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Report: Cable, Satellite TV Lead Entertainment Consumer Spending

19 May, 2011 By: Erik Gruenwedel

Excluding multichannel video distributors and theatrical, packaged media accounts for 82% of consumer spending

Consumer spending on entertainment in North America and Western Europe reached nearly $235 billion in 2010, up 69% from about $139 billion in 2010, according to new data from IHS Screen Digest.

Revenue from cable and satellite TV subscription-based platforms reached $139.2 billion, up from $56.1 billion in 2000, with net growth since 2000 of 148%, according the report.

Notable loser: CD and digital music formats, which declined 55% in the period 2000-2010 and reached $13.9 billion last year, accounting for just 6% of total entertainment media spending, compared with 22% a decade ago.

“Music is now the smallest entertainment media segment — a steep fall from its previous No. 2 perch a decade ago,” said Tony Gunnarsson, analyst for video at IHS.

Music’s loss was video’s gain, the latter overtaking music in consumer spending in 2001. Video spending recorded net growth of 14% during the decade, generating $32.3 billion of total entertainment media spending in 2010, according to IHS.

“Spending on the video sector peaked in 2004 at $40.7 billion, and despite subsequent growth on new platforms such as online and mobile, overall video spending since then has fallen as the DVD format reached market maturity and consumers found themselves exposed to ever-greater entertainment media choices,” Gunnarsson said. “Video now makes up 14% share of the total entertainment market, compared to 20% share 10 years ago.”

Games was the third largest area of entertainment media spending in 2010 and also boasts the fastest growth of any sector in the decade, up 193% from $9.9 billion 10 years ago to $29 billion last year. Benefiting from expanded demographics and the boom in digital 3D, games made up 12% of total entertainment media spending in 2010, compared to just 7% in 2000.

Consumer spending on cinema — the fourth largest of the five entertainment media sectors — reached $20.4 billion in 2010, representing net growth of 49% over the decade from $13.7 billion.

However, as with the shift in spending from music to video, consumers now spend more on video games than on cinema tickets. Cinema’s share of the total entertainment media market was 9% in 2010, down one point from 10 years ago.

When cinema and TV are excluded from the analysis, the continuing dominance of packaged media over digital and mobile delivery is clear.

Packaged media accounted for 82% of spending followed by digital at 15% and mobile at 3%, according to IHS.

Within the packaged media business, North Americans spent a greater proportion on buying and renting video than their European counterparts — 56% vs. 43% last year.

The reverse is true, however, for packaged music: Europeans spent approximately double the 9% expended by North America on packaged music, reflecting the fact that consumers in North America bought more digital music than their European counterparts.

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