Families cutting recreational spending
It appears when money troubles pop up, the first thing to go is spending on entertainment. Ticketmaster, Barnes & Noble and Blockbuster all had low sales and low or no profit in the fourth quarter.
Blockbuster
Blockbuster did not have low profits. It had no profits. In fact, the United States’ biggest movie rental chain lost $360 million. The video rental business has been hit hard by Netflix and more movies being offered online.
Businesses such as Netflix, which delivers DVDs to be borrowed by mail, are doing very well. So people have not stopped watching movies, they have found a more convenient way to do so. Blockbuster is applying for short term loans to keep the business afloat.
Business dealings
Blockbuster has gotten tentative agreements from JP Morgan Chase and a couple of other lenders, but even the company head is concerned that Blockbuster might not be a viable business much longer. The sign that Blockbuster is truly in serious trouble: it needs the loans to pay off debt.
Barnes & Noble
Spending on non-essentials such as books and CDs has gone way down. The internet hasn’t helped the CD sales department, either. Free online radio stations and programs like iTunes that let you download music have all but made CDs obsolete. It’s only a matter of time.
Barnes & Noble did make money fourth quarter, but its earnings fell 29 percent.
Ticketmaster
Concerts have always been an expensive form of entertainment. Now it seems people just aren’t willing to pay the price anymore. Ticketmaster, the largest online ticket seller in the United States, lost more than $1 billion in the fourth quarter.
Shares in the company were down so much that the company had to take a huge impairment charge on its account. The company is currently trying to negotiate a merger with LiveNation promoter.
$360 million? Ouch! It’s true; the Internet has practically conquered just about everything on the surface of the earth. It has become the most convenient, fastest way to get what you want, when you want it. People go shopping for clothes, food, jewelry – you name it, right from the comfort of their homes. A lot of people don’t even buy newspapers anymore. These movie rental places have to come up with something else to support their business flow, similar to what Movie Madness has done for the past years. They operate an in-store museum that attracts new customers and keep their customers coming back.
Concert tickets are outrageous! If you want to see a decent band for under $60, you’re up in the nosebleeds! A concert I went to in 2003 was a $90 ticket, for the second deck at the stadium it was in. I can’t say it wasn’t worth it, but still. Then again, elaborate concerts cost a lot of money to put on. You have transportation costs, road crew, venue costs, nevermind the staging and equipment – so for some of them it’s understandable. And trips to the video store don’t seem justifiable, when you can use Netflix for $15 a month.