Booming streaming services helped the entertainment market to another all-time-high of £7.537bn in 2018, according to preliminary data compiled by the Entertainment Retailers Association (ERA). But after a week dominated by news of High Street retailer HMV going into administration, new analysis shows physical formats are essential to deliver the biggest hits. 

After a sixth successive year of growth for the UK entertainment market, driven by digital services from the likes of Spotify, Steam, Netflix, Amazon, Deezer, Sky, Apple and Google, digital revenues accounted for more than three-quarters (76.1%) of entertainment sales value in 2018, according to ERA figures. 

On a market level digital revenues now dominate all three sectors, with digital generating 80.1% of games revenues, 72.3% of video and 71.3% of music. 

But on a title level, ERA analysis shows physical disc sales are still crucial to deliver the biggest hits with sales of the Top 20 films to own of the year averaging 74.1% physical and the Top 20 albums of the year averaging 61% physical. 

The biggest music and video hit of the year, Hollywood musical The Greatest Showman, sold nearly two-thirds of its combined 4.3m sales on CD, DVD and Blu-ray. The biggest-selling console game of the year, FIFA 19, sold 2.5m units, around 75% on physical formats.

ERA CEO Kim Bayley said, “On a market level these figures are a stunning testament to the investment and innovation of digital services who have transformed the fortunes of an entertainment industry many had thought was doomed by the internet and piracy. Significantly in this week of HMV’s news, however, the data shows that if you want a real mass market hit, you need the reach and convenience of physical formats.

“In music even today more people buy CDs than pay for streaming subscriptions and in video more homes have DVD players than subscribe to all the leading video services put together. The challenge for physical retailers is to tap into this huge market of occasional buyers.” 

 

ERA PRELIMINARY ENTERTAINMENT  SALES TOTALS 2018 (£m)
		2017	2018	% change
Music	Physical	£459.4	£383.2	-16.6%
	Downloads	£165.0	£122.6	-25.7%
	Streaming	£601.9	£829.1	37.7%
	Total Music	£1,226.3	£1,334.9	8.9%
Video	Physical Retail	£742.1	£616.9	-16.9%
	Physical Rental	£40.5	£31.7	-21.7%
	Digital	£1,341.0	£1,689.4	26.0%
	Total Video	£2,123.6	£2,337.9	10.1%
Games	Physical	£792.4	£769.9	-2.8%
	Digital	£2,750.0	£3,094.0	12.5%
	Total Games	£3,542.4	£3,863.9	9.1%
Total	Physical	£2,034.4	£1,801.7	-11.4%
	Digital (inc streaming)	£4,857.9	£5,735.1	18.1%
	Total Entertainment	£6,892.3	£7,536.8	9.4%

Sources:

Music: Physical / Digital – The Official Charts Company. Streaming (subscription only) estimates – BPI / ERA.

Video: Physical – The Official Charts Company / BASE. Digital – Futuresource Consulting estimates of transactional digital video (including  EST (Electronic Sell-Through) Movies & TV, iVoD (online digital rental) and CVoD/Pay-TV VoD (digital rental via Pay-TV providers to a STB). Adult & PPV sports are excluded.

SVOD (Subscription video on demand): Online subscription streaming services such as Netflix and an allocation of Amazon Prime revenue. Now TV movies, entertainment & kids is also included within this, but sports is excluded)

Games: Physical – GfK Chart Track. Digital – IHS Markit estimates (including digital online, mobile and tablet gaming), GSD 

ERA’s market figures provide a definitive overview of the UK entertainment market, aggregating data from respected market analysts including the Official Charts Company, GfK, Futuresource Consulting, GSD and IHS. Preliminary numbers will be updated and confirmed with the publication of the ERA Yearbook in March 2019.  

Games now account for more than half of the entertainment market 

The biggest winner in entertainment’s digital transformation has been the games sector. For the first time in 2018, ERA can report that games accounted for more than half of the entire UK entertainment market (51.3%). More than any other sector, games has benefitted from a proliferation of new services from direct to console downloads to mobile and social gaming.

 The physical console and PC games market shrank slightly in 2018, down 2.8% to £769.9m, and digital growth was by recent standards a modest 12.5% to £3.094m, but the sheer scale of the games market is such that it was enough to make it bigger than video and music combined. 

