The digital revolution in the entertainment business has reached a new tipping point with Britons now spending nearly 80 per cent of their expenditure on entertainment online, according to the Entertainment Retailers Association.
And for the first time, entertainment has gone ‘pay monthly’ with expenditure on access to entertainment via services such as Netflix, Spotify and apps such as Pokemon Go exceeding expenditure on ownership models such as discs or permanent downloads for the first time.
The figures are included in the latest edition of the ERA Yearbook, regarded as the definitive statistical source on the UK games, video and music markets.
In 2016, online and mobile-generated digital and home delivery entertainment revenues accounted for 77.7 per cent of the £6.32 billion (€7.24bn) spent on music, video and games, with physical stores accounting for just 22.3 per cent.
ERA figures also indicate that for the first time in 2016, Britons spent more on accessing entertainment via subscription services from Netflix, Amazon, Spotify, Google Play, Sky and Apple Music and mobile apps like Pokemon Go than they did buying it permanently on disc or download.
Access services accounted for 51.3 per cent of entertainment expenditure in 2016 with 48.7 per cent spent on discs and downloads. A key factor was booming expenditure on music and video streaming services.
“We are seeing the rise of a ‘pay monthly’ generation in entertainment, noted ERA CEO Kim Bayley. “Rather than buying music, video or games outright, the British public is being won over by rental or all-you-can eat services which are available 24/7. If downloads represented the first digital revolution in entertainment, we are now at digital 2.0, the subscription age.”
Despite the broader trend, affection for physical formats still remains strong. Music fans remain devotees of ownership formats, with sales bolstered by the boom in vinyl (up another 54.4 per cent in 2016 to £65.6 million) and deluxe CD and box set editions.
Even in previously declining markets, the introduction of a hot new product can generate substantial new physical sales.
The handheld games software market saw a surprise sales boost in the fourth quarter of 2016 after Nintendo released two new Pokemon titles for its 3DS platform. With each selling around a quarter of a million units, it was enough to see the entire sector grow by more than 20 per cent compared with 2015.
“Digital may grab the headlines, but we should not underestimate the fondness of the UK public for physical formats in particular,” added Bayley. “While the vinyl revival has been well reported, millions of people still regard DVDs, CDs and console game discs as the best way to access entertainment. Discs are durable, convenient and are still probably the best entertainment option for gifting.”
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