January 21, 2019

According to the preliminary data, booming streaming services helped the entertainment market to another all time high of £7.537 billion in 2018.

After a sixth successive year of growth for the market, driven by digital services from the likes of Spotify, Steam, Netflix, Amazon, Deezer, Sky, Apple and Google, digital revenues accounted for more than three-quarters (76.1%) of entertainment sales value in 2018.

On a market level digital revenues now dominate all three sectors, with digital generating 80.1% of games revenues, 72.3% of video and 71.3% of music.

However, on a title level, ERA analysis shows physical disc sales are still crucial to deliver the biggest hits: sales of the Top 20 films to own of the year averaged 74.1% physical and the Top 20 albums of the year averaged 61% physical.

The biggest winner in entertainment’s digital transformation is the games sector. For the first time, ERA reported that in 2018 games accounted for more than half of the entire UK entertainment market (51.3%). More than any other sector, games benefitted from a proliferation of new services from direct to console downloads to mobile and social gaming.

The physical console and PC games market shrank slightly in 2018, down 2.8% to £769.9 million, and digital growth was by recent standards a modest 12.5% to £3.094 million, but the sheer scale of the games market is such that it was enough to make it bigger than video and music combined.

Now worth £3.864 billion, the games market has, thanks to digital, more than doubled in value since 2007.

ERA CEO Kim Bayley said: “The games industry has been incredibly effective in taking advantage of the potential of digital technology to offer new and compelling forms of entertainment. Despite being the youngest of our three sectors, it is now by far the biggest”.

As for video, downloads from Amazon, Apple and Sky Store and streaming services such as Netflix, Amazon Prime and Sky’s Now TV again proved the biggest news in video, driving digital revenues up 26% to £1.689 billion.

This was in sharp contrast to the performance of DVD, down 23.5% in volume, and Blu-ray, down 11.9%. In value terms, with revenues of £2.338 billion in 2018, the video business is now 7.4% above its 2012 low point, but still well below its historic 2004 high of £2.953 billion.

The best-selling film to own of 2018 was Hollywood musical The Greatest Showman, which sold 2.69m units, 71.3% of them on DVD or Blu-ray disc. It topped a chart dominated by escapism and sci-fi fantasy and strongly oriented to physical formats.

Ms Bayley said: “Video was arguably entertainment’s most dynamic sector in 2018. Streaming services have transformed the viewing choices of the British public by offering 24/7 access and convenience. Meanwhile sales figures show the continuing loyalty of video consumers to DVD and Blu-ray, still the default choices for gift-buying and building a video collection.”

As for music, the sector registered its fourth successive year of growth in 2018 thanks to streaming with revenues generated by services like Spotify, Apple, Amazon, Deezer and Google/YouTube growing 37.7% to reach £829.1 million.

The switch away from downloads continued, with single track downloads down 25.5% over the year and album downloads down 26.3%.

Physical formats performed less well, with CD unit sales down another 23.1%. After a decade of growth, vinyl album sales grew just 1.6%.

The music sector is now 30% bigger than it was at its 2014 low point of £1.03 billion, but it is still well off its 2001 peak of £2.11 billion.

Ms Bayley said: “Streaming services were once again the star performers in the UK music market in 2018, but the continuing strength of physical sales at the top end of the chart means that unless you are a hip-hop artist, the only way to have a really big album is to generate CD sales as well as streams.” To read ERA’s press release in full and for further information on the sources of the figures, click here.