Down with Reading?

An interesting table of statistics – yes I am assuming statistics are interesting, why yes, I am a huge nerd – crossed my feed today. The table, presented below, shows the household expenditure breakdowns over time (1990-2009). The highlighted lines show the amounts spent on entertainment and reading.

US Bureau of Labor Statistics (with labour spelt incorrectly)
US Bureau of Labor Statistics (with labour spelt incorrectly)

For those of you who are blind or prefer reading my words rather than a table of numbers, the statistics show that since 1990 there has been a pretty steady increase in household expenditure on entertainment, but the amount spent on reading has been in steady decline. Clearly it is time to panic. Movies, TV and gaming have won. Time to give up reading and writing. No future in it.

Well, that would be the conclusion if you don’t go and look for the source data.

Now I am rather lazy, so I haven’t bothered to look up every year of data and tried to recreate the table. But what I have done is looked up the figures from a few of the years not included in the table: 2010, 20112012 and 2013. The spend on reading from those years is $100, $115, $109 (no 2013 data as yet) and entertainment spend of $2,504, $2,572, $2,605 and $2,482. Seems like that trend stopped, or something.

Actually, the trend has more to do with the household demographics and income than any change in book buying. Whilst in the early 2000’s there was a drop in reading for entertainment from ~0.4% of household expenditure to ~0.2%, this has been consistent since. So readers are still buying and reading books at roughly the same proportion as always.

And who are the readers? Well, from the demographics breakdown the readers tend to be middle-aged or older, higher income, educated households, or households without kids. Apparently having kids stops you reading, can’t think why. And clearly older and more affluent people are the ones who can afford the hardcover prices, or see the value in them, or just like having something on the bookshelf surrounding their money pile – rich people have money piles in their houses, right?

To me this doesn’t say reading is a dying industry, rather that there are groups being missed by the current industry. Of course I’m biased and probably daydreaming about a magical place where books hunt down DVDs for sport. The younger people tend to have less entertainment expenditure, with the average consumer spending 5% of their income on entertainment, whilst under 25s spend between 4 and 5%. Their book buying appears to have declined and is lower than the average consumer, at 0.14% (2012). This makes them a missed market (or possibly buying cheaper e-books). The other groups spending less on books are the less educated and lower income people, and again, not just in total expenditure but in the proportion of household expenditure.

Clearly these three groups could be reading just as much but instead of buying books they are borrowing them from friends or libraries, or they might be buying cheaper books. But something tells me this isn’t the case, what with the kids these days with their hippity hop music and haircuts. To my mind the fear that the market for books is shrinking, as suggested by the above table, is not borne out by the more recent data. We see more competition for entertainment dollars yet books don’t change that much ($150 to $110 over 22 years is 3 paperbacks in the US) suggesting that the problem is in who is reading. If reading is going to be only for richer, older and more educated people then we have a problem, especially if we aren’t creating the next generation of readers.

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The decline of cinema

theater management

There is only really one thing I miss about living in the city and that is going to the cinema. Of course, I’d miss that even more if there were movies worth shelling out this month’s mortgage repayments to see. The idea of paying big bucks to sit in a seat that has probably been used for sex by strangers, eating snacks that have a 2000% markup, after forgetting your earplugs and going partially deaf, which is a blessing after the pre-movie ads, is just not that appealing. Now Australian cinemas have decided they aren’t charging movie goers enough money and have decided to blame an easy target to justify their cash grab.

Cinema executives have blamed piracy on the recent price rises of ticket prices in Australia. Because of course it is piracy that is to blame, and not the marginalising of the customer base with exorbitant pricing regimes. Nor could it possibly be that people have more alternate entertainment options, including waiting a few months to watch the latest “blockbuster” in their own home cinema. Nor could it be the rubbish that so many movie studios are turning out.

Let’s dissect this nonsense like the original reports in the media should have done. There are many factors at play in the decline of cinema. The first real problem is that there hasn’t really been a change in the proportion of the population that go to the cinema in 40 years, but the number of times per year they go has been steadily declining since the 90’s.

