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Online services now account for 90% of UK entertainment retail revenues

By | Published on Friday 6 March 2020

Entertainment Retailers Association

Just under 90% of entertainment retail revenues in the UK last year were generated online according to the annual stats pack from the Entertainment Retailers Association, which is published today. As always, the retail trade group has crunched online and high street sales figures for digital and physical music, video and gaming products and services.

Digital content platforms accounted for 81.8% of home entertainment revenues in 2019, while online mail-order sites selling physical product – led by Amazon – generated 8% of monies. Which means that just 10.2% of the money came from the high street.

Within digital, the streaming boom in both music and video is key, of course. Last year saw a 21.5% increase in digital video revenues in the UK, up to £2.1 billion, driven by the continued growth of the likes of Netflix and Amazon Prime. Streaming music revenues rose even more, up 23.5% in 2019 to just over £1 billion.

We already knew the top line figures in ERA’s ‘Yearbook’, because the trade group published them at the start of the year.

But have a quick reminder: the entertainment retail sector at large grew 2.4% to £7.8 billion in 2019, boosted by that streaming boom in music and video. Those booms compensated for declines in the biggest entertainment segment – gaming – which had a tricky 2019, mainly because both PlayStation and Xbox were at the end of their ‘console cycles’.

Elsewhere in its stats pack, ERA notes that just a decade ago the wider entertainment retail sector still made 80% of its revenues from physical formats. With digital now generating more than 80% of the money, that’s a significant shift.

Though, the trade group adds, when it comes to many of the big hit releases, physical product still plays a key role alongside digital consumption. And, of course, in music, there’s still the good old vinyl revival going on.

ERA boss Kim Bayley calls the dramatic shift to digital within a decade “extraordinary”, adding: “The internet now accounts for 90p in every pound spent on entertainment. It is quite simply the most dramatic revolution in entertainment retailing ever seen”.

However, she goes on: “Physical entertainment still amounted to a £1.4 billion market in 2019. It is certainly down, but it is far bigger than many appreciate and still offers benefits in terms of gifting, collectability and permanence which streaming cannot match”.

And in the music domain, indie stores in particular have successfully capitalised on the sometimes-exaggerated-but-nevertheless-important vinyl revival. “While much of music spending has moved online”, Bayley concludes, “independents with a distinctive, locally-tailored offering continue to flourish”.