The Entertainment Economy: How Mega-Media Forces Are Transforming Our Lives
By Michael J. Wolf
Corporate adviser Michael J. Wolf shares insider stories and opinions on the business of show business.
Times Books (1999)
Reviewed by: Abilio Tavares Jr.
In The Entertainment Economy, author Michael J. Wolf does not write about the economics of the entertainment industry, so the would-be entertainment mogul who is hoping to be educated about music royalty payments, television syndication, or the ins and outs of motion picture accounting practices will have to look elsewhere. Wolf instead provides readers with an informative book about the evolving entertainment culture that is affecting not only the way we spend our leisure time but how we have come to do business in an entertainment-oriented economy.
There is little doubt that Wolf knows something about the connection between entertainment and business. The son of an investment broker and television producer/entertainment writer, the author grew up surrounded by the Wall Street Journal and Variety. According to the author, this exposure to business and entertainment led to a job marketing for a studio and running a financial services company. Then, after a term of consulting, Wolf became a senior partner in the international consulting firm of Booz-Allen & Hamilton, where he is the head of the firm's media and entertainment group and advises some of the world's top media and entertainment companies. Wolf has done his research and knows his subject enough to present his case.
The book is divided into 10 chapters, with titles such as: "Hedonomics: The Fun-Focused Consumer," "The E-Factor: There's No Business without Show Business,"; and ";Mogul Kombat: The Struggle for World Domination." The author starts by giving readers an overview of the changing economy by noting that social, political, and technological changes—bolstered by such events as the end of the military buildup of the 1980s"created opportunities for entertainment to take center stage in the 1990s. Wolf notes, for instance, that in 1998 in the United States, the percentage of consumer spending for entertainment exceeded that spent for clothing or healthcare; that year, the entertainment industry enjoyed revenues of $480 billion. He observes that in the entertainment-dominated city of Las Vegas, Nevada, employment grew 8.5 percent in 1998, while in California, entertainment-related employment has grown 83 percent since the end of the Cold War.
According to Wolf, this so-called entertainmentization of the economy can be explained in part by the entertainment-hungry habits of a generation that grew up with television. Baby boomers control 51 percent of the wealth in the United States and now consider extra free time more important than extra money. This generation spends more money on entertainment than it saves. These consumers are demanding more bang for their entertainment buck and are ready to pay for new ways to maximize their entertainment time. Theme park malls as well as mega-theaters with over 30 screens and stadium seating are all in response to the demands of baby boomers and their children, who have grown up with not only television but also video and computers. The economic effect is that malls are being anchored by mega-theaters and game complexes instead of department stores because baby boomers got bored shopping at JC Penney's or Sears.
Wolf insists that entertainment-oriented growth is taking place around the world. This global expansion can be explained in part by the mega-entertainment companies that are marketing overseas and in part by the production of entertainment product by less expensive means.
The most interesting observation made by the author regarding developing countries is that even where money is scarce the entertainment industry is growing. In the past, entertainment products such as televisions, VCRs, and computers were considered luxuries. Now, even in developing countries, such products are considered necessities to enter the consumer class. The result has been that the entertainment economies of many developing countries have accelerated economic growth in general. Wolf writes that entertainment has become the "driving wheel of the new world economy."
The author introduces readers to concepts such as the "e-factor," by which entertainment influences not only what people buy but where they live, work, shop, and play. Another new word is "hedonomics,"; in which the fun-seeking, entertainment-hungry consumer rules. Wolf recognizes that in the battle for consumer attention, businesses have come to realize that in order to attract the attention of fickle consumers with a short supply of free time, they have to add entertainment to their product. Not just parks but stores, restaurants, and malls now have themes, and game centers and mega-theaters contain an abundance of entertainment options. Wolf does not hesitate to state that traditionally more practical businesses such as fast food outlets and even banks are being forced to use entertainment to distinguish themselves from the competition. The goal of business in such an environment is to get our attention long enough to sell us a product or service and to develop brand loyalty.
Wolf also documents how, in a crowded market, entertainment businesses are racing to merge with other entertainment, technology, and mass media firms to become mega-media conglomerates intent on increasing the number of outlets available to them to promote, sell, and distribute their products.
Movie studios now fully merged with other businesses treat films like Star Wars Episode I: The Phantom Menace or Toy Story 2 as opportunities to generate television, music, video, publishing, and merchandising revenues. By maximizing the number and types of outlets available, the entertainment giants seek as many consumers as possible, thereby increasing their chances of recouping the skyrocketing costs of producing and marketing entertainment product.
In the last chapter, Wolf offers readers some predictions about tomorrow's entertainment economy. Wolf reflects that "no new medium has ever killed off another; it has only influenced...it." Investors should remember that newspapers survived radio, and radio and moving pictures survived television. He predicts that these media will survive the Internet. Second, while new technology offers infinite ways to be entertained alone, the basic human need for socialization guarantees the survival of entertainment venues such as malls and theaters. Third, consumer businesses will split into those that emphasize convenience—such as specialty stores and e-commerce—or those that become entertainment venues—such as the Mall of America. Finally, in the high-tech and entertainment economies, the most valuable commodity is creativity and human imagination.
The Entertainment Economy can be frustrating. Wolf has an easy and direct writing style, but his points are occasionally lost under the weight of information overload. There are times when Wolf simply offers too much minutia or revisits the same points. The reader's ability to follow the narrative suffers as a result. Wolf seems to be aware of this problem and has divided each of the 10 chapters into subtopics. His titles, however, are often more clever than informative.
Despite these flaws, Wolf's book successfully raises some serious questions about the increasing reliance of business on entertainment. Nevertheless, the author never really establishes how mega-media forces are transforming our lives. Rather, he shows that entertainment-hungry consumers are forcing businesses to transform themselves and the way they do business.
Abilio Tavares Jr. practices business and civil litigation with the Los Angeles firm of Negele & Associates and is a member of the Los Angeles Lawyer Editorial Board.