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UK Market Statistics

By Luke Butler - ERA Research Analyst

Innovation and diversity key to growth as entertainment retail spend rises to £5.7bn. 

Total spend on music, video and games in the UK increased to £5,664.7m in 2014, up 2.3% year-on-year. Following on from the 4% rise posted in 2013, the entertainment market is once again beginning to trend positively.

Contained within that overall market growth figure are some contrasting category performances. Marginal declines in spend on music and video - down 1.6% and 1.4% respectively - were offset by growth in videogames sales, up 7.5% versus 2013.

Retailers continued to pour investment into an array of new services in 2014, responding to an increasingly fragmented home entertainment landscape and an evolving set of consumer expectations. In videogames, at least, that investment is already beginning to pay dividends, while upwardly trending digital revenues in music and video suggest 2015 may see the return of overall growth in those categories too.

In terms of total consumer-spend, the games category once again took the lion's share securing 43% of the market, edging further ahead of video on 39%. Music's share, meanwhile, dropped below 20% for the first time, with sales of £1bn enough to secure just 18% total entertainment retail spend.



2014 was the year when the UK entertainment retail industry finally became a truly mixed economy. A booming appetite for streamed music, on-demand video and mobile gaming, serviced by a diverse and innovative mix of online retail models, significantly boosted digital's share of the total entertainment market to very nearly 50% in 2014. 

£2,825m was spent on digital formats across music, video and games, up 18% year-on-year and enough to offset the continuing decline in spend on physical formats, which was down almost 10% versus 2013 to £2,840m. 

2014's digital surge was largely driven by the games and video categories. 61% of total games sales are now delivered digitally, with spend exceeding £1,500m, up nearly 19% year-on-year. 

And, while video is still clearly a majority-physical business, with 63% of its sales in 2014 coming via DVDs and Blu-rays, significant spend increases on download-to-own formats and online subscription services like Amazon Prime Instant and Netflix boosted digital video revenues to over £800m, up 29% year-onyear. 

Music - the most mature digital entertainment market - now derives very nearly 50% of its total revenues via digital formats, with 2014 spend on downloads and streaming subscriptions amounting to £513m, up 1.9% versus 2013.




It is not just the revolution in digital formats that has seen the entertainment retail industry migrate increasingly online. Unconstrained by the limited rack-space that a bricks and mortar retailer must carefully manage, ecommerce giants like Amazon can couple unrivalled depths of physical product range and availability with the convenience of home delivery.

It is perhaps no surprise then that physical online retailers have seen their combined share of physical format spend increase every year since they launched on these shores in 1998.

In 2014, home delivery retailers secured approximately a third of all physical sales by value across music, video and games. When combined with the burgeoning growth in digital format revenues, fully two-thirds (66.1%) of all entertainment retail transactions were conducted online last year.

While all three entertainment categories are now executing the majority of their business via the Internet, none has moved spend more rapidly or more emphatically than games with 73.6% of the category's total value transacted online in 2014.

Music's migration to the Internet is not far behind games with 66.9% of sales executed online, although video is taking a little longer to shift given its revenues are still largely derived from physical formats.


In 2014 the UK consumer spent almost £2bn on accessing music, video and games content across a range of subscription and on-demand digital services. Up 21% on the year before and accounting for 34% of total entertainment spend, this trend heralds one of the most paradigmatic shifts in the structure of home entertainment retailing since the launch of the MP3.

The concept of paying to access home entertainment is not a new one of course. Think VHS and DVD video rental as a most obvious example. But, with over 80% of UK households now equipped with a broadband Internet connection of some description, paying to instantly access an almost limitless inventory of songs, films and games online is proving to be an increasingly compelling option for many of us.

Driven by mobile 'free-to-play' in-app purchasing, microtransactions and online subscriptions to Multiplayer Online Games, access spend in the games category is the most prevalent of all. Nearly £1bn was spent in 2014, representing 40% of total category spend.

The rapid rise of digital video subscription services like Amazon Prime Instant and Netflix, combined with significant growth in on-demand film and TV transactions via satellite and cable TV operations like Sky Store and BT TV, has propelled video access revenues up 17.3% versus last year to £754m.

However, shaped by tight windowing criteria that timerestricts the availability of key new release titles, video retail still remains a predominantly buy-to-own category. Purchased DVDs and Blu-rays and a burgeoning digital sell-thru sector via services like iTunes commanded 65% of total video spend in 2014.

It was on 'all-you-can-eat' music subscription streaming services where consumer-spend on entertainment access models grew fastest of all in 2014. The £175m spent in the UK on accessing music via services like Spotify and Deezer was up over 65% year-on-year. Despite this growth, however, revenues in music retail are still overwhelmingly derived on formats that you buy to keep, representing 83% of total category spend.

It should be noted that most major music subscription services - distinct from streaming operators in the other two categories - have an ad-funded, free-to-play tier and derive at least some of their revenues, not directly from the consumer, but from advertisers.



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