Hard economy might help home entertainment

NPD: 18% of DVD buyers say they'll boost spending

By Danny King -- Video Business, 6/5/2008

JUNE 5 | Consumer fears that the U.S. is headed for a recession might not hurt the home entertainment business as much as other industries, including travel and apparel.

About 58% of consumers polled by NPD Group last month said the country is in a recession, up from 55% in April. About half of those polled said they would cut back on leisure travel. Those who said they will spend less on items such as clothing and shoes attribute the drop to higher gas prices and utility bills.

The pullback might not translate as much to home entertainment, though, as electronics enthusiasts are less likely to change spending habits when it comes to hardware items such as flat-screen TVs, DVD players and game consoles. About 46% of DVD buyers said in March that they wouldn’t change their spending on consumer entertainment, while 18% said they would boost spending, according to a separate NPD poll.

“Despite all the bad news, you have a lot of people who are at least neutral at this point,” said Russ Crupnick, VP and senior industry analyst for entertainment at NPD. “There’s still a waiting list to get a Wii, and there’s still a demand for LCD TVs, though it’s slowing.”

Companies such as Blockbuster are counting on continued home entertainment spending, as the chain boosts its inventory of Blu-ray discs and invests in store redesigns that emphasize gaming and video downloads. The largest U.S. movie-rental chain said Wednesday that about eight out of nine of those polled in April will stay at home more because of the economic downturn, while about the same percentage will use their home entertainment systems more.

In last month’s NPD poll, 63% of the consumers surveyed said they’d take a closer look at retail promotions such as sales, discounts and membership programs, up from 58% in April.

Accordingly, Wal-Mart said this week that it would set aside a special section for HDTVs and Blu-ray players at about a third of its U.S. stores. The world’s largest retailer also will give $100 gift cards to customers who buy Blu-ray players between June 8 and June 14.

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