Revival of the US Entertainment Industry
This brief delves into the impact of entertainment on the modern economy. It analyzes the influence of Taylor Swift’s Eras Tour and “Barbenheimer” on economic productivity and its vital role in the US financial system. It also predicts the future of the entertainment industry and consumer spending trends.
While the pandemic impacted nearly every facet of the economy, the film industry was hit hard by COVID-19 due to the collaborative nature of work and the lack of a remote substitute. According to Warner Bros, the industry lost more than $5 billion during the pandemic because of production delays and cancellations. More than 80 films set to premiere in 2020 were canceled, and 155 were delayed. As social distancing restrictions gradually decreased, the box office started to recover and revenues in 2022 increased by 64% from a low of $4.58 billion in 2021. When “Spider-Man: No Way Home” premiered in December 2021, it brought in over $1 billion in box office revenue, showing a potential rebound of the American entertainment industry and that production was still possible in spite of CDC restrictions. However, the combined opening weekend of “Barbie” and “Oppenheimer” solidified box office recovery, as more than 200,000 Americans flocked to theaters. Both of these films exceeded expected sales and were behind the fourth-largest-grossing premier weekend.
However, even while box office revenues have steadily increased since March 2020, the recent Writers Guild of America (WGA) strike has delayed production and created an atmosphere of uncertainty regarding the future of the entertainment industry. The rise of streaming services and the decrease of on-air TV mean that most writers are not receiving residuals from their work. This issue, alongside staffing problems and the lack of a livable wage, caused 11,500 unionized screenwriters to strike, alongside non-union members who decided to strike in solidarity. While most movies are still on track for release, scripted TV shows like dramas and late-night talk shows are facing delays, since writers are needed to make changes to scripts during production. Facing the same qualms as writers, the SAG-AFTRA, Hollywood’s actors’ union, went on strike in July. Actors are unable to do their job nor can they promote their work on social media. As a result of the strike, many awaited shows, such as “Stranger Things” and “Severance,” have been postponed.
A. Stakeholders- Short-Term Immplications
Recent booms in the entertainment industry have held up an American economy that was, not long ago, predicted to fall into recession. Taylor Swift’s “Era” Tour, for instance, o is projected to generate $4.6 billion in total consumer spending through its impact on tourism and the local service industry.Swift has also reportedly passed out over $55 million in bonuses to staff such as dancers and caterers. Moreover, with some concertgoers spending over $10,000 on tickets, Swift’s fans represent an extreme version of the pandemic “FOMO” generation: consumers who are willing to splurge for what they missed out on during the pandemic.
In the film industry, the internet phenomenon “Barbenheimer” has not only brought struggling theaters back to life but also encouraged greater consumer spending in the entertainment industry, with both movies combining for the box office history’s fourth-biggest overall weekend. The Wall Street bank reports that its cardholders have spent 23.7% more on entertainment in July compared with the same period last year. AMC Theaters also posted record revenues between July 21 and 27, when “Barbie” and “Oppenheimer” were released. On top of the high-grossing “Barbenheimer” films, the “The Super Mario Bros. Movie” was the first movie to cross the $1 billion benchmark globally, increasing Nintendo’s revenue by 50% in its first quarter. Undoubtedly, countless cities, theaters, and hotels are seeing an unprecedented economic rejuvenation fueled by movie stars and performers.
B. Long-Term Implications
With entertainment now at the forefront of American economics, economists are becoming increasingly interested in the rise of social media and pop culture, which have driven the uptake in spending and revived struggling businesses. The upward trend catalyzed by entertainment has ultimately raised doubts about whether or not the US will tip into recession. Instead of an extreme downturn, some experts have embraced the idea of a “soft landing,” especially as growing wages and retail sales point to the low likelihood of a recession.
However, the short-term booms from entertainment might not last. Though the Eras tour has led to a boom in occupancy and profits for the American hotel industry, it is unclear whether that level of revenue will sustain after the Eras tour finishes its leg in the US. Combined with the ongoing hospitality worker strikes in tourist driven cities like LA, a slowing in revenues could pose a problem for the US hotel industry. Meanwhile, the kinds of consumer spending that marked the Eras tour are already beginning to slow. For cinema owners, the simultaneous actors and writers strikes might leave theaters without new releases. Coupled with the fact that Hollywood’s major studios are postponing the release of some movies, AMC Theaters, Regal, and Cinemark might find it difficult to fully rebound from the pandemic after “Barbenheimer.” Therefore, while recession fears have quelled overall, the future of the travel and entertainment industry remains full of uncertainty.
The economic impact of the revival of the entertainment industry has been massive, bringing billions of dollars into the economy. Films like “Barbie” and “Oppenheimer” and concerts such as Taylor Swift’s Eras Tour reflect consumer trends that show increased spending in entertainment by more than 20%. Through this, we see that the short-term effects of an entertainment bounceback might be short lived due to hospitality shortages and writer strikes. Overall, the entertainment industry plays an important role in the US economy, and though it is strong now, it may be threatened in the near future.
The Institute for Youth in Policy wishes to acknowledge Ahad Khan, Donovan Zagorin, Nolan Ezzet, and other contributors for developing and maintaining the Policy Department within the Institute.
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