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Just as the auto industry determines the basic health and output of a host of other industries (steel, plastics, rubber), the American entertainment business has become a driving force behind other key segments of the country's economy. As a result of this so-called multiplier effect, the products and profits of dozens of U.S. industries are umbilically tied to American entertainment: fast food, communications technology, sportswear, toys and games, sporting goods, advertising, travel, consumer electronics and so on. And the underlying strength of the American economy, many economists believe, has a lot to do with the tie-in of such businesses to the continued growth and world dominance of the American entertainment business and the popular culture that it exports.
"The role of entertainment as a multiplier is probably as great as, or greater than, any other industry's," observes Charles Waite, chief of the U.S. Census Bureau of Economic Programs. "Unfortunately, there's no exact way to measure its effect." But if the American entertainment industry's boundaries were drawn broadly enough to include all or most of its related businesses, some economists believe, it could be credited with generating more than $500 billion a year in sales.
Though the business is increasingly global, the domestic entertainment industry is still the backbone, and it is still thriving. The enormous profits of the '80s are being reduced by the recession. But the amount of time and money the average postadolescent American spends in the thrall of entertainment remains astounding: 40 hours and $30 a week, if industry statistics are to be believed. By the time U.S. culture goes overseas, it has been tried, tested and usually proved successful at home.
Americans this year will spend some $35 billion on records, audio- and videotapes and CDs, almost as much as they will spend on Japanese hardware manufactured to play them. In the air-conditioned Nevada desert, the opening of two gargantuan amusement centers dedicated to gambling and show business -- the Mirage and Excalibur hotels -- is leading Las Vegas toward its biggest year ever. In Nashville the country-music business is keeping the local economy afloat amid a tide of regional recession. Felix Rohatyn, the fiscal doctor, says the only hope for New York City, laid low by the collapse of the boom-boom Wall Street economy of the '80s, is to turn it into a tourist attraction keyed to entertainment. But the industry is also undergoing profound change in its essential financial and cultural dynamic: moving toward the European and Asian customer as a major source of revenue while moving away from American network television as the creative and economic magnet. Rambo III earned $55 million at home but $105 million abroad.
Another effect of globalization: rather than waiting months or years before being released outside the country, American movies and television programs are beginning to enter the foreign marketplace in their infancy and even at birth -- and boosting profits. Universal opened Back to the Future II in the U.S., Europe and Japan simultaneously. The film made more than $300 million, and the receipts were available months earlier than usual, accruing millions of dollars in interest.