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Digital dominates entertainment

News, 06 January 2017
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LONDON: Digital sales of games, music and, for the first time, video are running ahead of physical sales in the UK according to new figures from the Entertainment Retailers Association (ERA).

Preliminary 2016 figures from the trade association show that video market became a majority (58%) digital business last year, with revenues from downloads and subscription services exceeding those of DVD and Blu-ray discs.

This was driven by the likes of Netflix, Sky, Amazon and Apple, as digital revenues jumped 23% to £1,309.3m.

Games, meanwhile, are now 74% digital, while 57% of music revenues are derived from digital services, whether downloads or streaming.

At almost £3bn, games formed the largest single segment, followed by video on £2.2bn, with music at £1.1bn.

The total of £6.3bn represents the outcome of successful investment in innovation, claimed Kim Bayley, chief executive at the ERA.

"To have added over £1bn in new revenues in just four years is an incredible achievement," she said. "To put it another way, take away today's digital services and the entertainment market would be barely a third the size it is today."

Physical formats of music, video and games product declined by 15% in aggregate in 2016, but some physical formats continue to flourish. Sales of handheld games software grew 21.3% to £48.8m, while vinyl records continued their sustained revival, up 56.4% to £65.6m.

"Physical entertainment retailing is clearly off its peak," said Bayley, "but it is still a £2.2bn market. The growth of vinyl in particular shows that physical formats can flourish if they offer distinctive benefits.

"The strength of the DVD and CD formats over the Christmas period shows that physical still dominates when it comes to gifting," she added.

Data sourced from ERA; additional content by Warc staff

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