The artistic/entertainment segment of American culture is looked to as the global trendsetter and market leader. Worldwide there has been an Americanization of music, fashion, and art. People are intrigued by our culture, and want to embrace those particular elements, despite their disdain for the United States' political views or economic status. As such, US-based entertainment companies tend to have an advantage over American companies in other industries — particularly in the post-Iraq War era.
The events of September 11 further ingratiated the United States in the eyes of the world because there was an outpouring of sympathy; the recently ended war in Iraq has the potential to do just the opposite. Many international countries perceive the United States' position on the war as political bullheadedness. Results of a recent Pew Global Attitude Project Poll indicate that repercussions from the conflict have created more anti-American sentiment.
The survey showed that only 45% of German citizens have a positive view of America, and that's higher than in France (43%), Spain (38%), and Russia (36%). The director of the research center said the war had widened the rift between America and Western Europe. You can see it in the US stock market and also in the currency exchange rate.
People in other countries are boycotting America and American-based companies, which is a contributing factor to the weakening dollar. Foreign investors are choosing to invest elsewhere and are pulling out of US investments. As a result, the interest rates are low, the return on US investments is low, and the dollar value is low.
The solid foundation and strong customer relationships that have been established over the years, as well as the market awareness of the products and services worldwide, will help the entertainment industry potentially avoid some of the political backlash felt in other industries. Because the live performance industry is relatively small, and an even smaller number of players have a true global reach, the entertainment industry shouldn't suffer the economic impact that the oil and gas, automotive, commodity, and finance-based industries may feel.
Another aspect that should allow the entertainment industry to avoid the economic hit and political backlash is the fact that music is universal. Despite the political turmoil that may be going on at any given moment in any particular part of the world, people still want to be entertained; they continue to seek that outlet or release from the troubles of the day.
Movies will still be popular, theatrical productions will still draw crowds, and people will still turn out to see concerts and buy CDs. Provided the individual artists don't become too political and do or say things to turn the audiences against them, the political prejudice most likely won't be held against artists or the entertainment industry as a whole.
Rather than post-war sentiment toward the United States, what could potentially have the biggest negative impact on equipment manufacturers, rental houses, and production companies worldwide is the SARS epidemic. Just as most of the world is beginning to rebound from the downswing that began with the terrorist attacks on 9/11, another international fear has struck. How far-reaching it will be or how long it will last, I don't think anyone can predict.
We have already seen the cancellation of numerous events in Asia, from conferences and trade shows to major sporting events, including the women's World Cup soccer tournament. Not only are production companies and rental houses losing business for the major events, but also for the ancillary shows and events that surround them. Organizers of some events in South Asia have said that SARS will cause more cancellations than the war in Iraq. Travel agents are reporting cancellation rates as high as 80% on trips from the United States to Asia.
Hong Kong, a business and travel hub for Asia and China that attracts nearly 10 million visitors a year, has been struggling to pull out of a recession. The cancellation of many international events will burden the city even further. Pollstar, an industry trade publication which maintains the world's largest database of international concert information, lists no shows scheduled for Singapore, and just one in Hong Kong.
Pollstar publisher Gary Bongiovanni said there has been a steady stream of cancellations. Some concerts that were originally postponed to later in the year have now been cancelled completely. For now, he said, Japan seems to have avoided the scare, and it's still business as usual for the most part in that region.
The impact will be felt by local entertainment venues, such as clubs and theatres, convention centers, exhibition halls, meeting centers, and more. This will affect production and rental companies in the region, which will in turn be felt by the equipment manufacturers worldwide.
Should the SARS scare spread to Europe, South America, or other areas of the world, those regions will likely suffer the same economic blow. We've already seen the reaction to the brief scare in Toronto. The American Association for Cancer Research cancelled the annual meeting it had scheduled in the city. And when Major League Baseball's Texas Rangers were in Canada to play the Toronto Blue Jays, players were advised not to leave the team hotel, to only ride the team bus, and to only eat meals prepared for the entire team.
Although the number of cancellations in Toronto may not be of the magnitude of Hong Kong or Beijing, the city could lose business just based on the number of artists, touring productions, corporate groups, or conventioners who opt to bypass the city for another locale, even though the World Heath Organization (WHO) no longer lists Toronto as a place people should avoid.
Fortunately, WHO authorities have recently declared that the SARS epidemic is in decline and that the disease is coming under control. We can only hope that trend continues and we can return to a state of normalcy — perhaps the first state of normalcy since September 11, 2001.
Bob Schacherl is vice president of sales for Genlyte Controls, manufacturer for both Vari-Lite and Entertainment Technology.