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The NPD Group: U.S. Consumers Anticipate Spending Less on Entertainment This Year

PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--According to The NPD Group, a leading market research company, keeping consumers excited about devices and hardware may be the secret to industry success in the current challenging economic environment. Results from NPD's upcoming "Entertainment Trends In America" report showed that 37 percent of Americans believe they will spend less on entertainment products and devices in 2008 versus 2007, compared to just 18 percent who anticipate spending more.

Just under half of respondents to NPD's survey (46 percent) thought they would spend about the same amount in 2008 as in the prior year. Teens were the only age group where spending tipped positive; 30 percent believed they would spend more than last year, versus 25 percent who thought they would spend less.

"Entertainment has historically been a reasonably recession-proof spending category," said Russ Crupnick, entertainment industry analyst for NPD, "but in the 2001 recession there were a spate of new gaming platforms, DVD was a relatively new format, and music CDs hadn't yet suffered the full onslaught of digital downloading. It appears from our recent consumer surveys that the current economic climate might be more challenging for those who make and sell entertainment products."

Consumers who plan to spend more on entertainment this year are primarily focused on buying new devices (e.g., Blu-ray Disc players and the latest gaming consoles), rather than on purchasing new entertainment content (e.g., DVDs, music). This finding indicates that the industry will have to work harder to successfully market entertainment content to this group of consumers. The uncertain state of the U.S. economy, and worries about disposable income had little to do with these consumers' entertainment spending outlook.

Consumers who demonstrated a negative outlook on future spending tended to focus their reasoning on economic factors, such as the increasing price of energy and food. They expressed a clear belief that the economy would get worse, and as a result their finances would be strained, thus causing entertainment spending to suffer. This widely held opinion pervaded all income groups, although predictably it was somewhat less prevalent among households earning more than $100,000 per year.

Data note: Information in this press release was derived from The NPD Group's "Entertainment Trends in America" consumer surveys, the results of which will be made available to NPD clients later this Spring. Data was based on a sample of more than 11,000 consumers, and results were balanced to reflect the U.S. population age 13 and older.

About The NPD Group, Inc.

The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us or visit http://www.npd.com/.