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Streaming and vinyl help music industry to increase share of entertainment revenues in 2021

By | Published on Thursday 6 January 2022

Entertainment Retailers Association

The UK’s home entertainment market – so music, video and gaming combined – reached record revenues of over £9.7 billion in 2021, according to new stats from the Entertainment Retailers Association. It was the ninth successive year of growth – despite fears of a pandemic dip – and it’s hoped that this year the sector will top £10 billion.

“The entire sector was braced for revenues to settle down in 2021 after 2020 grew an astonishing 18.7%, but growth continued – for the ninth successive year”, says ERA CEO Kim Bayley.

“Strikingly this growth is increasingly independent of new release activity”, she adds, “the vast majority of this growth being driven by digital services making entertainment more accessible and convenient than ever before. If we can repeat this success in 2022, the UK entertainment market will exceed £10 billion for the first time”.

Music traditionally makes up the smallest part of the wider entertainment retail pie, but it did grow its share in 2021, as gaming revenues fell slightly. In total, music brought in £1.67 billion across both digital services and more traditional retail – an increase of 8.7% year-on-year.

The bulk of this came from streaming, of course, with revenues totalling £1.3 billion (up 10.9%), followed by physical sales, which brought in £291.5 million – an increase of 7.3% on 2020, although down 8.4% compared to 2019, before the pandemic hit.

Unsurprisingly down on 2020 were downloads, which saw revenues drop to £55 million, which is a decline of 23.8% since this time last year and 38.7% since 2019.

These are retail revenues, which means all the monies that come into digital services and music retailers, including the cut taken by the services and retail businesses themselves. The record industry’s own 2021 revenue stats will follow later in the year.

While the home entertainment sector is less reliant on big releases in the age of subscription services online, the music industry did nevertheless enjoy some big new albums in 2021, including new records from Adele, Ed Sheeran and Abba.

“New releases undoubtedly increase the engagement of music fans with streaming services and in 2021 the music industry delivered several blockbusters”, Bayley notes, before adding: “What is increasingly clear, however, is that the biggest driver of revenue is the innovation and investment of the services themselves”.

Music was the only strand to see an increase in revenues from physical sales in 2021, aided by the vinyl revival and music retailers getting skilled at meeting ongoing COVID challenges. Video saw physical sales drop by 33.6% to £236 million – more than 50% down on 2019. Gaming saw physical down 20.8% to £511.5 million – although this was only a 15% drop compared to 2019.

“The return of physical music sales to growth a full two decades since they started to decline is nothing short of a miracle”, adds Bayley. “It is a testament more than anything to the doggedness and resilience of physical retailers, led by the indies, who have driven the vinyl revival in the face of some initial scepticism”.

Physical for all three sectors combined was down 18.5%, bringing in just over £1 billion. Digital overall increased 8.3% to £8.66 billion and was up 35.2% compared to 2019. With this boom in digital, ERA says that nearly 90p of every pound spend on home entertainment in the UK is now online.

Whether gaming and video see any revival of physical revenues post-pandemic remains to be seen. If not, the ongoing growth of music streaming, alongside the vinyl revival, could help music to further increase its share of wider entertainment retail revenues in 2022.