Music, TV, film and game downloads fail to boost high street as physical sales fall 17.6%
Downloads of music, TV shows, films and video games topped £1bn in the UK for the first time in 2012, with digital entertainment sales now accounting for almost a quarter of the market.
But the growth in legal downloading was still not enough to offset the continuing decline of physical sales of CDs, DVDs and video games, which still account for 75% of the market, and plummeted by 17.6% last year, spelling further gloom for the high street.
Added together, the overall UK home entertainment market declined by 12% last year to £4.21bn.
According to the Entertainment Retailers Association, digital media sales in Britain rose by 11.4% year on year to £1.03bn. Digital music sales rose 15% year on year to £383m, although the figure excludes revenues from streaming services such as Spotify, We7 and Deezer.
The still relatively small market for buying digital video products rose 20.3% year on year to £97.9m.
Video gaming remains the biggest digital sector – thanks to online games such as World of Warcraft, social gaming and owners of Xbox, Nintendo and PlayStations making digital transactions via their games consoles – growing 7.7% year on year to £552m in 2012.
“Breaching the £1bn barrier is an incredible achievement for the UK’s digital entertainment retailers and reflects their huge investment in new and innovative services that mean you can buy music, video and games literally at any time of the day and wherever you are,” said Kim Bayley, ERA’s director general.
On the flipside, ERA’s figures also highlighted the continuing decline of physical home entertainment content sales. CD music sales fell by 14.9% year on year in 2012, DVD and Blu-ray dropped 11.4% and physical copies of video games slumped 26.4%.
HMV, the last remaining nationwide music and DVD specialist on the high street, is facing an uncertain future after revealing a fresh collapse in demand over the summer. The retailer, which is having to cope with competition from online giants such as Amazon, is struggling under a £176m debt burden and last month told investors that it was likely to breach its banking covenants in January after failing to hit sales targets.
HMV’s share price fell 10% on Wednesday to just 1.75p, giving the 200-plus national store chain a market capitalisation of just £7.5m.
Despite its weak financial performance, HMV commands a 38% share of the physical music market and a 27% share for DVDs and Blu-Ray.
ERA raises factors including the decision by many music, video and games suppliers not to release key titles during the summer to avoid the London Olympics as one reason for the steep decline in physical home entertainment sales in 2012.
“The dearth of attractive releases during summer 2012 was clearly a significant factor,” said Bayley. “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.”
Music industry body the BPI shed further light on the digital music shift, reporting that British music fans streamed more than 3.7bn music tracks in 2012 – 140 streams per household in the UK.
The digital boom helped total UK sales of albums and singles to remain resilient in terms of units, with only a slight year-on-year fall from 291m to 289m, according to figures compiled by The Official Charts Company for the BPI and released on Wednesdayon Wednesday.
Sales of singles proved to be the brightest note, up 6% year on year in 2012 to 188.6m units.
The boost was fuelled by a 4.7% year-on-year rise in digital download sales, which account for more than 97% of total single sales, to 183.3m units. Sales of CD singles fell 44% to account for just 0.3% of total sales, to 620,000.
Somebody That I Used to Know by Gotye was the UK’s biggest-selling single of the year. The only British entry in the top five was The X Factor winner James Arthur’s Impossible.South Korean artist Psy’s smash hit Gangnam Style, which has become the first video to crack 1bn views on YouTube, was the sixth biggest selling single of the year.
The market for albums fell 11% year on year, from 113m units to 100.5m. Again digital sales proved strong, with growth of 14.8% to 30.5m units, just over 30% of the total market.
However, CD album sales, which account for 69% of total album sales, fell almost 20% to 69.4m units.
UK artists dominated the top of the album sales chart, with Emeli Sandé, Adele and Ed Sheeran taking the first three slots, with boyband One Direction and Mumford & Sons managing fifth and sixth.
“2012 was an encouraging year for UK artists and for music’s digital future,” said Geoff Taylor, chief executive of the BPI. “Digital albums grew strongly and singles sales hit a new record. Music fans are now streaming billions of songs from new services enabled by record labels.”
UK album sales 2012 (by volume)
CDs: 69.4m units, down 19.5%
Digital albums: 30.5m, up 14.8%
Total market (including other album sales formats): 100.5m, down 11.2%
1. Emeli Sandé – Our Version of Events
2. Adele – 21
3. Ed Sheeran – +
4. Lana Del Rey – Born to Die
5. One Direction – Up All Night
6. Mumford & Sons – Babel
7. Olly Murs – Right Place Right Time
8. Michael Bublé – Christmas
9. Coldplay – Mylo Xyloto
10. Rihanna – Unapologetic
UK single sales 2012 (by volume)
CDs: 620,000 units, down 44%
Digital sales: 183.3m, up 4.7%
Total market (including other singles sales formats): 188.6m, up 6%
1. Gotye – Somebody That I Used to Know
2. Carly Rae Jepsen – Call Me Maybe
3. Fun – We are Young
4. David Guetta – Titanium
5. James Arthur – Impossible
6. Psy – Gangnam Style
7. Nicki Minaj – Starships
8. Jessie J – Domino
9. Maroon 5 – Payphone
10. Flo Rida – Wild Ones
Source: The Official Charts Company