Consumers Plan Entertainment Purchases Although Store Spending May Decline

(MoneyWatch)  Most consumers say they will spend the same amount of money or more on entertainment this year, but that intention might not keep overall sales from slipping if the recession lingers.

According to the NPD Group tracking study Entertainment Trends In America, 75 percent of consumers will spend the same amount or more on digital music downloads in 2009 as they did in 2008.

While strong, that number is down slightly from 78 percent last year. For video games, 65 percent of consumers said they would spend the same amount or more on in 2009 compared with 68 percent in 2008. The Movie DVD category was flat at a 63 percent intention to spend the same or more.

On the other hand, 70 percent of respondents in 2009 said they would spend the same amount or more on video rentals versus 69 percent in 2008 versus, 60 percent said they would spend the same or more on music CDs in 2009 versus 57 percent in 2008 and 73 percent said they would spend the same or more on theatrical moves in 2009 versus 66 percent in 2008. Russ Crupnick, entertainment industry analyst for NPD, cited three factors the contributed to the results:

• Entertainment is a relatively inexpensive product category and one that provides for a range of budgets. If $50 for a video game is out of the question, used games and rentals are available for less. The same is true of other segments, with DVDs appearing in bargain racks just months after their initial release, for example.
• Entertainment properties drive anticipation that drives sales. Crupnick noted, "Theaters had a pretty good first quarter based on the strength of movies people wanted to see." And he added that other entertainment segments can generate demand with popular product. Paul Blart: Mall Cop is releasing on DVD and Crupnick anticipates that "people are going to flock to that."
• Entertainment purchasers can be selective. Budget-conscious consumers can pick up a CD they planed to buy when a favorite band issued a release without adding an impulse DVD or video game purchase they might have been inclined to make a year or two ago.

The last factor may tell against companies who are enjoying relatively strong entertainment sales as the recession lengthens. On the other hand, consumers are reluctant to cut back on purchases for their children ?€" <strong>Wal-Mart CEO Mike Duke made that point in his Today show appearance yesterday ?€" and DVDs, CDs and other entertainment products are things that parents can purchase for children and share with them even if they can't afford to do as much outside the home these days.