Karaoke+Goes+Upscale

Title: Karaoke Goes Upscale Source: http://blogs.wsj.com/hong-kong/2011/02/18/karaoke-goes-upscale/ Date: February 18, 2011

This article mentions that karaoke, one of Hong Kong's most popular forms of entertainment, is going downhill because the Hong Kong music industry, a complement of karaoke, is going downhill. The number of customers that go sing karaoke once per month has gone down 2% (D1-->D2) in 2010, causing the price to also go down (P1-->P2). Although not said, it is implied that that the new karaoke company, Red MR, is bringing in technology at extremely high costs in hopes of saving the karaoke industry, as well as the music industry possibly. Red MR spent 20,000 USD for each of its first batch of touch screen tables, and 10,000 USD for each of its second batch. In addition to this, the software used costs 100,000 USD. With other technologies such as virtual dancing, XBox, 3D TV, etc. Red MR hopes to attract more consumers. Currently, Red MR has a 90% capacity, meaning there is some surplus for rooms in the karaoke. This is perhaps due to the high prices Red MR has to charge in order to increase their profits due to their high costs from buying all the high technology products.

Vocabulary - Supply - a curve representing the quantity producers are willing to supply for each price - Demand - a curve representing the quantity demanded for each price - Complements - products that go together, when the demand of one increases/decreases, the other does the same

Spending so much money on high technology things in karaoke is not worth it. The karaoke industry is going downhill, so will high technology products change that trend? I don't think that is very likely. With a 10% surplus in rooms, the Red MR might still be gaining negative profits, and that is not going to help them regain the popularity of karaokes or the music industry. Since spending so much money isn't going to gain the Red MR any profits, what is the point in doing so? I think it is a very bad idea for Red MR to spend so much money on these high technology products. Although there is a possibility that new products will gain them more popularity and profits, it is an even worse idea that they are planning to continue to purchase more product.