Now worth £3.864bn, the games market has – thanks to digital – more than doubled in value since 2007. 

ERA CEO Kim Bayley said, “The games industry has been incredibly effective in taking advantage of the potential of digital technology to offer new and compelling forms of entertainment. Despite being the youngest of our three sectors, it is now by far the biggest.” 

 

THE UK’S BIGGEST SELLING CONSOLE GAMES 2018*
Position	Title	Company	Physical Unit Sales
1	FIFA 19	Electronic Arts	1,889,401
2	Red Dead Redemption 2	Take 2	1,757,212
3	Call Of Duty: Black Ops 4	Activision Blizzard	1,172,855
4	Marvel’s Spider-Man	Sony Computer Ent.	676,621
5	Mario Kart 8 Deluxe	Nintendo	458,675
6	Far Cry 5	Ubisoft	434,133
7	Crash Bandicoot N.Sane Trilogy	Activision Blizzard	430,551
8	God Of War	Sony Computer Ent.	399,395
9	Forza Horizon 4	Microsoft	392,960
10	FIFA 18	Electronic Arts	351,788
11	Grand Theft Auto V	Take 2	339,805
12	Spyro Reignited Trilogy	Activision Blizzard	333,725
13	Battlefield V	Electronic Arts	313,100
14	Assassin’s Creed Odyssey	Ubisoft	305,937
15	Super Smash Bros. Ultimate	Nintendo	284,155
16	Super Mario Odyssey	Nintendo	240,710
17	Call Of Duty: Wwii	Activision Blizzard	230,576
18	Pokemon: Let’s Go, Pikachu!	Nintendo	227,767
19	Shadow Of The Tomb Raider	Square Enix / Microsoft	226,125
20	Fallout 76	Bethesda Softworks	218,534

 Source: GfK/UKIE. * Digital games data not currently available

 

Video sees benefit of boom in downloads and streaming services 

Downloads from Amazon, Apple and Sky Store and streaming services such as Netflix, Amazon Prime and Sky’s Now TV again proved the biggest news in video, driving digital revenues up 26% to £1.689bn.

 This was in sharp contrast to the performance of DVD, down 23.5% in volume, and Blu-ray, down 11.9%. In value terms, with revenues of £2.338bn in 2018, the video business is now 7.4% above its 2012 low-point, but still well below its historic 2004 high of £2.953bn. 

The best-selling film to own of 2018 was Hollywood musical The Greatest Showman, which sold 2.69m units, 71.3% of them on DVD or Blu-ray disc. 

It topped a chart dominated by escapism and sci-fi fantasy and strongly oriented to physical formats. 

ERA CEO Kim Bayley said, “Video was arguably entertainment’s most dynamic sector in 2018. Streaming services have transformed the viewing choices of the British public by offering 24/7 access and convenience. Meanwhile sales figures show the continuing loyalty of video consumers to DVD and Blu-ray, still the default choices for gift-buying and building a video collection.” 

 

THE UK’S BIGGEST SELLING VIDEOS 2018
Position	Title	Corp. Group	Sales	% Digital	% Physical
1	The Greatest Showman	20th Century Fox	2,688,069	28.7%	71.3%
2	Avengers – Infinity War	Walt Disney	1,203,947	32.9%	67.1%
3	Mamma Mia – Here We Go Again	Universal Pictures	1,188,954	15.3%	84.7%
4	Star Wars – The Last Jedi	Walt Disney	1,155,736	15.0%	85.0%
5	Paddington 2	Elevation Sales	955,674	20.3%	79.7%
6	Peter Rabbit	Sony Pictures	899,271	30.0%	70.0%
7	Jumanji – Welcome To The Jungle	Sony Pictures	824,700	33.5%	66.5%
8	Black Panther	Walt Disney	813,979	19.6%	80.4%
9	Jurassic World – Fallen Kingdom	Universal Pictures	779,946	35.2%	64.8%
10	Thor – Ragnarok	Walt Disney	776,342	10.4%	89.6%
11	Deadpool 2	20th Century Fox	763,175	35.3%	64.7%
12	Solo – A Star Wars Story	Walt Disney	697,447	24.6%	75.4%
13	Darkest Hour	Universal Pictures	645,414	22.3%	77.7%
14	Kingsman – The Golden Circle	20th Century Fox	613,407	34.1%	65.9%
15	Blade Runner 2049	Sony Pictures	582,943	22.7%	77.3%
16	Justice League	Warner Home Video	579,381	33.2%	66.8%
17	Incredibles 2	Walt Disney	545,056	29.6%	70.4%
18	Coco	Walt Disney	536,486	28.7%	71.3%
19	It (2017)	Warner Home Video	456,086	26.5%	73.5%
20	Murder On The Orient Express	20th Century Fox	443,035	26.2%	73.8%

