Digital Services Deliver £1BN Boost To The Music, Video And Games Businesses In UK

Investment by new digital services like Spotify, Sky, Amazon, Apple Music and Google has resulted in sales of music, video and games running £1bn ahead of where they were just four years ago, according to data compiled by the Entertainment Retailers Association (ERA).

Preliminary figures from ERA indicate that booming digital services helped the music, video and games markets achieve new all-time record sales of £6.3bn in 2016, up 3% on the previous year – and over £1bn more than they were as recently as 2012.

That 3% growth is even more remarkable since it comes in comparison with 2015, which was a 53-week year.

For the first time in 2016 the video market became a majority (58%) digital business with revenues from downloads and subscription services now exceeding those of DVD and Blu-ray discs.

Digital services account for 57% of music revenues and 74% of the games market.

ERA CEO Kim Bayley said, “The music, video and games industries were understandably nervous about the advent of new digital services, but these figures provide resounding evidence of the benefits of our members’ investment in innovation. To have added over £1bn in new revenues in just four years is an incredible achievement. To put it another way, take away today’s digital services and the entertainment market would be barely a third the size it is today.”

ERA’s market figures provide a definitive overview of the UK entertainment market, aggregating data from respected market analysts including the Official Charts Company, GfK and IHS. Preliminary numbers will be updated and confirmed with the publication of the ERA Yearbook in March 2016.

Physical remains a £2.2bn business

Physical formats of music, video and games product declined by 15% in aggregate in 2016, but some physical formats continue to flourish. Sales of handheld games software grew 21.3% to £48.8m, while vinyl records continued their sustained revival, up 56.4% to £65.6m.

“Physical entertainment retailing is clearly off its peak,” said Bayley, “but it is still a £2.2bn market. The growth of vinyl in particular shows that physical formats can flourish if they offer distinctive benefits. The strength of the DVD and CD formats over the Christmas period shows that physical still dominates when it comes to gifting, for instance.”
Music: Entertainment’s fastest-growing sector

Music revenues grew by 4.6% in 2016, well ahead of video (up 2.2%) and games (up 2.9%) powered by a huge 65% rise in music subscription revenues driven by services such as Spotify, Apple Music, Amazon and Deezer.

The biggest decline was suffered by downloads (down 26.8% overall). After a relatively resilient 2015 when sales declined just 3.7%, CD revenues fell by 13% in 2016.

The biggest-selling album of the year was Now That’s What I Call Music 95 with sales of 908,500 units.