Digital sales dominating UK entertainment industry

The value of the UK home entertainment market soared to £11.1bn in 2022, an all-time record for music, video and games sales, according to preliminary figures from digital entertainment and retail association ERA. The total was 6.9% up on 2021 and a dramatic 39% up on the last pre-pandemic year of 2019.

The main driver of growth continues to be streaming and digital formats which reached £10.1 bn up 8.4% on 2021.

The fastest growing sector in 2022 was video, up 14.4% to £4,432m, followed by music, up 3.0% to £1,987m and games up 2.3% to £4,664m.

Games continues to represent the largest sector of sales, accounting for 42.1% of the total, with video within touching distance on 40.0% and music on 17.9%.

The leading titles in each sector were FIFA 23 (games), Top Gun Maverick featuring Tom Cruise (video) and Harry’s House by Harry Styles (music).

ERA Chairman Ben Drury said, “Despite pandemic, political uncertainty and recession, entertainment has continued to soar. Growth of nearly 40% since 2019 is extraordinary. Few would have believed we would retain the huge bounce in revenues seen when the Covid lockdown kept people at home, but these numbers show that even amid recession, people are determined to maintain their spending on entertainment. This is a huge vote of confidence in the attractiveness of our member’s offer whether they be small independent record shops or global streaming platforms.”

MUSIC
Music sales grew by 3.0% in 2022 to £1,986.9, their highest level since 2003 and nearly double the level of their low point in 2013.

The main driver of growth was again streaming from services such as Spotify, YouTube, Amazon and Apple. Subscription streaming revenues grew 5% to £1,661.1m.

Physical sales fell slightly by 3.8% to £280.4m, but continued to level out as the higher-priced vinyl format showed sustained growth as CD slipped. Vinyl album sales grew 11% to £150.5m, while CD album sales fell 17.4% to £124m, the first time vinyl outsold CD by value since 1987.

Harry Styles produced the year’s biggest-selling album in Harry’s House and biggest selling/streaming single in ‘As It Was’.

ERA CEO Kim Bayley said, “We are approaching a watershed. Thanks to the investment and ingenuity of streaming services on the one hand and to the physical retailers who have driven the vinyl revival on the other, music is within sight of exceeding £2bn in retail sales value for the first time in more than two decades. Music has to be great to win people’s attention, but it’s the buying and consumption experience which ultimately persuades people to put their hands in their pockets.”

VIDEO
Video had another bumper year in 2022 with revenues up 14.4% to £4,432.2 driven mainly by subscription streaming from the likes of Amazon Prime, Netflix, Disney+ and Now TV.

Subscription video on demand grew by 17.6% compared with 2021 to £3,849.8m and now accounts for 87% of the video market.

The largest physical format, DVD, fell by 22.1% compared with 2021 to £117.2m, but reflecting the same demand for quality which has propelled the vinyl boom in music, sales of premium formats Blu-ray and 4K UHD grew by 7% to £91.7m.

The biggest-selling video title of the year was Top Gun – Maverick, Tom Cruise’s sequel to the 1986 original which sold 1.1m copies, more than 800,000 of them as “electronic sell-through” or downloads.

ERA CEO Kim Bayley said, “Video has faced the double whammy of a dearth of new releases caused by the Covid lockdown on top of the structural change from physical to digital, but 2022 saw the sector at an another all-time high and well-ahead of its 2008 physical peak of £2,844m. The success of Top Gun – Maverick and second-placed Spiderman – No Way Home shows the centrality of new releases to drive excitement in the video market.”

GAMES
Games remains the largest of entertainment’s three core sectors, accounting for 42.1% of total entertainment revenues in 2022. Sales grew by 2.3% to £4,664.4m compared with 2021.

Games is the most fragmented of the three sectors with channels ranging from traditional packaged discs to console downloads, PC games, mobile and tablet games and a variety of other subscription and token-based playing mechanisms.

Physical games software sales were soft, falling 4.5% to £488.6m compared with 2021 and now account for just 10% of the overall sector.

Conversely, the best performer was console downloads, up 12.2% to £724.7m. These are still significantly smaller, however, than mobile and tablet games which were up 3.2% to £1,486.8m and the catch-all “other digital” category (up 0.2%) at £1,747.4m.

The biggest-selling console game was FIFA 23 which sold 2.39m units across digital and physical formats in the final instalment of the 29 year partnership between its publisher EA and football’s world governing body.

ERA CEO Kim Bayley said, “Gaming remains the often-unheralded leader of the entertainment market. While growth at 2.3% was lower than that of video or music, its scale is enormous and in terms of innovation and excitement it continues to set the pace for the entire entertainment sector.” BCS Bureau