Our company has started analyzing detailed entertainment spending data for 2010. As I reported in the previous blog, household out-of-home entertainment spending saw a decrease in 2010. In the near future we will be analyzing whether the staycation trend is continuing or if we are starting to see a return to spending on entertainment on trips.
In this blog, I decided to take a look at video game hardware and software expenditures and the impact such spending might be having on out-of-home entertainment spending. The graph below shows the share of average total household spending on out-of-home entertainment (both community-based and on trips) combined with video game hardware and software by the three different entertainment categories.
Between 2000 and 2010, total inflation-adjusted average household spending of all three categories combined declined by 2.7%. But as the graph shows, what is even more significant is that entertainment spending has been shifting away from out-of-home entertainment to the video game category. Most of the shift is coming out of entertainment spending on trips. In the year 2000, spending on video game software and hardware only accounted for 11% of all such entertainment spending. In 2010 it had grown to 22% of all such spending. In fact, average household video game spending doubled during the decade. During the same ten years, entertainment spending on trips decreased from 39% to 28% of all such entertainment spending. The increase in video game spending is being offset by almost exactly the same amount of year-by-year decrease in entertainment spending on trips. The graph lines for the two spending categories are almost perfect mirror images of each other. As one goes up, the other goes down in sync.
The data shows that there is a definite long-term trend; the virtual world is winning and real world out-of-home entertainment venues, especially entertainment venues visited on trips, are losing.