Olson is representative of a younger generation that values the Internet above other media. The recent Forrester Research survey found that adults ages 25 to 34 were the most willing to sacrifice a night at the multiplex or premium cable if money gets tight. What were they least willing to surrender? High-speed Internet access.
The endless stream of free content, through legitimate services as well as pirate sites, appears to be shifting viewing habits more quickly than industry executives had anticipated -- or intended. That creates a dilemma for media companies because the Internet generates substantially lower revenue than established business models -- 30-second TV commercials and home video sales -- which have long supported the costly economics of TV shows and movies. That's not Hollywood's only problem.
When Midori Connolly's family business in San Diego, which supplies audiovisual equipment for conferences, began to feel the economic slowdown this summer, she and her husband trimmed expenses.
The monthly subscription to DVDs-via-mail service Netflix was the first to go. Now they rent movies for $1 a day from a kiosk at the supermarket. Next they saved the $10 to download George Strait's new "Troubadour" album on iTunes. Instead, they bought two tracks for 99 cents each. And they didn't rush out to spend $17 for the DVD of "Sex and the City." They checked out a free copy from the library.
"We started finding alternatives that we didn't have to spend money on," said the 31-year-old mother of two. "I don't feel that we've lost any quality."
Media companies are bracing for the fallout from decisions by families like the Connollys. With the economy cooling, Netflix has lowered its revenue and subscriber forecasts for the fourth quarter. Viacom Inc., which owns Paramount Pictures and MTV, and CBS Corp. said profits would be lower than expected, citing weaker ad sales. NBC Universal plans to slash $500 million in spending -- 3% of its budget -- because it anticipates "unprecedented economic challenges" in the year ahead.
The wild card is the length and depth of the downturn. No one knows how bad things will get.
Although cinema attendance increased during five of the last seven recessions, a closer examination of movie box office receipts during the Great Depression seems at odds with Hollywood's conventional wisdom. Attendance soared in 1929 and 1930, after the advent of "talkies," but the novelty appears to have worn off amid hard times. By 1932, ticket sales had plunged and did not recover until 1940, just before World War II.
