Entertainment spending jumped 20% in the first six months of 2021 compared with 2020 even though the time spent on entertainment overall barely changed.
At the pandemic’s onset, “experiential” activities like going on vacations, going to Broadway shows, or attending sports, came to a near-standstill. According to “The Evolution of Entertainment,” a report released from the NPD Group, as people migrate back to these experiential activities, areas that benefitted from staying home, like television, toys, and video games, now face challenges.
“Companies will need to set short-term strategies to retain the audience that was engaged during the pandemic,” said John Buffone, Executive Director, Industry Analyst at NPD Group, in an online presentation on the study (below).
The study has particular post-pandemic messages for video providers. It says a growing number of viewers reported that they just aren’t watching as much TV as before.
“This change suggests peak viewership was reached last year, and we are now on a slow decline,” the presentation says. “The hyper-growth streaming era is turning into a competition for share of viewer’s time making content more valuable.”
According to the report, the average American adult spent $858 on entertainment from January through June 2021, up 20% from the shutdown-stunted first half of 2020. Time spent on entertainment overall just budged from 72 hours a week to 73 hours.
Director and Thought Leadership of NPD Group, Elizabeth Lafontaine, said that this growth of $143 per person was felt across all categories except TV and movies, and arts and crafts, both of which surged last year with the pandemic.
“Despite the lifting of COVID restrictions this past spring, we still saw entertainment engagement remain flat, although the mix did change compared with last year,” she said.
“Experiences,” the study’s largest category, grew by 36% over last year, reflecting a recovery from the COVID-related decline of many activities in the second quarter of 2020. The number of people engaged in experiences in 2021 so far compared to 2020 are spending twice the time with it. Toys, books, and video games saw increases in spending in 2021, and live event spending soared 86%, while TV and movies spending only dropped about 1%.
“We did see a rebound in experiential categories, but that wasn’t necessarily at the expense of interactive play,” Lafontaine said. “Consumers found a way to balance-spend on both types of entertainment, which we hope will continue as consumers look at their entertainment portfolio in the future.”
The survey found small drops in the percentages of people engaging in some forms of entertainment — video games and books — but those still involved were more engaged and spent more time with them.
“What is apparent here is that consumers don’t just favor one type of entertainment; usually consumers who participate engage in multiple activities,” she said. “With that, there are multiple options to reach consumers across many touchpoints.”
Viewership is still far above 2019 levels, so the sky isn’t exactly falling.
But with so many choices, consumers aren’t afraid to switch services. Nearly one-fourth of American adults — and 28% of 13-to-24-year-olds — reported starting or restarting a streaming service in the last six months. Only 15% of folks over 65 did that.
The reasons for ditching a streaming service break down into two main categories of people.
Older viewers without kids are more likely to say they’re just not watching as much TV as before. Young families with kids at home are more likely to churn and be sensitive to trial offers, promotions, costs, and content.
And older viewers (55 and over) are half as likely as the 18-to-34 set to cancel a subscription service right after the series they specifically signed up for ends. And they’re only one-third as likely to cancel a service to replace it with another one. They stay put, but they also have only half the number of SVOD subscriptions as the 18-to-34-year-olds.
Whatever the mix, the data suggests people are still going to spend plenty of time and money in these areas.
Entertainment has “continued to be a source of joy and escapism during a time of uncertainty,” said Lafontaine. “And while the makeup of the industry has shifted immensely, the consumer has indicated they still love to be entertained.”
Other findings of the report:
- Watching movies in movie theaters remained significantly below pre-pandemic levels in the first half of the year. In part, entertainment time was diverted to in-home viewing through premium release windows and the proliferation of Netflix and other SVOD services.
- SVOD engagement has pulled back after the initial restrictions related to the pandemic relaxed, as consumers spend more of their time on going out to eat, travel, and other experiential activities. Time spent on experiences has grown 104% this year compared to last year.
- Free streaming video is a growing supplement to viewers’ SVOD services.
- Traditional content viewing on cable, satellite TV, and packaged media continues to migrate to streaming.
“Looking ahead, the mandate for the industry is to retain viewer engagement and win the battle for share of viewers’ time,” said Buffone. “As consumers migrate back to experiential activities, the available time to engage in watching TV shows and movies will naturally decline.”
The report also addresses trends in toys, books, and video games.