UK entertainment spending rises with surge in film and music streaming

Value of film and TV downloads, streams and subscriptions rises to £621m, and number of tracks streamed doubles to 7.4bn

After five years of decline, sales of entertainment products such as music, films and video games were growing again last year because of booming digital services such as Netflix and Spotify, according to figures published on Wednesday.

The surge in popularity of watching TV and films on the likes of Netflix, Amazon's LoveFilm and Apple's iTunes fuelled a 40% increase in spending on digital videos with downloads, streams and subscriptions rising to £621m, according to the Entertainment Retailers Association (ERA). The digital revolution was also felt in the UK music industry, where the number of tracks streamed doubled to 7.4bn, thanks to a rise in users of services such as Spotify and Deezer, which have almost halted a 10-year decline in music sales.

The shift to digital viewing more than offset a 6.8% fall in the sale of physical DVDs to £1.4bn, reversing a five-year decline in total video sales, which managed 3.7% growth to £2.06bn last year.

"Services like Netflix, LoveFilm and Blinkbox are transforming the video business by making content available over multiple devices," said Kim Bayley, director general of the ERA, which provides a roundup of figures from across the music, video and gaming industry. "They are responding to the way people are now consuming content on the move."

The biggest-selling DVD in the UK last year was Skyfall, which shifted 2.96m copies, easily beating The Hobbit: An Unexpected Journey, which sold 2.07m, according to figures from the British Video Association. The biggest-selling TV show on DVD was the second season of Game of Thrones, followed by the BBC shows Top Gear: The Perfect Road Trip and two series of Mrs Brown's Boys.

In the UK music market, total sales of albums and singles fell by just 0.5% to £1.04bn, as the popularity of digital downloads and streaming services almost offset the continuing plummeting sales of CDs, according to the music industry trade body BPI.

The value of digital subscriptions to music services rose by 34% last year to £103m, as the number of tracks streamed doubled to 7.4bn.

Arctic Monkeys managed to span the digital divide, proving to be the most streamed act as well as the biggest seller on vinyl with their album AM.

Vinyl continued its mini-revival, with sales doubling last year to 780,000, a market worth £14.6m.

In the digital singles market, Robin Thicke's controversial Blurred Lines was the most downloaded track of the year, followed by Daft Punk's Get Lucky. Surprisingly, total sales of digital singles fell by 4% to 175.6m downloads.

Digital album sales rose 6.8% to 32.6m downloads (worth £233m), with the most popular album Bastille's Bad Blood.

"The success of digital music in 2013 surpassed all previous records," said Geoff Taylor, chief executive of the BPI. "As digital music moves into the streaming era, the prospects for future growth in the UK music market look strong."

While digital revenue streams are providing hope for the film and music industries, the beleaguered high street market continued to suffer, with a 12.8% fall in CDs sold to 60.6m units, worth £539m.

Combined sales of digital and physical albums fell 3.6% in value to £772m.

One Direction's Midnight Memories was the biggest-selling album of the year, shifting about 700,000 copies, the first time in almost three decades there has not been a million-selling album artist. In 2012, Emeli Sandé's Our Version of Events sold 1.4m and in 2011, Adele's 21 sold 3.9m copies.

This lacklustre performance concerns some in the music industry, especially given that One Direction were beaten into fourth place by three editions from the Now That's What I Call Music franchise, when compilations are considered. "The performance is primarily due to a weak release schedule, which is disappointing," said Bayley. "Retailers will be hoping that labels deliver bigger hits this year."

The impact of digital's rise was felt in the overall UK home entertainment market, which had its best year since 2009, growing 4% to £5.4bn.

Digital also played a significant role in the video game industry, with revenues from digital games – which includes PCs, downloads of paid content on consoles such as PlayStation and Xbox and mobile gaming – rising 16% to £1.17bn.

The rise means that revenue from digital gaming has passed that of physical sales of video games, which fell 2.9% to £1.01bn, and kept the whole market up 6.6% to £2.2bn.

The ERA said that the hotly awaited launches of Microsoft's Xbox One and Sony's PlayStation 4 consoles came "too late to rescue the hard-pressed physical games market".

The single biggest-selling entertainment title in the UK last year was the video game Grand Theft Auto V, which sold 3.67m copies.

In the ERA's table of "Entertainment's Greatest Hits" of 2013 covering all products, Daniel Craig's latest outing as James Bond in Skyfall ranked second; Electronic Arts' Fifa 2014 football game third; The Hobbit: An Unexpected Journey fourth; and the video game Call Of Duty: Ghosts rounded out the top five.

The rapidly growing importance of digital media to the music, video and games markets is highlighted with the 20% growth they enjoyed in value to £2.3bn last year. The digital music, video and games market now accounts for 43% of the total UK entertainment sector.

"This is a stunning result after at least five years of decline in the entertainment market as a whole," said Bayley.

"Retailers have invested hundreds of millions of pounds in new digital services, which have historically presented challenges to the entertainment business, and these numbers suggest the public is responding in their droves." © 2014 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

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