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Entertainment and Information Media: Trends in U.S. Households October 2002 Author:   Michael Gold About This Report Contents Download the full report (pdf) About This Report It may come as no surprise that U.S. residents are spending more of their disposable income and more of their waking hours than ever before using entertainment and information media—audio, video, the Internet, print, and more. Nevertheless, many readers of this report will find surprises and insights in the changing ways that people use media—for example, how people have increased the amount of money they spend to watch roughly the same amount of TV, how traditional media styles persist concurrently with the adoption of new media, and how broad demographic and behavioral trends pose challenges to the music industry that are more serious than the threat from use of MP3. We base a substantial portion of this report on our interpretation of the results recently published by the Veronis Suhler Stevenson (VSS) organization, whose annual studies we often rely on for raw data about U.S. media trends. The report presents some key inferences that we draw from the VSS study in the light of our understanding of market dynamics. To help this analysis, we adjust the VSS reported industry revenue figures to reflect inflation, compare household media expenditures to disposable income, and aggregate markets according to our own frameworks—for example, when breaking out market shares of packaged versus networked media. Moreover, for presenting the changes in the way people use recorded music, we rely directly on data from the Recording Industry Association of America; for analyzing the home video market, we rely on several sources, which the final section discusses. We welcome feedback about this report and the program, and we encourage you to contact us with any questions or suggestions. For more information, please contact Michael Gold, Digital Futures; telephone: +1 650 859 6354; fax: +1 650 859 4544; e-mail: mgold@sric-bi.com. We appreciate your support of our program and look forward to working closely with you as a Digital Futures sponsor. Contents About This Report ii Executive Summary 1 Time Spent with Media in U.S. Households 2   New Media at the Expense of Old Media 2   New Media Preferences Wedging into Old Ones 4   Still Only 24 Hours in a Day 4   Networked Media Gaining; Packaged Media Stable 6 Increased Household Spending on Media 8   Beneficiaries of Increased Spending 8   Payment for What Once Was Free 9 The CD Sales Slump: Not Simply because of MP3 13 Home Video: A Substitute for Home Audio 17   Impact of Video's Growth on Audio 18   The Controversy about the Size of the Home-Video Market 19   Table Size of the U.S. Home-Video Market 18   Figures Mind Shares: Time Spent by U.S. Residents Using Various Media 3 Daily Time Budgets for Categories of Mass Media 5 Time Budgets: Packaged versus Networked Media 7 Real Annual Spending on Media 9 Real U.S. Spending on Household Media 11 U.S. Market for Packaged Music, Corrected for Inflation 14 The Graying of the Music Audience 15 Recent Growth of Packaged Audio and Video Markets 17

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