Economists see boom times for the entertainment and communications industries early in the coming millennium, with at least two forecasts predicting powerful growth in employment, output and spending.
As cutting-edge digital technologies feed the American appetite for new products and pastimes, U.S.-based showbiz and communications enterprises should grow at nearly twice the rate of the economy over the next nine years, industry trackers Paul Kagan Associates said in a report issued this week.
UCLA economists, meanwhile, believe employment in the movie and television fields in California will double by 2015, to 364,000, and reach about 437,000 five years later.
And those figures may be conservative, said Tom Lieser, executive director of the Anderson Forecast, issued quarterly by the Anderson School of Management at UCLA.
Lieser and his colleagues got their figures from the California Employment Development Department, which, he said, “is considered in the industry to undercount the actual number of people working.”
“That’s because the nature of the business is that a lot of people work on short-term contracts and it’s hard to capture this in a survey that puts its main emphasis on payroll data,” Lieser told Daily Variety.
Good times ahead
Even though current growth in the industry is somewhat flat and there have been layoffs and cutbacks in some companies, he said, good times likely lie ahead.
“It’s an industry that’s been getting a good claim on the consumers’ dollars even when times are bad,” Lieser said. “Looking at 20 years ahead, we typically look at why the industry is here in the first place and whether it’s likely to increase its presence in California or elsewhere.”
With the industry so firmly centered and entrenched in Southern California, he said, it’s unlikely to dissipate in any significant way, despite productions in Canada, Mexico and elsewhere.
“If you were looking at the cheapest place to make a movie, it wouldn’t be here, but it’s where the deals are made, it’s where the talent is,” Lieser said.
In 1960, the entertainment industry in California employed about 40,000 people, according to state figures. By 1977, the number was 73,000, and 10 years later it was 101,000. This year, at least 180,000 people work in the industry.
MPAA figures higher
Those numbers are significantly lower than figures compiled by the Motion Picture Assn. of America, which estimated that 226,000 people worked in motion pictures and TV in 1996.
Looking ahead, consumers and advertisers will spend about $793 billion by 2007 in entertainment and communications, as compared to $365 billion last year, according to the Paul Kagan report.
The average U.S. household will spend $4,211 annually on entertainment and communications by 2007, up 121% from $1,902 last year, chairman Paul Kagan said.
“Market demand has led to competition and convergence, the buzz words for the 21st century,” Kagan added. “They are the matches that have set the media on fire.”
Convergence refers to the merging of digital media, such as computers and the Internet, with analog modes of entertainment delivery like television and telephones.
Kagan reports that media and entertainment revenues in the U.S. grew at a rate of 9.1% annually between 1992 and 1997, or more than twice the rate of inflation.
Using that growth level as a backdrop, Kagan expects consumer spending on entertainment to exceed $460 billion from $191.6 billion last year, a 10-year compound annual growth of 9.2%. Media advertising spending will nearly double to $333 billion from 1997’s $173 billion, for a compounded yearly growth of 6.8%.
The Internet will see the greatest growth with a 26.3% compounded annual growth rate. Kagan expects spending on Internet access, retailing, Web telephony and advertising to jump to $63 billion from about $6 billion last year.
Spending on wireless telecommunications should grow at 12.8% annually, and cable and satellite TV is expected to turn in the third greatest growth rate, at 10.4% a year.