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Streaming services hit a high in the UK
MUMBAI: Streaming and access services scooped a quarter of the entertainment market in the UK but music and video store total hit an all-time high.
Booming subscription sales by services like Netflix, Lovefilm, Spotify and Deezer mean so-called “access services” rather than sales of products like discs and downloads accounted for a quarter of the entertainment market in 2013, according to new figures revealed in the Entertainment Retailers Association (ERA) Yearbook published in the UK.
But the physical store market remains vibrant with the numbers of outlets stocking music and video reaching an all-time high, and independent retailers in particular thriving.
“Access models” include streaming services for video (Netflix, Lovefilm) and music (Spotify, Deezer) and in-app purchases for games (Angry Birds, Moshi Monsters). In 2013, their share of entertainment revenues grew to 26 per cent while 74 per cent of revenues were still accounted for by ownership models.
Overall internet-derived sales – including home delivery, digital download and streaming and other access services – accounted for a clear majority of the £5.3 billion entertainment market in 2013, according to ERA figures, with a 60 per cent share of sales. The remaining 40 per cent of revenue was generated by physical stores.
ERA DG Kim Bayley said, “This is stark evidence of the revolution in entertainment consumption being driven by entertainment retailers. The fact that 60p in the entertainment pound is now spent online and 26p in the pound is for access to content rather than ownership is a testament to the huge investment and technological ingenuity of retailers in providing consumers with new ways to enjoy the music, video and games they love.”
The ERA Yearbook is established as the definitive statistical description of the UK entertainment market comprising the music, videogames and video sectors. It combines actual point of sale data supplied by retailers accounting for approximately two-thirds of the total £5.3 billion market and best-available, industry-standard estimates for the remaining third. Point of sale data for physical video sales and physical and digital music sales come courtesy of the Official Charts Company, while point of sale data for physical videogames sales comes from GfK Chart-track. Estimates for the value of the music streaming market come from record companies trade association, the BPI, grossed up from record company revenues, while estimates for the digital video and videogames markets are courtesy of consultants IHS.
Strong investment and innovation by retailers: 2013 witnessed significant investment and innovation from retailers as they continued to transform the availability and accessibility of entertainment to UK consumers: bl bloom.fmandMusicqubed launched mass market music streaming services at sub-£5 price points;
- HMV, now under new management, refocused its entire store estate on its historic music and video heartland;
- Deezerintroduced its new ‘Hear This’ feature, a new personalised discovery tool, which combines expert recommendations from the service’s editors with a smart algorithm that learns about each individual’s listening habits and preferences;
- Netflixreportedly exceeded 2m subscribers in the UK;
- Googlelaunched its All Access streaming music service to sit alongside its existing Play store;
- Spotify struck up strategic alliances with Vodafone and The Times;
- Skyconfirmed the convergence of broadcast and retail models with the launch of itsNow TVstreaming service sitting alongside Sky Store and Sky Go;
- Napsterlaunched major promotions with Sonos, Samsung and LG as well as a partnership with Sun+;
- Leading UK indieRough Tradelaunched its first US store in New York City;
- US gaming giantValveannounced plans to create its own console, dubbed the Steam Machine.
Bayley added, “The transformation of the entertainment market is often misrepresented either as some kind of force of nature beyond human control or as a far-sighted initiative of record and video and games companies. It is neither.
“The entertainment revolution has been driven by new and existing retailers taking huge gambles and investing in technology and new delivery mechanisms. The striking thing, however, is that 10 years after the launch of iTunes and then the rise of mobile entertainment, physical formats still account for a clear majority of entertainment market sales.”
Physical stores versus online: In 2013 physical stores accounted for £2.12 billion in sales, down 8 per cent on 2012, while online sales – the combination of physical sales by internet-based home delivery services like Amazon and digital services – reached £3.18 billion, up 13.9 per cent.
Despite this, the number of physical outlets selling both music (8,580) and video (8,803) reached an all-time-high in 2013. Only in videogames did the total number of physical outlets decline – to 5,590.
Said Kim Bayley, “It is striking how new stores are embracing entertainment even as physical sales are decreasing.”
The biggest factor in the increase in the number of music and video outlets has been the addition to the tally first, of smaller convenience format supermarkets selling a limited range and second of non-specialists such as BP, Disney and BHS.
Access versus Ownership: The fastest growing segment of the online entertainment market is accounted for by services which allow consumers to access content rather than purchasing it outright (ie products like discs or downloads). These include video subscription services such as Netflix and Lovefilm, whose total revenues grew by 120 per cent in 2013, music streaming services like Spotify and Deezer which were up 34 per cent year on year and a variety of games services including in-game micro-transactions, subscriptions to PC multiplayer online games, on-demand games and in-app purchases.
In total, access models grew 35.6 per cent in 2013 to reach £1,377 million, just over a quarter of the entire entertainment market.