60pc of UK home entertainment revenue comes from web

13 Mar 2014

Image via Goodluz/Shutterstock

Sales of video, video games and music in the UK home-entertainment sector are largely driven by online sources, suggest figures from the UK’s Entertainment Retailers Association (ERA) Yearbook released yesterday.

Overall, revenues in the UK home-entertainment sector increased 4pc to stg£5.3bn in 2013 compared to the previous year, marking the first time the sector saw an increase since 2008.

Of this, internet-derived sales (including home-delivery services, digital downloads, streaming and other access services) accounted for stg£3.18bn – a 13.9pc increase year-on-year and a substantial 60pc of the entire market.

Furthermore, access models such as video subscription services, music streaming and online gaming now account for 26pc of the entire entertainment market in the UK, growing 35.6pc in 2013 to reach stg£1.38bn.

“The fact that 60p in the entertainment pound is now spent online and 26p in the pound is for access to content rather than ownership is a testament to the huge investment and technological ingenuity of retailers in providing consumers with new ways to enjoy the music, video and games they love,” said ERA director-general Kim Bayley.

Drilling down among these access services, video subscription services saw the greatest increase of 120pc year-on-year – which is great news for UK providers like Netflix and LoveFilm (owned by Amazon) – while revenues from music-streaming services like Spotify and Deezer were up 34pc.

Enduring love for physical products

While home entertainment sales from bricks-and-mortar establishments dropped 8pc in 2013, it’s not all doom and gloom for this sector, which still accounts for 40pc of the market and stg£2.12bn in revenue.

An enduring phoenix in this market the high-street retailer HMV, which, having closed a number of its stores in the past year, has since come under new management and has been reinvigorated with a more positive outlook.

“We continue to be struck by the strong resilience of the physical market in the UK,” said Rudy Osorio, head of video at HMV. “Early adopters’ enthusiasm for streaming may grab the headlines, but sales of stg£2.1bn through store-based retailers of entertainment product show there is still a substantial mainstream market of consumers who value the convenience of disc-based formats, particularly for gifting and impulse buys.”

Independent record shops also had a successful 2013, marking an increase in share of the physical album market from 2.4pc to 4.5pc. Since 2008, sales of vinyl through UK indie stores have risen from 75,700 to 368,300.

Overall, the physical product still dominates in the UK entertainment sector, accounting for 56.6pc of the share with 43.4pc going to digital.

“The entertainment revolution has been driven by new and existing retailers taking huge gambles and investing in technology and new delivery mechanisms. The striking thing, however, is that 10 years after the launch of iTunes and then the rise of mobile entertainment, physical formats still account for a clear majority of entertainment market sales,” said Bayley.

The ERA Yearbook compiles two-thirds of its figures from actual point-of-sale data supplied by retailers and best-available, industry-standard estimates for the remaining third.

Online music purchase image by Goodluz via Shutterstock

Elaine Burke is the host of For Tech’s Sake, a co-production from Silicon Republic and The HeadStuff Podcast Network. She was previously the editor of Silicon Republic.