One of the questions I have been getting lately is: Why the weekly focus on music, film, consumer electronics and all things digital ?
The simple answer: Consumer spending.
Consider the following macro consumer expenditures from select sectors in the United States:
(Autos and Bar/Restaurants are included for comparison purposes)
|Industry Sector, Consumer Spending||$ Billions*|
|Publishing industries (includes software)||244.4|
|Motion picture and sound recording industries||85.6|
|Broadcasting and telecommunications||609.1|
|Performing arts, spectator sports, museums||78.5|
|Amusements, gambling, and recreation||92.0|
|Computer and electronic products||408.7|
|Food services and drinking places||414.0|
* Data is for 2003; Amounts are in current dollars
How do these numbers break down for individual families? Most people are unaware of this: The average American spends more on entertainment than on gasoline,
household furnishings and clothing and nearly the same amount as spent
on dining out, according to the Bureau of Labor Statistics.
And the wealthy spend more on entertainment than on health care:
graphic courtesy of NYT
That’s rather significant. While everyone (present company included)
has been cautiously watching fuel prices rise and fall, the American
entertainment dollar is a major driver of the U.S. economy.
And that’s before we get to the hardware: PCs, Plasmas, iPods, X-boxes, digital cameras. The hardware expenditures we make to keep ourselves entertained are substantial.
That’s the reason why Microsoft took a $4billion hit developing the X-Box. Its a jumbo loser on a short term basis for them; But if they can convert it to the center of the living room digital hub, it may payoff over the long term.
And yes, Mister Softie knows that the digital hub ain’t gonna be a P.C.
So the X-box is a giant hedge, an attempt to at least fight for the living room against Apple, Sony, TiVo, General Instrument, and even Intel.
Yes, these are glamor industries; But more importantly, they have significant on the overall economy . . .
How to Tame an Inflated Entertainment Budget
NYT, November 19, 2005
Microsoft’s Xbox Reflects New Focus on Hardware
Software Giant Broadens Business Model as It Seeks Ways to Take On Apple, Sony
ROBERT A. GUTH
THE WALL STREET JOURNAL, November 22, 2005; Page A1
Gross Output by Industry in Current Dollars
[Billions of dollars]
Bureau of Economic Analysis, Release date: November 9, 2005