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Flat is the New Up in Entertainment

2 Nov, 2008 By: Thomas K. Arnold

I received an interesting call last week from a reporter from the Cleveland Plain Dealer newspaper. He had seen press reports that the DVD business was down about 2.5% for the year, and wanted to interview me.

I shuddered and thought to myself, “Here we go again. Another ‘sky is falling’ story about how packaged media is in the dumps and the whole world is going digital.”

“Sure,” I said as cheerily as I could, trying hard to mask my dread.

His first question: “Why do you think home entertainment is still doing so well? That’s not a big drop at all, considering the economy and how other industries are faring.”

I was stunned — in a good way. I proceeded to rattle off my standard stump speech whenever I speak to the consumer press: how home entertainment traditionally has been more resilient than most industries to economic downturns; how when consumers start to feel the pinch in their wallets, entertainment spending is often the last to get cut, since they are looking for something to take their minds off their troubles; how renting or even buying a DVD is a bargain, a far more economical way to spend an evening than a night out on the town or even a trip to the movie theater.

After I hung up, I ran into Stephanie Prange, our editor in chief, in the hallway. “Chris [Tribbey, our senior reporter] just filed a story from Digital Hollywood,” she told me. “You should read it.”

I did. And the line that stuck out was a quote from Peter Daley, a VP at tech advisory firm Union Square Advisors.

With the downturn in the economy, Daley said, entertainment habits tend to change. “People stop going out to movies and instead watch a DVD or [video-on-demand],” he said, noting that the bar for content aggregators has gotten lower. “If you’re around four or five years from now, that’s good. Flat is the new up.”

Interesting assessment — and in line with what the Cleveland Plain Dealer reporter’s perspective seemed to be. In prior years, any time the DVD business was off by 2% or 3%, we would hear ominous rumblings from analysts, the consumer press, sometimes even our own circle of studio and retail executives.

But just in the last month, everyone, it seems, has started singing a different song. Instead of the blues, they’re humming the “B-Flat Waltz.”

Thomas K. Arnold’s e-mail address is tarnold@questex.com

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