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Business News (more headlines) 03-08-2017

Entertainment Goes Pay Monthly For The First Time As Access Trumps Ownership

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The digital revolution in the entertainment business has reached a new tipping point with Britons now spending nearly 80% of their expenditure on entertainment online, according to the Entertainment Retailers Association.

And for the first time entertainment has gone "pay monthly" with expenditure on access to entertainment via services like Netflix, Spotify and apps like Pokemon Go exceeding expenditure on ownership models such as discs or permanent downloads for the first time.

The figures are included in the latest edition of the ERA Yearbook published today (March 7). The ERA Yearbook is regarded as the definitive statistical source on the UK games, video and music markets.

In 2016 online and mobile-generated digital and home delivery entertainment revenues accounted for 77.7% of the £6.32bn spent on music, video and games, with physical stores accounting for just 22.3%.

Just as significantly, ERA figures show that for the first time in 2016 Britons spent more on accessing entertainment via subscription services from Netflix, Amazon, Spotify, Google Play, Sky and Apple Music and mobile apps like Pokemon Go than they did buying it permanently on disc or download.

Access services accounted for 51.3% of entertainment expenditure in 2016 with 48.7% spent on discs and downloads. Key factor was booming expenditure on music and video streaming services.

ERA CEO Kim Bayley said, "We are seeing the rise of a pay monthly generation in entertainment. Rather than buying music, video or games outright, the British public is being won over by rental or all-you-can eat services which are available 24/7. If downloads represented the first digital revolution in entertainment, we are now at digital 2.0, the subscription age."

Despite the broader trend, affection for physical formats still remains strong

Music fans remain devotees of ownership formats, with sales bolstered by the boom in vinyl (up another 54.4% in 2016 to £65.6m) and deluxe CD and box set editions.

Even in previously declining markets, the introduction of a hot new product can generate substantial new physical sales.

The handheld games software market saw a surprise sales boost in the fourth quarter of 2016 after Nintendo released two new Pokemon titles for its 3DS platform. With each selling around a quarter of a million units, it was enough to see the entire sector grow by more than 20% compared with 2015.

Said Bayley, "Digital may grab the headlines, but we should not underestimate the fondness of the UK public for physical formats in particular. While the vinyl revival has been well reported, millions of people still regard DVDs, CDs and console game discs as the best way to access entertainment.

"Discs are durable, convenient and are still probably the best entertainment option for gifting."

Key driver in the resilience of physical formats was an increase in the number of outlets selling music and/or video to another all-time-high. The number of outlets selling music and/or video has now increased in each of the past eight years and now stands at over 15,300, driven by an increase in non-traditional and convenience stores stocking discs.

Entertainment overall posted its fourth successive year of growth in 2016, scoring its best year-on-year performance since 2000 to reach sales of £6,317.8m, up 3% on 2015. Games now accounts for nearly half of the entertainment market (46.8%), its highest share ever;

As well as its renowned statistical round-up of the year in entertainment, the ERA Yearbook also includes contributions from ERA members including Amazon, GAME, HMV, Sainsburys, Sky Store, Spotify, Tesco and independents David's and Jumbo.

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