CD, Video/DVD and Video Game Sales: New Study Shows Increased Competition for Share of Entertainment Dollar

US

NPD Group: The multitude of entertainment options in the marketplace means increased competition for the consumer’s entertainment dollar. The report highlighted the fierce competition, but noted an increasing interdependence, across the various entertainment categories. The was designed to help marketers and retailers plan for the critical 2005 holiday season armed with the hindsight of 2004 purchase patterns. DVD’s were the most popular entertainment product category, with 42 percent of US population age 13 and older purchasing a video in November and December of last year. DVD’s were closely followed by toys (37 percent), music CD’s (36 percent), gift cards (30 percent) and videogames (20 percent) as the most popular items purchased over the holiday season. More than half of entertainment product purchasers crossed categories during the 2004 holiday season. For example, 62 percent of music buyers also purchased a video, and 62 percent of videogame buyers bought a traditional toy. The challenge for marketers is to understand how to leverage the consumer’s desire for entertainment alternatives, while not cannibalizing their core business. The entertainment industry sectors each need to understand where cross-promotion and in-store merchandising is synergistic, so that they can optimize brand equity and register ring. If last holiday is any indication, that licensing will continue to soar in 2005, and beyond. Consumers are clearly playing back the licensing message.

79 percent of consumers who bought a movie soundtrack did so after seeing the movie; 43 percent reported buying a toy that was featured in a movie; and 33 percent of videogame buyers were motivated to buy a game that was represented in a movie; and 20 percent of videogame buyers bought music that was featured in the game. Music companies are scrambling to get placement in a movie or videogame, and this validates those marketing tactics. Teens were especially responsive to buying music from games, and that’s a terrific vehicle for labels to promote new artists or reconnect with consumers who have been trading instead of buying. Though it may be strange to think about entertainment in the context of shirts and pajamas, consumers appear to be thinking that way when they shop.

Mass merchandisers are top of mind when consumers think about purchasing entertainment. Low prices, convenience and selection are naturally important to shoppers, but what really comes through during the holidays is the value of one-stop shopping,. Consumers are on a mission to save time and they know that mass merchandisers offer an efficient shopping model. It’s one reason we saw online merchandisers benefit during the holidays.To counteract the one-stop-shopping consumer mentality, brick-and-mortar electronics and specialty retailers must position themselves among consumers as a “destination” shopping alternative. Their primary challenge is to market their retail destinations as the place where consumers will find superior service, deep catalogs and value-based pricing. Crosss-Entertainment Shopping Report Publ 20050519