Despite Industry Fears, Consumer Spending Cuts
Do Not Impact Piracy
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Published July 2010. © 2010 Interpret, LLC
Catalyst: Filesharing is always a concern for content creators and providers, but a volatile economy gives
rise to worries that more consumers will turn to piracy more frequently as a means of avoiding paying
for entertainment. Are these concerns valid, and can these companies do anything to mitigate the
effects of filesharing?
• How is the economy affecting entertainment purchasing?
• Is the economy having an effect on piracy?
• What steps can content producers and providers take to mitigate piracy?
Interpret Insight: While content companies and media producers fear an increase in digital piracy due to
the struggling economy, their concerns are largely unfounded. There is virtually no relationship between
a consumer’s propensity to engage in filesharing behaviors and his or her reduction in entertainment
spending during these hardships. Media companies that are combating piracy need not do so because of
the economy; rather, they should be more focused on meeting consumer expectations. To compete
effectively with unlicensed options, they will need to focus on choice, convenience and ease-of-use.
Digital Entertainment Among the Budget-Conscious
Even as the economy progresses uncertainly toward recovery, the impact of the recession has clearly
taken its toll. Given their more limited means, it is unsurprising that consumers reduced their spending
to match. At the beginning of 2010, three quarters of those over 18 indicated that they were cutting
back their spending to some extent, and nearly half (48 percent) said that they were cutting back “a lot.”
The economic impact of these budget-conscious consumers is more deeply felt in some industries than
others. Among those who reduced their spending to some extent in Quarter 1 of 2010, three particular
expenses proved especially prone to cutbacks: 79 percent of this group spent less on eating out; 65
percent saved on clothing, shoes, etc; and 63 percent trimmed back on entertainment-related activities.
Declines in Traditional Media Consumption among Budget-Conscious Consumers
means include “zero” responses
Movies you saw in a theater -16%
DVDs you purchased -1%
New Video Games Purchased -19%
Music CDs you purchased -10%
Blu-ray Discs you purchased -17%
Total Respondents Have Cut Back Spending a Lot
New Media Measure Q1 2010 n=3863
In regards to the latter activity, the ways in which these consumers are cutting back is of particular
interest. Those who say they have cut back spending “a lot” are less likely than the average consumer to
engage with traditional entertainment media, yet more likely to look to digital media for their
entertainment needs. For example, on average, these budget-conscious consumers have seen 16
percent fewer movies in the theater in the past six months than the average person, purchased 19
percent fewer new video games, and 10 percent fewer CDs (fig. 1).
Increases in Digital Media Consumption among Budget-Conscious Consumers