Netflix and Spotify: Video games main entertainment draw

News


05 Jan, 2017

Netflix and Spotify: Video games main entertainment draw

The addition of Amazon and Netflix to television has revolutionised the digital entertainment industry in British households, with digital and video sales overtaking DVDs and other physical formats for the first time in television history.

According to industry figures, digital video sales including subscription streaming services soared by more than a fifth last year to £1.3bn, the Entertainment Retailers Association (ERA) said. On the other hand, physical sales and rentals were £943m, down from £1.1bn in 2015.

Videos downloaded from other providers such as iTunes and Sky only account for a small share of the mix. For example, DVDs and Blu-ray sales accounted for 86 per cent of revenues for this year’s most watched film, Star Wars: the Force Awakens. Downloads only account for 14 per cent.

Figures indicate that most of the growth in the digital video market is being pushed by subscription streaming services, led by Netflix and Amazon. More than a quarter of British households have a Netflix account, a subscription fee which costs £7.49 per month for high definition content.

The rise in digital sales outweighed the decline of physical formats, delivering an overall growth in the entertainment sector of 2.2 per cent. This follows three years of flat revenues, as per ERA data.

A rise in subscription music streaming was also recorded, with CD sales continuing to decline – total consumer sales being £1.1bn.

The only consumer entertainment industry that seems immune to the shift from physical to digital distribution is the video gaming sector, with overall revenue registering a growth of 2.9 per cent since 2013. Total retail values amount to £3bn, meaning video games account for nearly half of the £6.3bn entertainment market.

Just five years ago, video games made up less than two fifths of the market.
ERA chief executive Kim Baylay said that the figures were “resounding evidence of the benefits of our members’ investment in innovation”.

She continued: “To have added over £1bn in new revenues in just four years is an incredible achievement. To put it another way, take away today’s digital services and the entertainment market would be barely a third the size it is today.”

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