How Much Entertainment Can We Afford?

Filed in archive Business Trends on June 9, 2006

Perhaps the New York Stock Exchange can start an ETF or CNBC could add an economic indicator to its scrolling bar. We will call it the "3M" meaning Monthly Media Madness. Er, no, that symbol is already taken. How about the CMCI for Consumer Media Cost Index? The CMCI will track America's relentlessly growing monthly media bill: magazines, cable, TiVo, video-on-demand, broadband Internet, iPod downloads, and mobile TV.

Steve Smith points out that "the un-examined flip side of media fragmentation is that more platforms require more consumer spending: more than $1,000 per person by 2010, according to projections from Veronis Suhler/PQ Media."

All of which raises the obvious question of whether Americans are approaching some kind of media threshold -- an unsustainable bubble of subscriptions?

Joe Pilotta, vice president of BIGresearch, warns that media spending may suffer serious indirect pressure from an overextended consumer. "When it hits [media], it's not going to come from the technology but from an exogenous source," says Pilotta. Credit card debt is enormous, pushing American households into a negative savings state that inevitably will force the middle class to rethink tech and media priorities in the face of making, say, the car payment.

We are only at the early adopter phase of emerging platforms like satellite radio, online music services, digital video recorders, and mobile content, let alone applications like in-car global positioning systems, information services, and wireless broadband. Each platform is building business models and adding yet another monthly subscription fee to the tab. Perhaps one or two of them might want to rethink that model.