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TK's MORNING BUZZ: Expanding Pie Vs. Cannibalization? Most Readers Say the Truth is a Little of Both

7 Mar, 2001 By: Thomas K. Arnold

Once again, I received numerous responses to one of my shameless pitches for feedback, this time to my "expanding pie vs. cannibalization" column of last Monday. If you will recall, I opined that of the two schools of thought -- those who think the home entertainment universe is expanding, and those who believe it's eating itself -- I subscribed to the former, due to my belief in the growing fractionalization of home viewing.

Most readers said the truth is a little of both. One wrote, "A better description would be a partially filled balloon. As more choices and ways to consume entertainment become available the balloon fills with air and expands. Asthe balloon fills one or more delivery options will eat into the others, but still the balloon gets larger. But alas! Eventually that balloon will pop!

"No one knows yet how big that balloon can get??"

Another wrote, "I think there is a lot of truth in both theories. Every time someone watches a movies on STEAL-PER-VIEW or VOD that's one less rental and potential late fee. DVD sales are also cutting into the rental pie. The Internet now takes a lot of peoples' free time. The fact that rentals are remaining fairly strong means the pie is expanding. As a store owner I need to get all expenses under better control. It's not how much you make but how much you keep that counts."

One distributor had this to say: "My deep thoughts are that there is more cannibalization than there is expanding pie," he wrote, "because we're competing for free time, which is at best 'nominal' for most Americans these days." (This reader, incidentally, also called me an "idiot" for watching movies on my DVD while my wife is watching "Sex in the City" videos in the bedroom.)

But my favorite response comes from our publisher, Don Rosenberg, who on occasion can be one of my harshest critics. Here's his response, in its entirety:

"I am more of the cannibalization school as opposed to the expanding pie. But it is clearly not 100% one way or the other. The ability for dad, mom and the kids to watch different programming has been around for more than 10 years. Over 50% of households that have VCRs had two by 1991. Most home now have three. Of course the computer and the game/DVD boxes will expand those options, but the options have existed and many families were split in their viewing habits for many years.

"That old argument that TV won't kill the theaters and VCRs won't kill TV and the theaters, etc., etc., is just that, old. That theory made sense when people had leisure time to fill or replace that wasn't viewer-oriented.

"People are reading less and, going way back, radio usage at home plummeted as TVs caught on. It was only the car that brought people back to radio. People used to also sit around and talk at night. Do you know anyone who does that?

"I just don't see enough time (and that can't expand) for people to do all of these things that they now can, that all involve some form of video entertainment. The expansion due to the population increase and the equipment increase will almost be offset by cannibalization. So we will continue to have an upward growth in 'movie' watching but technology will rearrange what market share each format will receive. It will not be as dramatic and fast as some think, but it will happen."

Comments? Contact TK directly at:TKArnold@aol.com

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