the face of economic disadvantages. The second blog I interacted with was Julia Boorstin's entry, Is the Entertainment Industry Recession-Proof? on her blog Media Money. Published by Boorstin, a reporter and anchor for CNBC who specializes in the business of media entertainment, the entry considers whether or not entertainment comapnies will survive the economic hardships unscathed. In addition to posting my comments on these blogs I have also posted them below.

Open Forum Friday: Is the Movie Industry Recession Proof?

Comment:

Thank you for posing some very important questions regarding the current 

economics of the film and entertainment industries. I appreciate your ability to shine a stage light on the economic crisis specifically in Hollywood. I agree with you when you write that "when their purse strings are tightened, people will still shell out for entertainment and escapism," but I have to wonder if the current prices for movies are just too high? At about $10 a ticket is it absolutely necessary to sit through a film dedicated to the glamorous life of a Chihuahua? Are Leonardo Dicaprio and Russel Crowe, seen right in their upcoming flick "Body of Lies," even worth $10 when the economy has really hit a low? I think it is also worthwhile to consider the fact that people have become much more dependent on consumer products, like DVD's and consumer services, such as Netflix. These products and services also steal the box office's thunder, not to say that they hurt the industry as a whole. 

I think that ultimately what will determine whether or not people keep spending their money on entertainment is the value of the products that Hollywood produces. An amazing product is obviously harder to pass up and thus more likely to be successful in a rougher economic outlook. I also appreciate your point that in hard economic times "funding for movies become a lot harder to find and studios will be forced to take less risks." It is easy to forget that the studios are also affected, and effectively restricted, like the rest of us during economic hardships. I thought it was a valid and interesting point to bring up the idea that the restrictions placed on the movie studios will result in less creative freedom. In an industry when it is usually all about the money anyhow, when money is tight, it is definitely all about the money in Hollywood. I definitely agree with your opinion that this will be a depressing reality for Hollywood if these economic restrictions do come to fruition. The last thing Hollywood needs is more big-buck blockbusters and fewer significant and challenging films. 

Is the Entertainment Industry Recession-Proof?

Comment:

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 Emmys Flop: Is Reality to Blame?

This year's 60th Annual Primetime Emmy Awards Show boasted the lowest ratings for the Emmys since 1990. Nielsen Media Research found the ABC telecast averaged 12.2 million, down 6 percent from last year's broadcast and on par with record-low 12.3 million people who watched the 1990 Emmys. This was also the fourth straight year in viewer decline for the Emmys which begs the question: what's eating the Emmys?

Sunday Night Football, or more specifically the Dallas Cowboys versus Green Bay Packers, surely took a sizable bite out of the Emmys' audience. But should a once-a-year, star-studded, glamorous award show really loose all of their viewers to linebackers? It seems like something else was askew.

Some say, the broadcast was overly-focused on reality television and doomed from it's "unscripted" opening skit, seen on the left, during which reality television hosts Ryan Seacrest, Howie Mandel, Heidi Klum,Jeff Probst and Tom Bergeron talked about nothing for twelve straight minutes. "This is not a bit," Mandel said during the skit. "This is reality and who better to offer that to you?" But in fact, the reality was that the skit was met with a bored, if not stunned, audience and mocked just fifteen minutes into the show when Jeremy Piven accepted his Emmy. "What if I just kept talking for twelve minutes? what would happen? That was the opening," Piven joked.

Some critics felt the reality hosts were fully to blame for the show's dismal ratings. Without their glossy sets and their usual confinement to two-minute babble the hosts seemed out of their league. USA Today deemed the broadcast "hideously awful from start to harried finish, dragged down by five amateurish reality anchors who would have been unwelcome as guests, let alone host."

ABC chose to feature the quintet as hosts in order to introduce the Emmys' brand new reality host category in which all five hosts were nominated. Though each host is talented in the cocoon of his individual show, the chemistry between them was contrived and largely missing. Egos were soothed as each host seemed allotted just the same amount of time as the next and all the while I sat there wondering why ABC hadn't just chosen one host? The only possible hindrance being the fact that choosing one nominee would look like choosing the winner. So why not forget the reality television hosting gag altogether? I would kick all of them off my Emmy island. But it seems that at this year's Emmys, reality was king. Even Lauren Conrad of "The Hills", famous for starring as herself in a never-ending "reality" series, presented an Emmy Sunday night. Presenter standards must have been significantly lowered.

On the whole, the Emmys broadcast was as reality-saturated as television itself. From hosts to presenters to winners, reality presence was not wanting. But with all of the reality floating about I have to wonder, do the Emmys have nothing higher to honor than reality television? Are twelve million people tuning in to see reality rewarded? Has the television industry lost its talent? Or has American lost its interest in scripted television?

In classic award show style, ABC paid montage homage to scripted greats like the Mary Tyler Moore Show but this year's scripted television still failed to take center stage. As James Hibberd said, "It didn't help the Emmys that its big winners were the barely watched Mad Men, the slightly more watched John Adams and as Tina Fey joked, the Hulu-watched 30 Rock."

Bigger names like Grey's Anatomy, and Ugly Betty were noticeably absent from the winning line-up. Aside from Tina Fey's triple win, seen right, there was little excitement in the Emmy air. ABC news, who broadcasted the program, believes the small audience and lack of excitement about the winning shows is an ominous sign for TV's new season, which opens Monday. In the end, the winning shows seemed to be the shows with less-than-winning ratings. The lack of consistency left viewers befuddled and disconnected from the awards.

The discrepancy between ratings and winnings may be attributed to the taste of the chosen voters, but it also seemed to pay inadvertent homage to the 100 day writers strike last season. As the Associated Press remarked, "the shows that were able to continue show what TV without writers is like."Apparently, shows without writers equates to shows without ratings... but they still win Emmys. The writers strike not only drained the Emmy talent pool, it also largely deflated the television industry. Though the fumbling and lackluster performance of the reality hosts is surely responsible for some viewer disinterest, the real ratings issue came from America's lack of interest in TV altogether. Without shows to excite, hosts to entertain and speeches that last for more than 15 seconds there is no point in watching the Emmys. Reality can only take you so far and as a nation with a lot of issues of its own, America seems to be ready for some un-reality entertainment.