ERA - Entertainment Retailers Association
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Overview

ERA produces the following reports and information for its members, all of which can be accessed through our website.

  • Yearbook
  • Weekly dashboards
  • Research reports
  • Information and fact sheets

Should you wish to purchase the yearbook or obtain any of the fact sheets listed please contact the ERA office - admin@eraltd.org

Our yearbook is available at a cost of £50

UK Market Statistics

By Luke Butler - ERA Research Analyst

2015 was a year when all 3 of the sectors ERA represents returned to growth on the back of stellar digital gains.

Total UK entertainment retail consumer spend grew for the third consecutive year in 2015, up 5.6% to £6,123m.

After posting marginal declines last year, music and video revenues made a welcome return to growth, up 3.5% and 1.5% respectively, while the games category continued to power ahead, up 10% versus 2014.

In response to a consumer that now expects delivery of entertainment across a myriad of formats, platforms and devices, retailers have had to invest, adapt and innovate to meet that demand. In 2015, well over half of all revenues across music, video and games were generated by retailers and services that didn't exist 10 years ago.

After several years of market transformation, that investment and innovation has paid off, creating a diverse, multichannel entertainment retail landscape that, in 2015, delivered healthy revenue growth across each of the major home entertainment categories.

In terms of category share, further prodigious growth in the games sector last year saw spend rise to £2.8bn, securing over 46% of the entertainment retail market, while the £2.2bn spent on video content represented just under 37%. Marginally more than £1bn was spent on music in 2015 with its share falling to 17% from 18% in 2014.

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DIGITAL AND PHYSICAL FORMAT SPLITS

After years of surging internet-based consumer spend on downloads and streaming, 2015 was the year that entertainment retail finally became a majority-digital business. Over £3.5bn was spent on digital formats across music, video and games, representing 57.6% of the total market, up 19.2% versus 2014.

Spend on digital video in particular took off in 2015. While the category still derives most of its revenues from physical formats (51.5%), digital spend was up fully 30.3% year-on-year, driven largely by the millions of new accounts that were opened with online subscription services in the UK, provided by companies like Netflix, Amazon Prime Instant and NowTV.

Games, however, remains the most digital category of all.

In terms of total revenue, two out of every three pounds generated by games in the UK last year came via content that was digitally delivered directly to consoles, PCs, mobiles and tablets, or accessed online. Spend hit a record £1.9bn, up 17.1% versus 2015.

Music - the first of the entertainment categories to derive any meaningful revenues from digital formats when iTunes was launched in 2004 - became a majority-digital business for the first time in 2015, with the £544m spent on downloads and streaming subscriptions representing 51.4% of the total music market.

Overall spend on physical entertainment formats declined by 8.5% in 2015, resulting primarily from very soft physical video sales. Spend on DVD and Blu-ray slipped 16% year-on-year, with £220m less taken through the tills versus 2014.

Sales of packaged games software contracted marginally in 2015, down 2.2% to £928m, while the long-term decline of spend on physical music formats slowed dramatically last year, down just 0.5% versus 2014.

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BRICKS AND MORTAR VERSUS ONLINE

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When you combine accelerating digital sales with sales of physical formats online via home delivery retailers like Amazon, the migration of the entertainment consumer to the Internet is even more sharply defined. Combined digital and physical home delivery spend in 2015 amounted to just under £4.4bn, meaning that 72% of all entertainment retail transactions were conducted online last year.

While Amazon is clearly the most successful and well-established retailer in the home delivery space, the whole market is in fact comprised of a large number of smaller, more focused online operations. As well as being home to the physical online arms of well-known high street brands like hmv and Game, and grocers like Tesco and Sainsbury's, many specialist, independent bricks-and-mortar retailers, like Townsend Records and Presto Classical for example, successfully exploit the sheer scale of the channel to reach customers well beyond their physical shop footprint.

While all three entertainment categories now conduct the majority of their business online, the growing popularity of mobile and direct-to-console purchases in the games market means that well over three-quarters of total games transactions are now executed on the Internet.

The video category, while still majority-physical in terms of format share, generates over two-thirds of actual spend via the Internet and music, with over £720m spent online last year, derived 68% of its revenues over internet based channels in 2015.


ACCESS VERSUS OWNERSHIP

Integral to the digital revolution in entertainment retail is a UK consumer that's becoming increasingly comfortable with the concept of paying to access entertainment, rather than paying to own it outright. £2.4bn was spent on accessing music, video and games content in 2015, up 23% versus 2014, with the vast majority of transactions occurring online. Revenues are booming across a number of digital subscription and on-demand services with all three entertainment categories experiencing significant growth across their respective access models. 39% of total spend on entertainment last year was derived via models that provide the consumer with access to entertainment rather than ownership.

That growth in demand is having a notably transformative effect on the video market where consumers spent £972m accessing film and TV content in 2015.

It is digital subscriptions to Video-on-Demand services in particular that have really captured the consumer's attention and boosted access revenues significantly. Services like Netflix and Amazon Prime Instant - now offering nearly 3,000 titles to rent for around £6 per month - have gone from generating just £100k in spend in 2008 - when the physical disc was still, by far the preferred format to access video on - to nearly half a billion pounds in 2015.

Combined with the steady growth in on-demand film and TV transactions across the satellite and cable sector, 43% of total video category spend is now accounted for by access models alone.

Despite the combined effects of growth in spend to access with double-digit declines in DVD and Blu-ray sales, video remained a majority 'ownership' category in 2015. 57% of total spend came via physical disc purchases, or from sales of download-to-own formats via retailers like iTunes and Amazon. Sky's innovative 'Buy and Keep' hybrid offer - where you buy a permanent video download and get sent a physical copy in the post - is also contributing significantly to the growth of the digital retail channel.

The story is largely a similar one in music. While the £251m spent on subscriptions to all-you-can-eat music streaming services like Spotify and Apple Music in 2015 is clearly having a negative effect on digital download sales, steadying CD revenues and the explosive growth in vinyl means that three-quarters of total spend in the category is still accounted for by transactions to own.

In the games category, revenues derived from mobile in-app content and online subscriptions have slowed slightly year-on-year but access spend still topped the £1bn mark in 2015, representing 41% of the category total.

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