In these troubled times, indicators of financial distress abound: the TED spread, rocketing commodity prices, ailing business confidence in Germany and Belgium, house price data of course, and finally the troubles of the porn world.
The latter flagged up in Variety magazine is a little alarming, because porn was meant to be the ultimate in recession-proof business. (HT The Big Picture.)
Variety columnist Peter Bart writes:
Further, with the country already in a dispirited mood, the fact that porn has gone limp may indicate a true plunge in consumer confidence. DVD porn is down between 10% and 30%, depending on which nook and cranny of the business you scrutinize.
For those with a healthy interest, “couples-friendly” is holding up, while “gonzo” suffering a more serious decline. As for any media business, the provision of freebie content online is a headache, offering consumers a low-cost alternative when times are tight.
Back to the economy. Abnormal Returns is on the case. If the general public is cutting back on porn, what other daily essentials are they foregoing as budgets become stretched?
Henry Blodget nominates the latte. In the good times, Starbucks argued that their frothy treats were no longer “consumer discretionary” items but staples. Yet the coffee vendor warned Thursday that profit is likely to fall this year as stretched customers rethink their need for caffeine.
At Financial Armageddon, Michael Panzner notes that the results from United Health Group suggest that more Americans are opting to pass on a service they supposedly couldn’t do without: insurance.
Another supposedly recession-robust industry has its own troubles. Addiction helps to keep consumers buying tobacco - but health worries, punitive tax and the inability to smoke it publicly has already limited the market. Now the Office of Fair Trading has got involved too, unveiling wide-ranging allegations of price fixing involving tobacco companies and some leading supermarkets.
So where are the new recession-proof industries or companies? Apple certainly caused excitement with its “astounding” resilience. IT and outsourcing is another regular candidate - though while some companies may want to cut costs in a downturn by farming out services, more are likely to delay all IT decisions, and others will go bust reducing the overall pool of business.
Golf is put out there by, surprise, Golfweek magazine. In a more difficult business climate, do you work harder or have more downtime on the links? Does slow deal-making increase the need for golf-related glad-handing and networking or render it an unnecessary waste?
How about litigation? One way or another, the lawyers always have something to do.
So you’re not smoking. You’re caffeine-free and uninsured. You’ve cut right back on your porn rental and adult channel outgoings. What can’t you manage without?
Related links
Hard times ahead as porn goes soft? - Variety
