Unemployment has reached its highest level in eleven years, and household budgets have been slashed, apparently to their lowest level in eleven years. With belts tightening, and unemployment rising, the proportion of the population staying at home will rise over the year. And the chances are that television watching and gaming will rise too.
It is also fair to also expect households to downgrade to cheaper pay-TV packages, and cut back on discretionary DVD spending. This is supported by recent research from paid research group, Continental Research which found that 15 per cent of respondents surveyed are considering either downgrading their subscription packages or cancelling them.
As such, companies such as BSkyB are highly susceptible to contractions in discretionary spend as consumers move towards more cost-conscious programme watching through either freeview TV or video on demand (VoD) such as that available through BBC's iPlayer.
This trend has already begun and by the end of November, the iPlayer chalked up 237m views, which is about a million views per day. Similarly, Virgin Media revealed that it had 61m requests for its cable services with 35m requests to view programmes on online in November alone.
In times like these, generally it is best to avoid media companies. and we currently have a sell tip on and sell advice on . But not all companies are set for a struggle, businesses like Welsh production company Boomerang and ANT, which provides embedded applications to the IPTV and broadband TV markets, should demonstrate some resilience.
Aim-listed ANT works with set-top box manufacturers and content providers to develop applications that allow consumers access to advanced applications - such as those used in Sky +. Boasting a client list that includes Samsung and Phillips, and on track to reach profitability this financial year, the group is on the right track. ANT is also cash positive with £4.3m in the bank, and has a growing proportion of recurring revenues.
Fellow Aim-listed Boomerang is an independent TV production company specialising in extreme sport, lifestyle, children's, entertainment and drama programmes. Aside from the rise in television watching, Boomerang is also set to gain from Ofcom's regions and nations drive. Boomerang is also cash positive with £6.3m on its balance sheet, and we currently have a buy recommendation on the group.
Other companies in this arena include factual media group, Ten Alps whilst gaming retailer Game Group may also gain from a related surge in gaming.
