Movies, Like Video Games, Recession Proof
A little bit ago, I wrote a blog on why video games are recession proof. The theory is that people want a nice form of entertainment that, in a recession, is extremely low cost. Think about it. For about $50 for a brand new game, you get unlimited play for the LIFE of the game. The means the cost/play or cost/hour of play is as close to zero as you can get. Compare that to the movies. That cost is $9/play or maybe $4.50/hour. It’s off the chain for most popular concerts.
So why would movies do well in a recession? I have a couple of thoughts…
1. People like going out. In a recession, this truth still holds. And in an environment when there are so many reasons to stay home, it’s still true. For example, the ungodly number of social networks, video chat, AIM and other ways (like the phone) to maintain contact with friends, in addition to movies on demand and the old tried and true, TV, are some of these reasons to stay home. These should not be underestimated.
2. Compared to other forms of entertainment, going to the movies is relatively cheap (assuming that you eat before/after the movies and avoid the concessions, which can eat a whole in your pocket). It always gives you something to talk about afterwards too.
3. The reason to go out to a movie is because something is good. There were so many movies I wanted to see this summer it’s ridiculous (The Hulk and Batman being two of them). This is very crucial. If there were horrid movies at the box office, theatres would not be doing well at all.
What’s interesting is that some theatre chains (the industry is coming off of a period of consolidation) are doing okay. Theoretically, consolidations should be good since you can squeeze synergies out of most of them. With the theatre consolidations, initially, I was wondering whether it would good, since the industry wasn’t doing that well. I kept myself in check, because you can never scold good companies in a bad industry (don’t throw the baby out with the bathwater – type of thing).
Here’s a wonderful blog from Wired.com that gives some stats on the matter.
