The entertainment industry is undoubtedly one of the largest pieces of the economy, encompassing a rather large portion of the industry of the United States. The music, movie, and gaming industry generate massive amounts of revenue, and are becoming more and more vital to the economy with the billions of dollars they are raking in. The last Call of Duty game released generated over a billion dollars total and over $500,000 in the first day of its release. Netflix has surpassed three billion dollars in sales. iTunes has generated at least ten billion dollars in sales for Apple. It’s no doubt that these online giants have cornered the market and become key staples in many lives on a global scale. But what kind of impact does this make on tangible businesses you can actually walk in to?
Record stores are mostly a thing of the past now. You’d be hard pressed to find one in any small town, but you might find one stashed away in the streets of a larger city like Springfield. Nonetheless, it’s clear record stores are a dying breed, having mostly been scared off by music superpower iTunes. This means that money doesn’t stay in the town its made in, it goes off to large cities where the company was founded in, which means most of your iTunes purchases go off to California where Apple is based, where it’s not likely to come back.
The movie industry is also very evidently hurting from online businesses. Services like Netflix and Hulu offer streaming directly from the same device you use to order your movies from, so you don’t even have to move to watch a movie. Most places you go, Blockbuster stores are going out of business. Although the relatively small business of Family Video is still afloat, it obviously is being undermined by the convenience of Netflix.
The only business not seeming to be under pressure from online franchising seems to be the gaming industry. My guess is that since the majority of gamers tend to play on a console, such as the Xbox or Playstation, they prefer to have the physical copy of the game. Instead of buying a song and listening to it over and over, people usually only play through a whole game once, and then they’re done with it. Multiplayer keeps players coming back to a game, but the real appeal lies in the resale value of a game. If they like it, they can keep it. If they don’t, there’s always the option to sell it on eBay. The fact that you can buy a game on demand isn’t that great when you don’t get any money back when you’re done with it. This is why GameStop isn’t hurting in business. They sell someone a game when it comes out. Then, when you’re tired of it, you sell it back to GameStop for a loss, and GameStop gets to sell the game a second time as a used game for further profit.
The entire attraction to online music and movies is convenience. Since they’re cheap, people are willing to give up the ten dollars or so for a movie or an album. This outsources most companies to large cities where they can run a business from a computer instead of in front of a desk. Small business is being run out by convenience. Family Video is only alive because rentals are sensible and people don’t mind watching a movie or playing a game once and returning it. Once Microsoft decides to combine the Xbox and the personal computer, everyone will most likely just rent everything digitally and there goes another small business to convenience. It’s the same reason encyclopedias are impractical, why bother pulling a book off the shelf and scanning through it when the same answer can be accomplished by a simple Google search?
