Consumers Cut Entertainment Spending Amid Economic Struggles
By Movieguide® Contributor
As a possible recession looms, many consumers are looking to cut costs, and entertainment spending will likely be one of the first expenses affected, a new survey from Variety Intelligence Platform (VIP+) shows.
“With inflation at more than four-decade highs, 38% of respondents said they have begun making changes to spending on activities, such as attending concerts or going to the movies. Recreation and entertainment tied for second with travel among the spending categories that consumers projected they’d cut back on in the event of a recession, behind only eating out at restaurants,” VIP+ explains.
VIP+’s survey with Morning Consult of 2,200 U.S. adults gauged consumer sentiment shifts on entertainment spending as the economic situation worsens.
According to the survey, “Inflation has also triggered decreased spending on entertainment subscriptions such as video services like Netflix and Hulu and music subscriptions like Spotify and Apple Music. The survey found that 26% of adults say they have already made changes to their monthly entertainment subscriptions as a result of rising inflation.”
Additionally, 29% of respondents concerned about a recession have already cut their entertainment spending, and 39% would consider canceling subscriptions if companies raise their prices.
Younger generations showed a greater likelihood of cutting back spending as 36% of Gen Zers and 35% of Millennials have already made changes. Older generations show less interest in cutting their costs. Only 29% of Gen Xers and 16% of Baby Boomers have changed their entertainment spending.
Kevin Tran, media and entertainment analyst at Morning Consult, recommends companies “prioritize younger demo-skewing original releases in the months ahead. This trend should also intensify the sense of urgency that streamers like Disney+ and Netflix feel in launching cheaper, ad-supported tiers, as these new options will soften the blow of younger consumers who are minimizing their subscriptions due to economic concerns.”
According to the survey, “50% of Americans are very concerned about an economic recession,” and “Worsening consumer sentiment typically leads to a decline in consumer spending.” And while new data from the U.S. Census Bureau shows that consumers are still spending money, consumer sentiment towards the economy hit record lows in June.
Companies will get a better understanding of the economy’s effects on the entertainment industry soon, beginning with Netflix’s second-quarter financial report on July 19 with other media and entertainment companies will follow. This will “peel back the curtain on how the biggest companies are faring amid the downturn, and commentary regarding consumption habits and shifts will be very closely watched this season,” says VIP+.
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