Britain’s growing appetite for services such as Netflix and Amazon has helped push streaming and downloads of films and TV shows ahead of sales of DVDs and Blu-ray discs for the first time.
The rise in popularity of paying for TV content helped power total UK revenue from music, TV shows, films and video games to a record £6.3bn last year.
Video: the death of the DVD
Total revenues from digital video – which includes services such as Apple’s iTunes as well as Sky’s store and Now TV – surged almost 23% to £1.3bn last year.
The digital boost came as high street sales of DVDs and Blu-ray discs fell 17% to £894m – the first time it has fallen below the £1bn mark. The once mighty physical rental market fell 21% to just £49m.
Total revenue from physical and digital sales rose 2.2% to £2.25bn, with the biggest seller of the year Star Wars: The Force Awakens with sales of 2.3m .
“We’ve seen an explosion of technology that has allowed people to consume entertainment in different ways,” said Kim Bayley, chief executive of the Entertainment Retailers Association, which compiles the annual figures.
Netflix has rapidly grown to 6 million UK subscribers since launching in 2012. Amazon, which has shows including The Man in the High Castle as well as Jeremy Clarkson’s The Grand Tour, is estimated to have attracted 2.3 million regular users of to its UK video service since its launch in 2014, according to Ampere Analysis.
Sky had more than 3 million customers to its Sky Store in the year to the end of June, while its “buy and keep” service – where by customers download a film and get a DVD posted out – grew by 80%.
Despite the digital revolution, Bayley said that it was too soon to ring the death knell of the DVD, with physical sales of music, TV shows, films and computer games still worth £2.2bn annually.
“Physical entertainment retailing is clearly off its peak,” she said. “A multichannel economy is going to exist for some years to come. The strength of the DVD and CD formats over the Christmas period shows that physical still dominates when it comes to gifting, for instance.”
Music: digital, Adele and compilations
The digital onslaught is also continuing in the music market, with subscription revenues increasing by 65% to £418m, driven by services such as Spotify, Apple Music, Amazon Music and Deezer.
Physical sales of CDs fell by 13%, a steep decline after a 3.7% fall in 2015.
Overall physical sales were 7.3% down as a surge in vinyl sales, up by 56% to £65.6m, helped stabilise the decline.
Total music revenues were up 4.6% to £1.1bn, with the top two sellers Now That’s What I Call Music compilations followed by Adele’s 25, which was the biggest-selling album by a single artist.
Digital services now account for 57% of all music sales.
Video games: the back of the digital net
Total revenue from games grew 2.9% to £2.95bn last year. Digital sales from online and mobile grew by 12% to £2.2bn, while physical sales of games fell 16% to £776m.
The biggest selling game of the year was Fifa 17, with sales of 2.5m. This was almost the same number as its chart-topping predecessor Fifa 2016.
Almost three-quarters (74%) of the UK games market is now accounted for by digital revenues.
Last year marks the second in a row that the UK entertainment industry has seen growth after almost a decade of declining sales as businesses struggled to take advantage of the digital revolution.
“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,” said Bayley. “Take away today’s digital services and the entertainment market would be barely a third the size it is today.”
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