Post by Bozur on Mar 2, 2008 16:18:46 GMT -5
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Aloof From Recession
By DAN MITCHELL
Published: March 1, 2008
IN a scene from the fourth season of the HBO mob saga “The Sopranos,” the crime boss Tony Soprano gathers his crew chiefs together for a dressing-down. The 2002 recession is in full swing, but that is no excuse, he tells them. They are not earning enough for the family. He asks his consigliere, Silvio Dante, to name the two industries that are known to be recession-proof. “Certain aspects of the entertainment business,” Mr. Dante says. “And our thing.”
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Alex Eben Meyer
With all due respect, Mr. Dante was wrong. Some economists argue that no industry is really recession-proof, or at least it depends on the characteristics of a given recession. Organized crime, in part because it meets much of the demand for vices, can be recession-resistant, as can “certain aspects of the entertainment business.” But while the cable television business, for instance, has historically done well during downturns, the situation gets complicated when it comes to premium and pay-per-view services, as Gary Kim noted this week at TMCNet.
There are plenty of other industries, though, that have historically done well in recessions — particularly those that serve basic needs like food, energy and health care.
This, Daniel Gross wrote this week in Slate, explains why Wal-Mart is doing so well lately, while many other retailers are struggling. “In a pinched economy, consumers are embracing their inner skinflint,” he wrote. “And Wal-Mart is a penny pincher’s paradise.”
The Wal-Mart example shows how recession resistance is a function of what economists would describe as a low income elasticity of demand — meaning that people will buy certain goods and services even as money gets tight.
What, then, explains the recent success of World Wrestling Entertainment, whose revenue depends on perhaps the most discretionary of discretionary spending? Terence Kennelly of SeekingAlpha, a blog about stocks, says it is all about strategy. After a series of major setbacks, the company overhauled its marketing and operations, he notes, and so far, the results are good.
Does that mean that wrestling is recession-proof? The “next few quarters will be the true test,” he writes.
VICTOR’S SPOILS
Blu-ray has won the format wars, pushing the competing HD-DVD out of the market for high-definition DVDs. But it is a hollow victory, according to Lucas Mearian of Computerworld, because, he argues, Blu-ray “will tank.”
He cites four reasons. First, prices for Blu-ray DVD players will fall, but not by enough. Second, regular DVD players are nearly as good and much less expensive. Third, renting movies — either by mail or pay-per-view — is easier and cheaper than it used to be, and Blu-ray’s main market is sales, not rentals. And finally, downloading movies from the Internet and zapping them to set-top boxes, while a small part of the market, is poised to take off.
NUTTY CLAIMS
Nutella, a hazelnut spread that is popular in Europe but has never really taken off in the United States, is part of a healthy breakfast, the product’s maker claimed in a television spot in Britain. The advertisement depicted mothers feeding the sweet, gooey stuff to their children while an announcer said that “surprisingly, each jar contains 52 hazelnuts, the equivalent of a glass of skimmed milk and some cocoa.”
The Advertising Standards Authority in Britain concluded that the ad was misleading and ordered it withdrawn.
Eating a whole jar of Nutella to get the equivalent nutritional value of a glass of skim milk would also mean ingesting more than 100 grams of sugar, one nutrition watchdog noted.
www.nytimes.com/
Aloof From Recession
By DAN MITCHELL
Published: March 1, 2008
IN a scene from the fourth season of the HBO mob saga “The Sopranos,” the crime boss Tony Soprano gathers his crew chiefs together for a dressing-down. The 2002 recession is in full swing, but that is no excuse, he tells them. They are not earning enough for the family. He asks his consigliere, Silvio Dante, to name the two industries that are known to be recession-proof. “Certain aspects of the entertainment business,” Mr. Dante says. “And our thing.”
Skip to next paragraph
Alex Eben Meyer
With all due respect, Mr. Dante was wrong. Some economists argue that no industry is really recession-proof, or at least it depends on the characteristics of a given recession. Organized crime, in part because it meets much of the demand for vices, can be recession-resistant, as can “certain aspects of the entertainment business.” But while the cable television business, for instance, has historically done well during downturns, the situation gets complicated when it comes to premium and pay-per-view services, as Gary Kim noted this week at TMCNet.
There are plenty of other industries, though, that have historically done well in recessions — particularly those that serve basic needs like food, energy and health care.
This, Daniel Gross wrote this week in Slate, explains why Wal-Mart is doing so well lately, while many other retailers are struggling. “In a pinched economy, consumers are embracing their inner skinflint,” he wrote. “And Wal-Mart is a penny pincher’s paradise.”
The Wal-Mart example shows how recession resistance is a function of what economists would describe as a low income elasticity of demand — meaning that people will buy certain goods and services even as money gets tight.
What, then, explains the recent success of World Wrestling Entertainment, whose revenue depends on perhaps the most discretionary of discretionary spending? Terence Kennelly of SeekingAlpha, a blog about stocks, says it is all about strategy. After a series of major setbacks, the company overhauled its marketing and operations, he notes, and so far, the results are good.
Does that mean that wrestling is recession-proof? The “next few quarters will be the true test,” he writes.
VICTOR’S SPOILS
Blu-ray has won the format wars, pushing the competing HD-DVD out of the market for high-definition DVDs. But it is a hollow victory, according to Lucas Mearian of Computerworld, because, he argues, Blu-ray “will tank.”
He cites four reasons. First, prices for Blu-ray DVD players will fall, but not by enough. Second, regular DVD players are nearly as good and much less expensive. Third, renting movies — either by mail or pay-per-view — is easier and cheaper than it used to be, and Blu-ray’s main market is sales, not rentals. And finally, downloading movies from the Internet and zapping them to set-top boxes, while a small part of the market, is poised to take off.
NUTTY CLAIMS
Nutella, a hazelnut spread that is popular in Europe but has never really taken off in the United States, is part of a healthy breakfast, the product’s maker claimed in a television spot in Britain. The advertisement depicted mothers feeding the sweet, gooey stuff to their children while an announcer said that “surprisingly, each jar contains 52 hazelnuts, the equivalent of a glass of skimmed milk and some cocoa.”
The Advertising Standards Authority in Britain concluded that the ad was misleading and ordered it withdrawn.
Eating a whole jar of Nutella to get the equivalent nutritional value of a glass of skim milk would also mean ingesting more than 100 grams of sugar, one nutrition watchdog noted.
www.nytimes.com/