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Digital video helps drive entertainment retail boom

Fast-growing digital services like Spotify, Netflix and Steam helped entertainment retailing in 2013 deliver what is likely to have been its best result since 2009, according to preliminary year-end figures just released by the Entertainment Retailers Association (ERA).

The overall UK music, video and games market was worth £5.4 billion in 2013, up 4% on 2012 when it was worth £5.1 billion. Digital video, which includes iTunes downloads as well as streaming services like Netflix, Lovefilm and Blinkbox, grew by 40.2% to reach £621.4m

“This is a stunning result after at least five years of decline,” says ERA Director General Kim Bayley. “Retailers have invested hundreds of millions of pounds in new digital services and these numbers suggest the public is responding in their droves. New technologies have historically presented challenges to the entertainment business, but these results show how our members are helping music, video and games companies find new markets.”

Preliminary figures suggest video enjoyed its first growth since 2008 in 2013 – thanks to digital. Sales of physical formats declined 6.8% to £1.44bn, but digital sales value grew by 40% to £621m reflecting the rapid growth of streaming services like Netflix, Lovefilm and Blinkbox. The biggest-selling video of the year was Skyfall which sold 2.96m units worth.

“Video has done well to maintain its physical presence while enjoying strong digital growth,” says Bayley. “The challenge for video companies in 2014 will be to establish attractive physical formats which offer digital copies which enable them to hang on to valuable store space.”

The entertainment market is still predominantly a disc-based physical market with physical formats accounting for 56% of sales in 2013. The most digital market is games where 53.7% of sales are digital. Music is 48% digital, while in video nearly 70% of sales are still on disc-based formats.

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