OPINION: Changing times
By Paul Sweeting -- Video Business, 1/23/2009 11:56:00 AM
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In just the past week, we’ve seen Sony announce a staggering $2.9 billion operating loss, the largest in its history; the first-ever mass layoffs at Microsoft; 800 job cuts at Warner Bros.; and a restructuring at ABC that also will likely lead to layoffs.
The hits just keep coming.
Far from proving recession-proof, show business has shown itself to be just as vulnerable to the current economic downturn as other industries.
As Video Business reported earlier this month, consumer spending on DVDs and Blu-ray discs fell 5.7% last year, paced by a sharp, 8.5% drop in sell-through for DVD and Blu-ray combined.
The most striking data, however, was on the hardware side. According to data compiled by the Digital Entertainment Group, U.S. consumers bought 25.2 million DVD players last year, compared to 33.5 million in 2007, a drop of more than 30%.
To some extent, that was to be expected in the face of a new format, such as Blu-ray Disc. But sales of Blu-ray players (excluding PlayStation 3 consoles) came in shy of analysts’ projections as well.
One leading manufacturer, LG Electronics, saw operating profits at its digital media division, which includes DVD and Blu-ray Disc players, plunge 85% for the year.
That’s not consumers cutting back a bit on their out-of-pocket entertainment spending; it’s consumers not investing in the category at all.
There was one bright spot amid the gloom, however: videogames.
According to the NPD Group, combined videogame hardware and software sales grew 19% last year, despite a fourth-quarter slowdown.
Nintendo’s Wii platform continues to be a recession-defying phenomenon, while even Microsoft, which missed its revenue and earnings targets for the recent quarter, posted solid results for its Xbox unit.
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