ATTENDANCE
(% BEEN TO THE CINEMA IN THE LAST 12 MONTHS)

FREQUENCY
(AVERAGE NO. VISITS PER YEAR)

audiences_cin_attend_01

audiences_cin_attend_02

So rather than keeping audiences entertained regularly, audiences are clearly becoming more occasional customers. Underneath that general trend are some interesting changes in the demographics of cinema attendance. It is no secret that Hollywood movies are made for teenagers. Teens are a huge chunk of the cinema audience. But, the biggest change in the repeat attendees is in the teen market, which has been in steady general decline since the 70’s. Which part of the market is going to be most impacted by price rises? Go on: guess!

ATTENDANCE RATE
(% BEEN TO THE CINEMA IN THE LAST 12 MONTHS)

FREQUENCY
(AVERAGE NO. VISITS PER YEAR)

audiences_cinxage_rate

audiences_cinxage_freq

Another way to look at this is in the proportion of the population going to cinemas in the age demographics. Below you can see the 14-17 and 18-24 age groups are overrepresented as cinema goers, this starts to even out in the 25-34 group (also known as the settling down and going out less demographic), is at parity in the 35-49 group (also known as the parenthood has stolen my social life demographic), and people over 50 clearly don’t like all the loud noises.

AGE PROFILE OF CINEMA-GOERS COMPARED TO THE AUSTRALIAN POPULATION
OVER THE AGE OF 14, 2012

audiences_cin_genderprofile

So while the proportion of the population that have been going to the cinema each year has been pretty steady across the entire population, it is the number of times people go that is making the difference, especially in that much coveted teen “I want to see explosions and car chases” market. (Interesting aside: when you look at the age group breakdowns you do see that the over 25 audience since the 70’s have generally increased in their likelihood to attend the cinema, but this has been static for most demographic groups since the mid 90’s.) To put some hard numbers on that difference in the number of times a teen goes to the cinema each year, in 1974 the 14-24 demographic averaged 16.4 visits to the cinema, in 2012 that had dropped to 6.6 visits.

Obviously there are a lot of changes in the marketplace that have occurred over this time. TV has expanded, cable TV is a thing now, home rental or ownership of movies is a thing (VHS succeeded by DVD, now being superseded by Streaming, which will probably be superseded by actors coming to your house to perform on demand), computer games have grown in leaps and bounds, the internet, all vying for our attention and wallets. Just look at the change in households with various alternatives to cinema (NB: the game consoles data doesn’t tell the full gaming story, see this for more about that market):

Graph: Proportion of households with computer, Internet, mobile phone, games console and DVD player. The following table provides the data.

I alluded to this above, but one big change has been the home cinema. Some people will remember a time when some cinema screens were actually not much bigger than the ones installed in many homes now. Sound systems have improved greatly over the crappy little speaker that was the drive-in experience. Now we have high quality TVs and projection units that rival anything you can get in a cinema complex, and these come with a pause function, easy access to food that doesn’t kill your wallet nor beat your heart with belly flab, and sound settings lower than jackhammer. Then you have all the other possible entertainment options available, suddenly the list of movies (not) to see just isn’t as appealing.

The one thing cinemas still have going for them is windowing. For the first few months after opening, there is no other (legal) way to watch the film, you have to watch it in the cinema or wait for the DVD release. Although it seems clear people are more willing to wait, let the dust settle after opening weekend, and figure out what is worth watching, whether that be at the cinema, on DVD, when it makes it to TV, or at all. And now I’m going to contradict myself and say that piracy proves people aren’t willing to wait for those other options, preferring simultaneous releases. Both arguments still point out that people just aren’t as interested in paying big(ger) bucks to see movies in the cinema. Of course movie studios and distributors don’t like that idea, since windowing is great for their bottom line, especially opening weekend.

Now the reason for the price rise could be something to do with this chart, showing that 21% of the market is in the highest income households. Cinemas are obviously betting that their price elasticity is low and will take the price increase in their stride. What this ignores is the age demographic data above, which shows a sizeable chunk of the audience may be from affluent households, but that doesn’t mean their teenage bank account is bulging with lots of cash.

