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Digital entertainment exceeds £1bn in sales for the first time

London – 2 January 2013. Digital sales of music, video and games exceeded £1bn for the first time in 2012, according to official year-end figures released today by the Entertainment Retailers Association (ERA). With a final year-end tally of £1.033bn, digital sales of music, video and games grew by 11.4% over 2011 to account for a quarter of the combined entertainment market. Disc sales of CDs, DVDs, Blu-ray and videogames still account for just over three quarters of the entertainment market, despite falling by 17.6% compared with 2011.

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.

ERA Director General Kim Bayley said, "Breaching the £1bn barrier is an incredible achievement for the UK's digital entertainment retailers and reflects their huge investment in new and innovative services which means you can buy music, video and games literally at any time of the day and wherever you are. At the same time I suspect that many people will be surprised to learn just how resilient the physical business still is - with three quarters of entertainment sales still on disc. Downloads offer convenience and portability, but people still seem to value the quality and tangibility of a physical product."

The ERA statistics combine data from three leading sources:

  • Official Charts Company data on actual sales of music and video (physical) and music (digital);
  • GfK Chart-Track data on actual sales of videogames on physical formats;
  • IHS Screen Digest estimates of digital sales of video and videogames.

Digital entertainment's big year

Digital sales of music, video and games grew in total by 11.4% in 2012 to reach a new record of £1.033bn. The biggest digital sector by far remains videogames - mainly comprising Massive Multiplayer Online Games, Social gaming and online console transactions - which at £552.2m was worth more than digital sales of music and video combined.

Video showed most growth at 20.3%, but this reflects the relatively undeveloped nature of the market. Music's digital growth of 15.1% was particularly impressive given that it is the most established of the three digital markets.

fig 1
ERA Director General Kim Bayley said, "The combination of a myriad of exciting new devices and compelling new digital retailing services is clearly exciting consumers. What is most striking is that these figures do not even include the impact of streaming services like Spotify, Deezer, We7 and Rdio, for whom full market value data is not yet available."

Preliminary Official Charts Company data indicates that music streaming services delivered 3.7bn streams in the UK in 2012. At a typical three-and-a-half minutes per song, that's equivalent to nearly 34,000 years of music.

Physical still accounts for over three-quarters of entertainment sales

Physical formats of music, video and videogames faced another tough year in 2012 with physical music sales (mainly CD) down 14.9%, physical video (DVD and Blu-ray) down 11.4% and videogames (mainly console games) down 26.4%, but physical still retains a dominant share of the entertainment market.

fig4

Said Bayley, "Despite digital's seemingly inexorable growth, the CD, the DVD and the physical games disc show incredible resilience. It is nearly nine years since iTunes launched in the UK yet over 60% of music sales are still accounted for by physical formats. It is clearly way too soon to write off the CD and in video, digital barely gets a look in. Physical formats still account for three quarters of the entertainment market."

Entertainment overall faces tough times

Surging sales of digital formats were not enough to prevent the entertainment market overall from decline. Combined sales of music, video and videogames were down 12% to £4.21bn with the biggest fall suffered by videogames, down 17.4%.

Contributory factors included the decision by many music, video and games suppliers not to release key titles during the summer in order to avoid the Olympics, the fact the videogames business is in the lowest point of its format cycle and what is regarded by many as a lacklustre year for releases.

Said Kim Bayley, "The dearth of attractive releases during summer 2012 was clearly a significant factor. Suppliers need to do more to rebalance their release schedules and improve the quality of their releases. No retailer can afford to pay overheads on a store for 52 weeks of the year if all the key releases are going to be concentrated in the last quarter. And entrepreneurs will think twice about investing in new digital services if releases fail to excite the public. Luckily the message appears to be getting through and we look forward to being able to offer the public a much better release slate in 2013."

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