Technology is changing the nature of entertainment and leisure activities, creating new opportunities for investors.
The leisure and entertainment sector represents a large, growing chunk of the economy and is poised to get much bigger. The Dow Jones Travel and Leisure Index has grown at twice the pace of the S&P 500 in the past 25 years. Add up travel, television and film, gaming, restaurants, fitness, pets and social media industries and total leisure spending is at more than $1 trillion globally.
Growth in this sector may be just getting started. I expect it to continue to grow at a much faster rate than the overall economy with U.S. entertainment and dining growing at 4.9% between 2014 and 2016, driven by three secular tailwinds that are converging.
- Exciting new technology is leading to innovation. We are most excited about tremendous potential growth in segments like virtual reality and e-sports (watching people play video games competitively). Multiplayer gaming, streaming video, social networking and augmented reality are also fast-growing industries.
- Automation is allowing people to work less, play more. Americans may feel busier than ever, but the time spent working has actually declined in aggregate. Automation, which makes work more efficient, is a big reason why. Statistics on working hours show that in developed countries, people have more spare time than they did in the 1970s, working an average of 4.8 less hours per year. At that rate, the population could have 12 million years of additional leisure time by 2030.
- Multitasking is expanding hours per day spent engaging in leisure activities. People are increasingly doing two kinds of leisure activities at once—watching TV and posting on social media, or exercising and watching a movie, to name just two examples. One study of millennials found that only 5% watch TV without engaging in another activity. Existing statistical work on leisure has ignored multitasking instead pushing people to identify a single activity at each point in the day. This potentially understates actual time that can be monetized. Multitasking increases hours spent in leisure activities and is a primary driver for our interest in the sector.