Equivalised gross household income quintiles No. cinema-goers (‘000) Share of cinema-goers (%) Attendance rate (%)
Lowest quintile 1,010.6 9.7% 47.2%
Second quintile 1,305.6 12.5% 50.8%
Third quintile 1,879.1 18.0% 66.6%
Fourth quintile 2,106.4 20.2% 75.3%
Highest quintile 2,199.2 21.1% 80.0%
Unknown 1,930.5 18.5% 65.8%
Total 10,431.4 100% 65.2%

So we see that cinema audiences are becoming more occasional consumers, the trip to the movies is a special event, not a regular event. Teens are a big chunk of the cinema market and they aren’t the repeat customers they used to be. This is what happens when you price customers out of the market, you bite the hand that feeds. You also have them turn to other entertainment mediums. Blaming piracy for what is demonstrably a long term trend is a pretty big reach. I’d also argue that piracy is a reaction to consumer demand for lower pricing and simultaneous releasing, so that audiences can consume the movies in the way they want to, not the way they are being forced to, at a price that is commensurate with the utility received (e.g. people pay as much or more for a DVD – less if you consider it a couple or family purchase). If cinemas have anyone to blame it is themselves and their suppliers (distributors and studios). Using piracy to justify a price increase is clearly unfounded.

Of course, what needs to be mentioned is that films are essentially a loss leader for cinemas so that they can make money selling snacks and beverages. This ticket price increase is probably driven through the supply chain rather than by the cinemas themselves. But this also shows how cinemas have to adapt in order to survive. Going out to a movie is an experience. People are more willing to pay for experiences rather than stuff (DVDs). So if cinemas can get serious about screening experience at a fair price, they might get the audience back, or at least stop the decline.

Sources: http://www.screenaustralia.gov.au/research/statistics/audiences.aspx

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4901.0Main+Features1Apr%202009?OpenDocument

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6530.0Main+Features12003-04%20(Reissue)?OpenDocument

Reading stats for 2012

Hot off of the presses we have two new American reading surveys: Reading Habits in Different Communities and E-book Reading Jumps; Print Book Reading Declines

Actually, the phrase “hot off of the presses” is rather antiquated now. News stories that are breaking generally hit electronic mediums, or in some cases, such as celebrity gossip, they hit the TV and radio mediums. Interesting research or data is normally promoted virally via Twitter and the like. Should we have a new phrase like “just blogged” or “trending tweet” instead?

Back to the survey. While not all of us live in the USA, despite what some American congress-people might say, their trends in reading can be seen as indicative of what is happening elsewhere or is likely to happen elsewhere. The Pew Institute have done a pretty decent survey, it would be great if a few others were done for other countries.

What I found interesting was the growth in e-books and e-readers. There are further breakdowns in the full reports about why the change is happening, but suffice to say, e-books have many advantages over paper, despite paper books still being the most popular reading format.

Ereading-device-ownership

We can see a growth of 9% in people reading e-books during 2012, up from 21% to 30%. In terms of age demographics we can see that most age groups are taking up e-books, although the big growth is still in the middle age (30-49) group.

02-reading-and-ebooks

The next point of interest was who the readers were and how much they read. We can see that there is still a sizeable chunk of the community that don’t read and another chunk that pretend to read. I’d hazard a guess that light readers read non-fiction and the latest talked about bestseller only. Because they never really read good books it takes them ages to read one book and thus don’t read often.

22-reading-frequency

Among those ages 16 and older who had read a book in the past 12 months:

  • 8% read 1 book
  • 17% 2-3 books
  • 16% 4-5 books
  • 19% 6-10 books
  • 18% 11-20 books
  • 22% more than 20 books (this is my category)

Book-readers

And my final comment, women are still the readers. They make up a bigger proportion of book readers and they read more books. I have my own hypotheses as to why this is: boys are expected to like sport and reading is the opposite of sport; and reading doesn’t make you look as sexy as playing sport, so boys think you are less likely to get laid if you read. The big change I’d like to see, and this seems to be the case with e-readers and e-books, is for the average reader to read more books in a year, even if it is only so that people read the book before they make the movie of it.