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Summary:

The good news: digital formats now make up a quarter of UK entertainment sales thanks to 2012 growth. The bad: ongoing physical decline on the high-street means overall sales are shrinking.

Revenue from digital-format sales of music, videos and games jumped 11.4 percent through 2012 to pass the £1 billion ($1.6 billion) mark in the UK.

According to the country’s Entertainment Retailers Association, digital sales reached £1.033 billion, making up more than a quarter of the cross-format total – five percent more than a year ago.

But the association’s headline announcement of digital growth masks what is, in fact, a worrying pattern. Across the formats, UK entertainment retailers shed 12 percent in sales last year, as revenue from music, video and games each dipped.

That means the industry is caught in the classic industry conundrum of swapping analogue dollars for digital pennies.

The ERA reckons (via release):

“Contributory factors included the decision by many music, video and games suppliers not to release key titles during the summer in order to avoid the Olympics, the fact the videogames business is in the lowest point of its format cycle and what is regarded by many as a lacklustre year for releases.”

ERA director Kim Bayley rationale (via release) calls for better content to help troubled retailers like HMV:

“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. 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.”

Although gaming is the most lucrative UK digital entertainment sales segment, it grew by half the pace of music and video, which, spurred by new on-demand services, overtook games to become the highest-value segment across digital and physical.

The ERA end-of-year data, comprising Official Charts Company music sales and IHS Screen Digest estimates for video and games, do not include sales of unlimited-access streaming entertainment subscriptions like those offered by Spotify and Netflix.

Separately, the British Phonographic Industry (BPI) said UK singles sales continued to break records in 2012 thanks to digital downloads, which grew by six percent (by volume but not by revenue) to 188.6 million during the year.

“The final week of 2012 proved to be the year’s record week for digital sales as consumers redeemed their Christmas music vouchers and downloaded more than 1.3m albums and 5.6m singles,” said BPI CEO Geoff Taylor (via release)…

BPI 2012 sales volume

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  1. Reblogged this on Web3DLaw and commented:
    Digital boom couldn’t stop 2012 entertainment slump in UK:

    The good news: digital formats now make up a quarter of UK entertainment sales thanks to 2012 growth. The bad: ongoing physical decline on the high-street means overall sales are shrinking.

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