Trading The Bleachers For The Couch

Americans are staying away from events and movies in droves. Is it a blip or a trend?

It hasn't been much fun this year for the Boys of Summer. When the Texas Rangers went to Oakland, Calif., July 14-17 to take on the A's, one of baseball's hottest teams, only 88,000 fans came for the four-day showdown, filling just about half the seats at McAfee Coliseum. In Arizona, despite a shot at a division title, the Diamondbacks have been playing to 20% fewer fans than last year. In fact, nearly half of Major League Baseball's 30 clubs are luring smaller crowds this year

Empty seats aren't just a baseball phenomenon. Rock concert attendance was off 12% as of June 30. Even Eminem is suffering. Since the rapper took his tattoos and R-rated lyrics on the road this summer, his Anger Management 3 tour has played to nearly half-empty auditoriums in cities like Chula Vista, Calif., and Auburn, Wash. As the summer passed its halfway point, attendance at theme parks was off in some regions. And in the long-suffering movie biz, ticket sales are down by 9%.

Where is everyone? Entertainment promoters blame everything from unseasonable weather to high gas prices for the lousy attendance numbers. It's also no secret that high ticket prices -- imprudently jacked up in recent years -- are keeping folks away. The quality of the product, too, is a factor. But industry watchers also believe shifting consumer behavior is at work: Call it Cocooning in the Digital Age. With DVD players in most homes, broadband connections proliferating, scores of new video game titles being released each year, and nearly 400 cable channels, consumers can be endlessly entertained right in their own living room -- or home theater. Says Michael J. Wolf, McKinsey & Co. partner for the global entertainment division: "In a lot of places, out-of-home entertainment is no longer enjoyable. The costs are too high, and there are more and more alternatives for people to enjoy in their home."

Of course, not everyone is hurting. Folks are still getting on planes for Las Vegas, where the likes of Elton John and Céline Dion are packing them in. Tourists are streaming to Broadway shows. And sports like NASCAR and pro basketball, which set an attendance record this past season, still lure plenty of fans. But for many other venues, the combination of technology and shifting tastes have made it increasingly tough to get people up and off of the couch.

Already, consumers' changing habits are showing up in surveys. According to market researcher Parks Associates, 42% of Net users are less likely to go to movies than they were five years ago. An additional 46% are less likely to go to a concert. By contrast, 28% are more likely to rent a DVD. Says Alexandra Walker, a Washington (D.C.) editor who typifies the new breed of consumer: "We have a ginormous TV -- and a night at the movies keeps getting pricier."

At the same time, the digital distribution of music seems to be hitting the concert business in unforeseen ways. File-sharing networks, online-music subscriptions, and Apple Computer Inc.'s (AAPL ) popular iTunes Music Store have exposed music lovers to a range of sounds they would never have encountered before. Many are lesser-known acts who don't fill stadiums. "There is so much access to so much music now," says Ryan Schreiber, editor-in-chief of Pitchfork, a popular online indie-music magazine. "There is less stock placed in going to a major venue to see a traditional show."


Still, rival venues can't blame all their troubles on the explosion of home-based entertainment. Cinema chains, concert promoters, baseball teams, and others have intensified their troubles by hiking ticket prices in the face of rising competition. Last year, concert promoters boosted ticket prices by 12%, to an average of $59; sales have been falling since.

Major public companies that own theme parks -- such as Viacom (VIA ), which owns the Paramount Parks, and Walt Disney (DIS ) -- regularly jack up prices. Faced with hefty real estate costs, movie chains have also raised ticket prices 49% in the past decade, to an average of $6 and change, according to the Motion Picture Association of America. That means families of four fork out $60 or more for admission and snacks. "We know we're competing with other forms of entertainment. But a lot of people still leave their homes to enjoy quality entertainment," says Michael L. Campbell, chief executive of Regal Cinema (RGC ), which lifts prices 4% to 6% annually. He figures a Hollywood revival will end the downturn.

Maybe, but entertainment companies are clearly spooked -- and many are cutting prices in hopes of luring back patrons. Clear Channel Communications Inc., the nation's largest promoter, says it intends to drop ticket prices for lawn seats from $40 to $20. The promoter hopes to make up the difference with ticket sales and concessions from increased attendance. While Clear Channel declined to discuss pricing for the current Eminem tour, industry insiders say he dropped the $90 top ticket at some stops to $69. Others have tried to hold the line on prices. The 3,500-screen AMC theater chain skipped this year's admission hike, says a spokeswoman, and is offering free popcorn and soda to kids who drag their folks to see March of the Penguins. The Universal Studios theme park in Hollywood extended to July an early-season promotion that gives away a free pass for every single ticket sold. Despite strong season ticket sales early in the year, the Los Angeles Dodgers are giving away General Motors (GM ) cars every Tuesday.

Freebies and giveaways may bring back the fans, in time. Concert-ticket sales are already picking up for some acts, says Gary Bongiovanni, editor of concert-tracking magazine Pollstar. And Disneyland, which saw first-quarter attendance drop by 7%, jump-started ticket sales by blitzing Los Angeles with ads for its refurbished Space Mountain ride.

What the folks who run stadiums, amphitheaters, and box offices need is a strong final quarter. A hot playoff race could help; the Oakland A's managed to fill their stadium for a mid-August showdown with the Los Angeles Angels. And the Rolling Stones, Paul McCartney, and U2 -- a trio of legendary acts that draw a range of ages -- hit the road later this year and will almost certainly sell out. Folks, it seems, will still turn out for a big-event show or playoff game. But when the thrills pall, many will opt to stay home.

By Ronald Grover in Los Angeles

    Before it's here, it's on the Bloomberg Terminal.