Key challenges for the leisure and entertainment sector  

The leisure and entertainment sector comprises a broad set of businesses, including media and TV, sports, and gambling, along with site-based venues like entertainment complexes. The root challenge for clients in these spaces is staying relevant and keeping market share in a world so full of choice. During healthier economic times, businesses competed for customers’ time and money; now, as inflation persists and a cost-of-living crisis develops, keeping a share of diminished consumer discretionary spend presents even more of a challenge.

After Covid-19 forced people to live differently for a year and a half, re-establishing old pre-pandemic patterns has been an uphill battle. Just ask fitness centre operators, restauranteurs or travel retailers, who can all agree that old habits take time to renew, and often the required offer changes drastically.  

Connected exercise bikes were not ultimately as disruptive as expected during the pandemic lockdowns, but digital fitness is still a key part of the industry in 2022. As a result, fitness centre operators now add subscription flexibility to elevate their digital companion offers. 

Digital and omni-channel became more important within many leisure and entertainment businesses throughout Covid. Virtual fitness, pay per view music concerts, food delivery services, and companion apps for theme parks, stadia and other precincts are just some examples of this trend. This shift presents complexity, but also opportunity. Touchpoints, baskets and engagement can all be expanded further.

How we are helping clients 

We help our clients by providing data-based insights into what consumers want. Compiling, understanding and interpreting relevant data is our area of expertise. We generate data through having direct conversations within the sector, running surveys and focus groups, connecting with a network of other experts, and consulting our own deep expertise in tracking consumer disruption over decades. Strong data analytics provides us with powerful evidence-based insights and skills to best support our clients and give them a solid advantage.  

We are dedicated to understanding what consumers pursue. Concepts like membership, personal fulfilment and belonging are all part of the lens through which we examine changes in the leisure and entertainment sector. Understanding how consumers wish to fit into the world now and in the future helps us gauge potential new revenue streams for companies. From adding merchandise streams to recommending new broadcast sports strategies, we help our clients survive and thrive in the rapidly changing leisure and entertainment sector. Inflation also can’t be ignored, and we are determined to help clients achieve cost efficiencies and communicate value-for-money to their customers. 

“The overlay of digital and physical is the sweet spot for the sector. Getting this right should pay dividends.”

David Bishop, Partner, Paris

The year ahead 

We see big things ahead in 2023. Digital transformation remains a continuing trend - we saw an acceleration during the pandemic, and this shift is continuing.  

After a period of experimentation with hits and misses (VR tours, VOD everywhere), there is now a more settled idea of how digital and its devices can add value to leisure experience.  

Despite a lot of missteps, augmented reality and digital services that blend physical experience with devices (shopping, stadium, workout) are becoming useful in multiple settings. Entertainment and content providers are finding ways to serve different consumer groups with varied needs by offering a mix of settings (in venue, at home), platforms, content packaging and lengths, and funding models (ad or not). 

The tension of consumers reverting to post-Covid spending while also tightening their belts as macro conditions soften is another critical issue for leisure verticals in the year ahead. On one hand, consumers are keen to return to pre-Covid lifestyle patterns and catch up on missed experience and wellness activities. Long-distance travel, yoga retreats, and dining out are all making comebacks. On the flip side, consumers are facing rising living costs, stagnant discretionary incomes, and general uncertainty – all of which support a subdued approach to spending. The balance that consumers should strike here is an important question. 

Why L.E.K.? 

As ever, it’s our deep understanding of client needs and our ability to turn this understanding and insight into a clear business strategy that makes a big difference for our clients in a challenging and exciting market.

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