Booming Digital Services Return Entertainment Retailing To Growth

Fast-growing digital services like Spotify, Netflix and Steam helped entertainment retailing in 2013 deliver what is likely to have been its best result since 2009, according to preliminary year-end figures released today by the Entertainment Retailers Association (ERA). The overall UK music, video and games market was worth £5.4 billion in 2013, up 4% on 2012 when it was worth £5.1 billion. ERA Director General Kim Bayley said, “This is a stunning result after at least five years of decline. Retailers have invested hundreds of millions of pounds in new digital services and these numbers suggest the public is responding in their droves. New technologies have historically presented challenges to the entertainment business, but these results show how our members are helping music, video and games companies find new markets.”

ERA is the trade association for entertainment retailers of every kind from specialists and independents, to supermarkets, internet and download retailers as well as the new generation of streaming services.

It says sales of videogames in the UK were up 6.6% overall in 2013 while video grew by 3.7%. Music sales declined 0.5%.

The biggest-selling individual entertainment title was Grand Theft Auto V which sold 3.67m units.

The fastest growing entertainment categories in 2013 were mostly digital:

* Digital video, which includes iTunes downloads as well as streaming services like Netflix, Lovefilm and Blinkbox, grew by 40.2% to reach £621.4m;
* Music streaming, which includes the likes of Spotify, Deezer, O2 Tracks and bloom.fm, grew by 33.7% to £103m;
* Digital games, which covers mobile gaming as well as PC and console downloads, grew by 16.4% to £1.18bn.

The best-performing physical formats were Blu-ray video up 10% to £251.8m and vinyl albums whose sales more than doubled (up 101%) to £14.6m.

Said Bayley, “The big picture growth story in entertainment is clearly digital, but the success of Blu-ray and – most astonishingly vinyl – demonstrates that physical formats can still flourish when they are able to offer something distinctive.”

Music overview

Music’s 0.5% decline was a marked improvement on recent years, but will come as a disappointment to many retailers after a year of significant investment by digital services.

Innovation and investment by streaming services brought a 33.7% increase in subscription revenues to £103.1m according to BPI estimates, meaning the nascent streaming market already accounts for nearly 10% of consumer revenues in recorded music.

“Streaming services are driving a revolution in the music market,” said Kim Bayley.

The biggest-selling album was Now That’s What I Call Music 86 which sold 1.2m copies. Its sister titles Now…85 and Now…84 were the second and third biggest-selling albums of the year respectively.

Kim Bayley said, “Music’s performance is primarily due to a weak release schedule, which is particularly disappointing given the huge investment by digital services in music’s future. 2011’s biggest-selling artist album was Adele’s 21 which sold 3.9m copies. 2012’s biggest-seller was Emeli Sande’s Our Version of Events which sold 1.4m. In 2013 One Direction’s Midnight Memories sold just 715,000 copies. Retailers will be hoping that labels deliver bigger hits in 2014.”

Source: ERA