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UK digital entertainment sales surpass £1 billion in 2012

2012 proved to be a banner year for digital entertainment, with the Entertainment Retailers Association (ERA) estimating that £1.033 billion worth of revenues were generated by digital sales of entertainment products.

The online retail of games, music and video saw a growth of 11.4 per cent from 2011 with the sale of physical media such as CD, DVD and Blu-ray discs still accounting for three quarters of the market regardless of a 17.6 per cent drop in disc purchases.

"Breaching the £1 billion barrier is an incredible achievement for the UK's digital entertainment retailers and reflects their huge investment in new and innovative services which means you can buy music, video and games literally at any time of the day and wherever you are,” said Kim Bayley, ERA director general.

“At the same time I suspect that many people will be surprised to learn just how resilient the physical business still is - with three quarters of entertainment sales still on disc. Downloads offer convenience and portability, but people still seem to value the quality and tangibility of a physical product," Bayley said.

Gaming still dominates the digital sector, contributing £552.2 million in revenues and dwarfing the combined contributions of music and video.

However, digital transactions for video saw the greatest growth in 2012 at 20.3 per cent, but this market is still seen as "relatively underdeveloped".

The music sector saw a 15.1 per cent improvement on 2011, as the past year also saw digital sales finally overtake physical retail.

"The combination of a myriad of exciting new devices and compelling new digital retailing services is clearly exciting consumers. What is most striking is that these figures do not even include the impact of streaming services like Spotify, Deezer, We7 and Rdio, for whom full market value data is not yet available," Bayley explained.

Preliminary data from the Official Charts Company, which estimates that the UK logged 3.7 billion streams over the past year, suggested that streaming services are becoming a significant part of the digital entertainment economy.

Improved digital sales did not curtail an overall decline in the entertainment market, however, with a general drop of 12 per cent to £4.21 billion. The loss has been attributed to a disrupted summer release schedule, as key media releases where halted in order to avoid competing with the Olympics.

"The dearth of attractive releases during summer 2012 was clearly a significant factor. Suppliers need to do more to rebalance their release schedules and improve the quality of their releases. No retailer can afford to pay overheads on a store for 52 weeks of the year if all the key releases are going to be concentrated in the last quarter. And entrepreneurs will think twice about investing in new digital services if releases fail to excite the public,” Bayley explained.

“Luckily the message appears to be getting through and we look forward to being able to offer the public a much better release slate in 2013," she added.

Image Credit: Flickr (johntrainor)