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UK entertainment sales hit £6.3bn in 2016

Investment by new digital services such as Spotify, Sky, Amazon, Apple Music and Google has resulted in sales of music, video and games running £1 billion ahead of where they were just four years ago, according to data compiled by the Entertainment Retailers Association (ERA).

Preliminary figures from ERA indicate that booming digital services helped the music, video and games markets achieve new all-time record sales of £6.3 billion (7.37bn) in 2016, up 3 per cent on the previous year – and over £1 billion more than they were as recently as 2012.

That 3 per cent growth is even more remarkable since it comes in comparison with 2015, which was a 53-week year.

For the first time in 2016 the video market became a majority (58 per cent) digital business with revenues from downloads and subscription services now exceeding those of DVD and Blu-ray discs.

Digital services account for 57 per cent of music revenues and 74 per cent of the games market.

ERA CEO Kim Bayley said, “The music, video and games industries were understandably nervous about the advent of new digital services, but these figures provide resounding evidence of the benefits of our members’ investment in innovation. To have added over £1 billion in new revenues in just four years is an incredible achievement. 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.”

ERA’s market figures provide a definitive overview of the UK entertainment market, aggregating data from respected market analysts including the Official Charts Company, GfK and IHS. Preliminary numbers will be updated and confirmed with the publication of the ERA Yearbook in March 2016.

Physical remains a £2.2 billion business

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

“Physical entertainment retailing is clearly off its peak,” said Bayley, “but it is still a £2.2 billion 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, for instance.”

Video: Digital overtakes physical for the first time

  • Digital video revenues from the likes of Netflix, Sky, Amazon and Apple reached £1,309.3 million in 2016, up an incredible 22.8 per cent.
  • In contrast physical revenues were down 16.9 per cent to £893.6 million with both DVD and Blu-ray suffering double-digit declines.
  • The biggest-selling video of the year was Star Wars: The Force Awakens with sales of 2.3 million units.

Music: Entertainment’s fastest-growing sector

  • Music revenues grew by 4.6 per cent in 2016, well ahead of video (up 2.2 per cent) and games (up 2.9 per cent) powered by a huge 65 per cent rise in music subscription revenues driven by services such as Spotify, Apple Music, Amazon and Deezer.
  • The biggest decline was suffered by downloads (down 26.8 per cent overall). After a relatively resilient 2015 when sales declined just 3.7 per cent, CD revenues fell by 13 per cent in 2016.
  • The biggest-selling album of the year was Now That’s What I Call Music 95 with sales of 908,500 units.

Games:  Digital has 74 per cent share, but handheld games grow 21.3 per cent

  • Games revenues grew by a relatively modest £84 million in 2016 (up £256 million in 2015).
  • Physical games sales declined 16.4 per cent to £776 million, while digital revenues grew 12.1 per cent to reach £2.1 billion. Positive news for physical came with a 21.3 per cent increase in sales of handheld games
  • The biggest-selling game of the year was perennial hit FIFA 17, which with sales of 2.5 million sold almost exactly the same number of units as its predecessor FIFA 16.

 

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