Entertainment spending looks promising, NPD says

PHYSICAL: Popular titles in fourth quarter could lift DVD purchasing

By Susanne Ault -- Video Business, 11/4/2009

NOV. 4 | PHYSICAL: Entertainment spending appears generally healthy, as 66% of people report they plan to spend the same amount or more on media products and services in the next 12 months versus last year, according to NPD Group research.

That figure is three percentage points higher than the response from a similar NPD study conducted last year, which is promising, as the economy is digging itself out of a recession.

There are some differences in what people plan to buy through the end of the year. Compared to last year, consumers say they are less willing to spend money on CDs and DVDs and more willing to pay for digital music and to see movies in a theater.

However, NPD believes that DVD could gain momentum with hot new releases coming in the fourth quarter, which is typically the launch period for the most popular DVDs of the year.

“Although CDs have been facing challenges for years, our research shows that videogames, home video and other categories will benefit from releases that consumers really want at prices they perceive as offering a good value,” said Russ Crupnick, senior entertainment industry analyst for NPD. “Consumer sentiment can shift quickly with the release of powerful titles like Halo or Transformers.”

NPD reports that consumers also continue to subscribe to such entertainment services as Netflix and premium cable.

“Only a tiny portion of consumers are going off the entertainment grid,” Crupnick said.

Spending does vary, depending on gender. NPD notes that 63% of men said they planned to spend more than they did last year on entertainment, versus 37% of women who said the same.

NPD said spending is staying stable on these products, even as consumer activity rises within social networking and newer forms of entertainment. During the last six months, 37% of survey respondents said they visited a social network. That is 11 percentage points up from last year. Also, 63% of people sent and received text messages, up seven points from last year, and 9% said they used Twitter.