Why Most of the Media Market Will Weather The Looming Recession – Sort of.
In the face of gloom, doom and justifiable concerns about the health of the global economy, there are some potential bright spots that, while still not fully in the clear of a looming recession, may fare better than others.
To be sure, certain media brands (not all) will likely be the recipients of spending and behavior trends that reinforce the idea that even in economic down-turns consumers still seek out entertainment, in spite of, and sometimes because of, their depressed state. To wit, during the early 1990s trend forecasters, such as Faith Popcorn identified "Cocooning" (http://en.wikipedia.org/wiki/Cocooning) as a trend where consumers, especially during recessionary times, retreat to the comforts and confines of their homes, engage in less socializing and generally insulate themselves from the often harsh realities of the outside world. During this time it was predicted, that people will engage in more electronic commerce, watch more television, rent or download more movies and play more video games.
Today, Cocooning looks to have reemerged on the world stage, aided clearly by the global economic downturn, but also pervasive trends such as the ability of people to work from home, the ubiquity of communications devices that provide 24/7 access, and the demographic reality of an aging Boomer population.
So what does Cocooning imply for media brands? Well, most believe that all brands are going to take a hit over the next 18 months, but some will prosper better than others. Of late, cable programmers such as, SCI-FI (http://www.scifi.com), have posted their best ratings and strongest advertising results EVER. Here, it is reasonable to believe that Cocooning is at work, manifesting itself in viewers desire to transport themselves to an alternative, fictional place, well away from their 401K statement. In this spirit, it is logical that other cable nets such as Discovery, ESPN, National Geographic, Animal Planet and Food Network, will likely benefit from the same phenomena –it makes sense.
Also likely to at least hold their ground during this tempest are cable operators such as Comcast, Time Warner Cable and Cablevision who, having been so successful in bundling their brands into the everyday lives of consumers, now find themselves with very strong and projectable cash flows driven by large, diversified armies of triple-play (Digital TV, Digital Phone and High-Speed Internet) subscribers. However, it is worth noting that all is not rosy for cable operators who, pitted against telcos, face a very competitive environment for the hearts, minds and wallets of consumers (http://money.cnn.com/2008/05/08/technology/cablecompetition.fortune/index.htm). Still, while some consumers will definitely pare back their premium services, today’s cable offering has become consumers’ essential lifeline to the "rest of the world" – the conduit for all home communications. Absent the full deterioration of our economy, which we seem to have avoided, Cocooning 2.0 would indicate that massive churn and defection among cable subs is not a likely reality.
But as some will survive, albeit with challenges, some sectors will not fare as well. Box office sales, for example, are likely to be depressed for the foreseeable future, as an excess of average movies, many financed by hedge funds, (http://articles.latimes.com/2008/feb/16/business/fi-hedge16), begin to flood the theatres at a time when people have much cheaper, and arguably better quality entertainment options at home, as evidenced above. Finally, the jury is still out on how major broadcasters such as NBC, ABC, CBS and Fox will adapt as they see their advertising revenues fall in favor of more targeted media, while at the same time theoretically benefitting from improved ratings, due to viewers opting for "free", ad-supported content versus pay-per view, Netflix and other on-demand pay services.
As a final axiomatic thought there is this: Strong Brands Tend to Survive Bad Times. And as the media industry navigates itself through this economic headwind, marketers must invest in brand building activities that underscore the brand’s necessity to the lives of ’shaken consumers’ closer to home, while also harnessing the brand’s core points of differentiation to the exclusion of competitors.
