Streaming Boom Powers Entertainment Market To New All-Time-High Of £7.24bn In 2017

STREAMING BOOM POWERS ENTERTAINMENT MARKET
TO NEW ALL-TIME-HIGH OF £7.24BN IN 2017

ENTERTAINMENT SALES GROWING MORE THAN
FOUR TIMES FASTER THAN UK ECONOMY

Video – Digital up 22%

Music – Streaming services up over 40%

Games – Physical in surprise return to growth

 

 3 January 2018: The entertainment market reached a new all-time-high of £7.24bn in 2017, with the 8.8% sales growth in the combined music, video and games sectors outpacing growth in the wider UK economy by a factor of more than four, according to interim data compiled by the Entertainment Retailers Association (ERA).

The results mark the fifth successive year of growth for the UK entertainment market, driven by a raft of successful new digital services from the likes of Spotify, Steam, Netflix, Amazon, Deezer, Sky, Apple and Google. Digital services captured 71.9% of entertainment sales value in 2017, according to ERA figures.

Yet the statistics also provide strong evidence of the continuing appeal of physical formats with sales of vinyl albums growing by more than a third compared with 2016 and a welcome 5% increase in physical console games software.

Entertainment’s 8.8% growth rate in 2017 was more than four times that of the wider UK economy. According to latest UK Government statistics, UK GDP grew by 1.9% in the first three quarters of 2017 compared with the same period of 2016.

ERA CEO Kim Bayley said, “This is an historic result which demonstrates the benefits of innovation and investment in new technology. New digital services are bringing ever increasing numbers of the UK population back to entertainment with 24/7 access to the music, video and games they want. In the past the growth of the market tended to be dependent on the release schedules of games publishers, film studios and record labels. Now we are seeing a market which is also driven by digital platforms and technologies.”

 

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 2018.

 

Vinyl and console games lead the way for physical retail

Despite the boom in digital entertainment formats, 2017 saw some strong positives for physical retail. Physical formats of music, video and games product declined by 7.2% in 2017, half the rate of decline in 2016, leaving physical sales still worth more than £2.03bn. The most challenged sector was physical video with the value of sales of DVD and Blu-ray discs down 17%. The highest growth physical format was again vinyl albums where sales grew 33.7% to £87.7m.

Further evidence that consumer demand for physical formats is both resilient and unpredictable came with a 5% increase in sales of console games, driven by the success of individual titles like FIFA 18 and Call of Duty: WWII and Nintendo’s new Switch console. In 2016 physical sales of games declined by 16.4%.

Said Bayley: “Physical may no longer be the default option for many people that it once was, but it remains a substantial £2bn business. Where physical really comes into its own is where it offers something distinctive and additional to the content, whether it be the tactile experience of vinyl or the simple fact that physical objects work well as gifts. I remain confident that physical entertainment formats will continue to be with us for years to come.”

 

ERA PRELIMINARY ENTERTAINMENT SALES TOTALS 2017 (£m)

 

 

2016

2017

% change

Music

Physical

£475.4

£459.4

-3.4%

 

Downloads

£214.6

£165.0

-23.1%

 

Streaming

£406.6

£577.1

41.9%

 

Total Music

£1,096.6

£1,201.5

9.6%

 

 

 

 

 

Video

Physical Retail

£893.6

£742.1

-17.0%

 

Physical Rental

£48.4

£40.5

-16.3%

 

Digital

£1,559.4

£1,906.0

22.2%

 

Total Video

£2,501.4

£2,688.6

7.5%

 

 

 

 

 

Games

Physical

£776.0

£792.4

2.1%

 

Digital

£2,284.2

£2,560.2

12.1%

 

Total Games

£3,060.2

£3,352.6

9.6%

 

 

 

 

 

Total Entertainment

Physical

£2,193.4

£2,034.4

-7.2%

 

Digital (inc streaming)

£4,464.8

£5,208.3

16.7%

 

Total Entertainment

£6,658.2

£7,242.7

8.8%

 Sources:

Music: Physical / Digital - Official Charts Company.

Music: Streaming (subscription only) - BPI / ERA.

Video: Physical - Official Charts Company / BASE.

Video: Digital - IHS estimates (including EST, TV-VoD, web-based VoD and sVoD services).

Games: Physical - GfK.

Games: Digital - IHS estimates (including digital online, mobile and tablet gaming).

 

Video: Digital is now more than two-thirds of the market

  • Digital video revenues from the likes of Netflix, Sky Store, Amazon, Google and Apple grew by 22.2% in 2017 and now account for 70.9% of the video market;
  • Both DVD (first launched in 1996) and Blu-ray (2006) saw reverses with DVD down 18.4% and Blu-ray sales down 11.4%;
  • The strength of digital was sufficient to outweigh physical’s decline and produce overall market growth of 7.5%.

  

Music: The subscription success story

  • Music revenues grew by 9.6% in 2017, almost twice 2016’s growth rate (4.6%);
  • The key factor was the growth of paid subscription services from the likes of Spotify, Apple Music, Amazon and Deezer where revenues grew 41.9% to £577.1m – the first time they have exceeded half-a-billion pounds;
  • Vinyl continued its decade-long recovery, up 33.7% to £87.7m.

 

Games:  A good year for physical

  • Games revenues grew by 9.6% to reach a new all-time-high of £3.35bn;
  • Digital revenues including digital online, mobile and tablet gaming surged by 12.1% to £2.56bn;
  • After a 16.4% decline in 2016, physical games sales rebounded in 2017 to grow 2.1%, driven by a 5% increase in console games software.

 

ENDS

 

 

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