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Booming digital services return entertainment retailing to growth

Music, video and games deliver “best result since 2009” Grand Theft Auto V tops Entertainment Chart

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."

yearend 2013 table1

Sector overview

Videogames increased its lead as entertainment's biggest sector during 2013 and now accounts for 41.4% of total entertainment sales with video on 38.9% and music on 19.7%.

The entertainment market is still predominantly a disc-based physical market with physical formats accounting for 56% of sales in 2013. The most digital market is games where 53.7% of sales are digital. Music is 48% digital, while in video nearly 70% of sales are still on disc-based formats.

Games overview

Media coverage of the games market in 2013 was dominated by anticipation of the November launches of Microsoft's Xbox One and Sony's PS4 consoles.

In the event these launches came too late to rescue the hard-pressed physical games market which ended the year 2.9% down on 2012. What they did achieve was a huge boost to retailers in terms of console sales - which are not included in ERA's estimates of overall market value.

The Xbox One sold 364,000 units worth £144.5m, according to GfK Chart-track, while the PS4 sold 530,000 units worth £181.6m. But to put these into context, even together they were worth less than half the value of the digital games market which was worth £1.18bn in 2013.

The biggest-selling console game of the year was Grand Theft Auto V which sold 3.67m units.

Kim Bayley said, "Games continues to deliver digital sales strongly, but it was disappointing that Xbox One and PS4 came so late in 2013 and then huge demand meant stock sold out quickly. Retailers will be working hard in 2014 to maintain the sales momentum of these two great new pieces of kit." 

Video overview

Preliminary figures suggest video enjoyed its first growth since 2008 in 2013 - thanks to digital.

Sales of physical formats declined 6.8% to £1.44bn, but digital sales value grew by 40% to £621m reflecting the rapid growth of streaming services like Netflix, Lovefilm and Blinkbox.

The biggest-selling video of the year was Skyfall which sold 2.96m units worth.

Said Bayley, "Video has done well to maintain its physical presence while enjoying strong digital growth. The challenge for video companies in 2014 will be to establish attractive physical formats which offer digital copies which enable them to hang on to valuable store space."

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."

Grand Theft Auto V tops 2013's Entertainment Chart

The biggest-selling entertainment product in 2013 was videogame Grand Theft Auto V, according to the latest edition of ERA's annual Entertainment Chart, which combines sales data of videos, games and music albums.

With 3.67m units sold, it was well ahead of second-placed Skyfall, the James Bond movie which sold 2.96m units. Third place was taken by an Entertainment Chart regular, the latest edition of the FIFA videogame, FIFA 14 which sold 2.66m units.

Of the Top 20 best-selling entertainment titles in 2013, 13 positions were taken by videos, five were videogames and two were music albums, both of them editions of the Now… compilation series.

yearend 2013 table2

About ERA

ERA is the trade association representing the vast majority of retailers and digital services offering music, video and games. Its members range from independent record shops (Rough Trade, Reflex, Sister Ray) to internet retailers (Amazon) to specialist High Street operators (HMV, Game) to supermarkets (Tesco, Sainsburys, Asda, Morrisons) to digital services (Spotify, Deezer, 7digital).

ERA members supply the sales data which powers the Official Charts Company (music and video charts) and GfK Chart-Track (videogames). Together with record companies trade association the BPI, it owns the Official Charts Company.

ERA provides the organisational force behind Record Store Day, the annual celebration of independent record stores which has become the most successful new music industry promotion of the past two decades.

ERA works closely with its sister organisations in music, video and games and is a strong proponent of open markets, open standards and consumer choice.

 

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