Since the late-1980s the association of the German coin-operated machine industry (VDAI) has commissioned studies on the economic prospects of the music, sport and amusement industry. The annual updates have been presented by the ifo Institute for Economic Research at a press conference marking the opening of the International Trade Exhibition for Vending and Amusement Machines (IMA).
The commissioner of the study is interested in the short-term economic development, in particular the investment propensity of the operators. Moreover an international institutional comparison of the legal framework conditions has to be carried out to evaluate the situation in Germany.
The short-term development of the music, sport and amusement industry is derived from the latest Ifo Institute macroeconomic forecasts. Special attention is paid to the net income of private households.
The opportunities for the long-term growth potential are investigated by an analysis of regulatory framework, in particular the gaming law. A comparison with the regulatory framework conditions in other Member States is undertaken to reveal opportunities for changes in Germany.
The execution of the project was based on numerous statistical sources. Most important:
The turnover of the music, sport and amusement industry reached € 3.82 billions in 2001; this is a growth rate of 2.8% — calculated in current prices — over 2000. This development was caused above all by the manufacturing companies. Their output expanded by one seventh, whereas the turnover of the operators only grew by 1.2%.
The investment of the operators grew strongly in 2001, a development which was primarily induced by the introduction of the euro. The financial burden could have run up to € 50 millions. The comparison with the average yearly investment budget of the operating companies of around € 250 — 300 millions shows a high one-off amount which will have a negative impact on the forthcoming years’ cash-flow.
The economic outlook for the music, sport and amusement industry has dampened. The disposable income of all employees will grow by meagre 1% in 2002. In particular the lower income groups and employees of the manufacturing industries will be hit by the economic weakness. In light of this situation the demand for the services of the music, sport and amusement industry will be in even worse in 2002 than in 2001.
In connection with the introduction of the €, a minor amendment of the gaming law was carried out in 2001. However, it has not contributed to a basic improvement of the framework conditions of the music, sport and amusement industry, but this was only an adjustment of the parameters for gaming, which to a certain extent corrected the effects of an increase of the value added tax and inflation during the period between 1993 — the year of the last adjustment of the parameters for gaming — and 2001. If the poor economic situation of the music, sport and amusement industry induces legislators to change the framework conditions under recognition of the social and technical changes in the recent past, the shrinkage of the investment expenditures since the mid-1990s will finally bottom out.
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