Tuesday, April 15, 2008

Good Times, Bad Times.

As we head unerringly into a recession, it's interesting to reflect that the cinema was the big winner in past downturns. Even in the dreadful days of the Great Depression, Hollywood boomed.

I believe that this is going to result in a retrenchment by the entertainment corporations (who no longer have the kind of rarity values they had in the past) and a pause in the race towards advertising-driven everything.

Going out has become expensive. Travelling has become expensive. Eating is getting to be expensive. I suspect that content is about to become more expensive.

In the US the success of IPTV systems is going to result in some price testing by the new players that may well see prices settle at a higher level. In the UK, Sky have to do something to boost their lacklustre performance under James Murdoch and may push their prices upwards towards those charged by their main rival Virgin Media.

VoD and PPV will have to be pushed as ad dollars dry up - already there is a tangible gap between the money no longer being spent on TV advertising and the money spent elsewhere. The reality is that budgets have been cut for the past eighteen months and there will be a sharp decline, whatever Martin Sorrell says, after the spikes caused by the Olympics this summer and the US Presidential race.

So, it will be a tough time for Internet TV operators, but as people seek escapism and can no longer afford to drive to the pub, let alone order a meal or drink there, the living room may well become a richer hunting ground.

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