Surveys: It's a tough time for business

Consumers expected to spend less on entertainment this year

NEW YORK -- Times are hard for media and entertainment companies -- and for more than one reason, as new studies show.

Amid a sluggish economy, research firm NPD Group found that 37% of U.S. consumers plan to spend less on entertainment content and devices this year -- particularly on content in the form of DVDs and the like. Only 18% expect to spend more.

Two other surveys show that 32% of global consumers are not willing to pay anything for downloaded content and that entertainment and media companies are among the world's least-trusted businesses.

All this seems to confirm worries that a feared recession could this time around lead entertainment products to be less insulated from consumer-spending cutbacks than in the past.

"Entertainment has historically been a reasonably recession-proof spending category," said Russ Crupnick, entertainment industry analyst for NPD. In the most recent recession period in 2001, new video gaming platforms had just arrived, the DVD format was still relatively new, and CD sales hadn't begun their precipitous decline, the analyst noted.

"The current economic climate might be more challenging for those who make and sell entertainment products," Crupnick said.

NPD found that consumers who do plan to spend more on entertainment this year are focused on new devices, such as Blu-ray Disc players and the latest gaming consoles. "This finding indicates that the industry will have to work harder to successfully market entertainment content to this group of consumers," NPD said.

Meanwhile, PR agency Edelman found that 54% of global consumers ages 18-34 say price reductions would encourage them to buy content online rather than download illegally -- but 32% are not willing to pay anything at all. This unwillingness is the highest in the U.S. at 38%.

In another survey, Edelman found that the media and entertainment sectors are among the least trusted on a global basis and that trust is a key determinant for buying behavior.

Only 53% of worldwide respondents in the 35-64 demographic trust entertainment companies, and only 46% trust media firms, the survey found. Only the insurance industry fared worse globally.

In the U.S., Edelman found that 50% of responders were "entertainment trusters," compared with 35% who were distrusters. The U.K. has a 49%-26% edge in favor of the biz; in Germany, distrusters outweigh trusters 56% to 29%.

About 52% of young consumers in the U.S. perceive entertainment companies as providing good value, compared with 47% in the U.K. and 33% in Germany. Film, TV, music, gaming and online social media all get higher value ratings in the U.S. than in those countries.
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