The digital distribution of film and music failed to offset sharp falls in sales of CDs and DVDs in 2010, with media groups fearing that concerns about the long-term health of high street retailers such as HMV could intensify pressure on the industry over the next 12 months.
In the US, total spending on filmed home entertainment, which includes DVDs, Blu-ray discs and digital downloads, fell more than $2 billion from 2008 from $21 billion to $18.8 billion, according to Digital Entertainment Group.
The number of physical album and digital sales fell nearly 13 per cent in 2010 to 326.2m, according to Nielsen SoundScan data, extending a decade-long decline.
Although digital revenues are growing, the film and music industries still depend mostly on physical media.
Sales of Blu-ray discs, the next-generation DVD format, rose 68 per cent in 2010, with $1.8 billion of discs sold. But this failed to counter the decline of DVD sales, which have fallen more than $4 billion since 2008 to $14 billion.