Study: Showbiz Spending Will Fall 1.3% in 2011

Yep, it’s still declining: investment firm Veronis Suhler Stevenson predicts an overall slide in traditional media

Entertainment spending will fall 1.3 percent to $83.3 billion this year, according to a study released Wednesday by the investment firm Veronis Suhler Stevenson (VSS). 

In 2010, revenue in that sector slipped 0.4 percent to $84.4 billion. 

Although internet and wireless companies continue to grow at a fast pace, traditional media continues to be hit by declines in the DVD market and a flat domestic box office. 

Box office spending dipped 0.3 percent to $10.63 billion in 2010. The culprit, VSS wrote, was the lack of a box office phenomenon such as "Avatar" — a strange conclusion to draw, given that the James Cameron film, although released over the Christmas holiday in 2009, grossed the bulk of its global revenue in calendar year 2010.

That 0.3 percent is a decline the poor home entertainment sector would probably kill to suffer. Spending in that sector fell 8.7 percent to $20.36 billion in 2010, primarily due to sagging DVD purchases and the rise of cheaper streaming rental services like Netflix.

However, VSS expected the hard-hit industry would experience modest gains over this year as digital platforms start paying higher prices for content. 

Not so the television business. Program spending grew 8.2 percent to $32.4 billion in 2010 due to a larger commitment from broadcasters to original programming and coverage of the Winter Olympics, VSS said. 

The communications industry is growing faster than most other economic sectors.

It's a very different picture in the overall communications industry, where spending in the sector is on pace to grow 4.1 percent in 2011 to $1.12 trillion outstripping the national gross domestic product. 

The reason, VSS said, it the cross-pollination of computer, internet and wireless technologies, which are rapidly shaking up the way consumers access media. 

By the end of 2015, the communications industry will be the eighth-fastest-growing and fourth-largest U.S. economic component, according to the report.