Source: Official Charts Company/BASE. Includes physical sales plus download to own 

 

Music streams its way to success

Music registered its fourth successive year of growth in 2018 thanks to streaming with revenues generated by services like Spotify, Apple, Amazon, Deezer and Google/YouTube growing 37.7% to reach £829.1m. 

The switch away from downloads continued with single track downloads down 25.5% over the year and album downloads down 26.3%. 

Physical formats performed less well, with CD unit sales down another 23.1%. After a decade of growth, vinyl album sales grew just 1.6%. 

The music sector is now 30% bigger than it was at its 2014 low-point of £1.03bn, but it is still well off its 2001 peak of £2.11bn.

 The key trend in music in 2018 was the strength of original movie cast recordings. The biggest seller was The Greatest Showman with sales of 1.62m units and it was accompanied in the Top 10 by two other original movie cast recordings – Mamma Mia – Here We Go Again and A Star Is Born.

ERA CEO Kim Bayley said, “Streaming services were once again the star performers in the UK music market in 2018, but the continuing strength of physical sales at the top end of the chart means that unless you are a hip-hop artist, the only way to have a really big album is to generate CD sales as well as streams.”

 

THE UK’S BIGGEST ALBUMS 2018
	Title	Artist	Total Units	Corp. Group	% Digital	% Physical
1	The Greatest Showman	Cast Recording	1,621,905	Warner	48.7%	51.3%
2	Staying At Tamara’s	George Ezra	691,332	Sony	29.5%	70.5%
3	Divide	Ed Sheeran	510,305	Warner	59.1%	40.9%
4	Now That’s What I Call Music 100	Various Artists	479,197	Sony / Universal	14.6%	85.4%
5	Now That’s What I Call Music 99	Various Artists	395,237	Sony / Universal	16.9%	83.1%
6	Mamma Mia – Here We Go Again	Cast Recording	374,476	Universal	34.1%	65.9%
7	Scorpion	Drake	300,100	Universal	93.1%	6.9%
8	Now That’s What I Call Music 101	Various Artists	287,217	Sony / Universal	7.2%	92.8%
9	Beerbongs & Bentleys	Post Malone	281,644	Universal	91.9%	8.1%
10	A Star Is Born	Cast Recording	271,635	Universal	35.9%	64.1%
11	Love	Michael Buble	263,538	Warner	6.7%	93.3%
12	Dua Lipa	Dua Lipa	251,280	Warner	65.1%	34.9%
13	Kamikaze	Eminem	232,420	Universal	71.6%	28.4%
14	Odyssey	Take That	231,290	Sony / Universal	7.1%	92.9%
15	Si	Andrea Bocelli	213,321	Universal	5.1%	94.9%
16	Bohemian Rhapsody – OST	Queen	210,306	Universal	35.2%	64.8%
17	Always In Between	Jess Glynne	204,923	Warner	28.2%	71.8%
18	Blood Red Roses	Rod Stewart	196,192	Universal	5.1%	94.9%
19	Sweetener	Ariana Grande	193,362	Universal	61.7%	38.3%
20	The Architect	Paloma Faith	179,716	Sony	22.9%	77.1%

Source: The Official Charts Company

 

The “Christmas from hell” 

The structural challenges faced by physical retailers were compounded by a Christmas trading season worse than many entertainment retailers can remember. 

In the week leading up to December 21, DVD sales were down 31.2% on the same week the previous year, Blu-ray sales were down 33.5% and CD sales were down 29.4%.

ERA CEO Kim Bayley said, “It was truly the Christmas from hell. High Street retailing is clearly suffering and that certainly impacted the entertainment business. It is a testament to the strength of the streaming revolution that despite it all, entertainment enjoyed its sixth consecutive year of growth.”