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Escaping from the recession - Home videos and games are a popular way to forget gloom and doom.

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Introduction

TASK 7 Escaping from the recession Home videos and games are a popular way to forget gloom and doom Home entertainment has increased in popularity among Thais in recent times as the economy deteriorated and consumer spending dwindled. Many home entertainment operators say sales of all kinds of entertainment products dropped dramatically in 1997 as the recession took hold. But only a year later, sales began to pick up with video rental and distribution businesses, in particular, gaining increased popularity. The quick turnaround is partly attributed to a widespread use of video, video compact disc (VCD) and digital versatile disc (DVD) players for use as a home entertainment. Many video rental companies from overseas, including Tsutaya, Blockbuster and EZ Video, are trying to capitalize on the current wave. They have been opening video rental stores throughout Bangkok and other cities as more people turn to video rental services. Padet Hongfa, managing director of CVD International Co, said that before the economic crisis, the company's total revenue from the video business stemmed from sales (70%) and rentals (30%). But that ratio has reversed. CVD International is a local producer and distributor of home videos for the Major Group and an operator of Showtime stores. Mr Padet said video rentals would continue to dominate the market. ...read more.

Middle

Sales of local music cassettes and CDs are forecast to total 3.2 billion baht this year and grow by about 30% to 4.16 billion baht next year. Annual sales of the products have been between 4.5 billion baht and five billion in the past few years. Total sales of foreign music are projected to rise by 5% to 830 million baht next year from 800 million baht this year. Kittisak Chuang-aroon, managing director of local music giant Grammy Entertainment, said he believed the music industry would improve next year. Thai music cassettes and CDs were low-priced and only slightly affected by the economic downturn. However, sales had fallen by 20% this year, compared with last year's turnover. Nadda Buranasiri, president of the International Phonogram and Videogram of Thai Producers' Association, said that to adapt to the economic meltdown, most surviving firms had downsized business and put a brake on new investment. They had tried to expand distribution channels for foreign song cassettes and CDs, which total only 500 outlets around the country. Copyright violation remains a key hindrance to the music industry. "Getting rid of all pirated cassettes and CDs in the market is impossible, but squeezing them in a particular place looks easier," he said. Sales prices are expected to stay flat next year as many companies dare not increase prices for fear of losing revenue to pirates. ...read more.

Conclusion

Most (90 per cent) of this rental income came from videos (�444 million) and almost 70 per cent of the video rental income was from new releases. Overall, just over half of the total income of these businesses came from rental of new release videos. Other major sources of income included �40 million (6.7 per cent) from the sale of food and beverages and �36 million (6.1 per cent) from the sale of videos and video-related goods. Of the income from selling videos, 57 per cent came from sale of ex-rental stock, 22 per cent from sell-through videos, and 21 per cent from the sale of other video-related goods, including DVDs, games and accessories. Next update 2007 Value (�m) Proportion of total income (%) No. businesses involved Rental 493.8 83.0% Rental of videos 443.8 74.6% 1,166 New releases 306.5 51.5% 1,158 Other (incl. back catalogue and recent releases) 137.4 23.1% 1,117 Rental of DVDs 5.9 1.0% 775 Rental of video games 38.3 6.4% 966 Other rent, leasing and hiring income 5.8 1.0% 436 Sale of videos and video related goods 36.3 6.1% Videos (ex-rental) 20.5 3.4% 915 Videos (sell-through) 8.0 1.3% 546 Other video related goods 7.8 1.3% 488 Sales of other goods 45.2 7.6% Food and beverages 40.0 6.7% 1,075 Other 5.2 0.9% 407 Other income 19.8 3.3% Other operating income (incl. franchise fees) 11.6 1.9% 251 Other income (incl. interest) 8.2 1.4% 254 Total income 595.2 100.0% 30th March 2003 BHAVISH BALKEE ...read more.

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