British Retail Group Points to Music as Entertainment’s Fastest-Growing Sector
Music revenues in the U.K. grew by 4.6 percent in 2016 -- driving music, video and games sales to an all-time high of £6.3 billion ($7.8 billion), according to annual figures from the Entertainment…
Music revenues in the U.K. grew by 4.6 percent in 2016 — driving music, video and games sales to an all-time high of £6.3 billion ($7.8 billion), according to annual figures from the Entertainment Retailers Association (ERA).
In line with figures released earlier this week by labels trade body BPI, increased take-up of streaming subscription services was a key factor in boosting revenues, with streaming sales totaling £418 million ($514 million) in 2016, up 65 percent on last year when streaming generated just over £250 million ($307 million).
Total music sales in the U.K. totaled £1.1 billion ($1.3 billion) in 2016, up from £1 billion ($1.2 billion), according to the preliminary ERA figures, which provide a breakdown of sales revenue, as opposed to BPI’s annual figures, which detail levels of consumption.
Although both ERA and BPI physical sales figures are compiled from Official Charts Company data, ERA’s reporting of streaming revenues is based on its own estimates, which partially explains the discrepancy between ERA’s 4 percent reported growth and BPI’s more conservative 1.5 percent. ERA’s preliminary numbers will be updated and confirmed when its annual year book is published in March.
What’s beyond doubt is the impact that streaming is having on other music formats. ERA states that physical sales fell by 7.3 percent, down to £475 million (£590 million), with CD sales alone sliding by 13 percent year-on-year, a dramatic change from the 3.7 percent slide that 2015 experienced.
In line with other leading international markets, download sales in the U.K. tumbled 26.8 percent to £214 million ($265 million), down from £293 million in 2015 ($364 million). Digital services account for 57 percent of the U.K.’s music revenues.
Increased uptake of streaming subscription services, however, ensured that music was the faster-growing sector in the entertainment industry, beating both DVD/video-on-demand (up 2.2 percent) and computer games (up 2.9 percent), even if music still has a long way to go if it’s to ever catch up with either. In 2016, the total video market was worth £2.2 billion ($2.7 billion), while games software was £2.9 billion ($3.5 billion). The combined total of all three industries, music, games and video, was £6.3 billion ($7.8 billion), up 3 percent on 2015, which was a 53 week trading year.
As previously reported, the biggest-selling album of the year was Now That’s What I Call Music 95, which moved 908,500 units. The ongoing resurgence in vinyl sales (up over 50 percent, according to ERA) generated £65 million ($80 million).
“The music, video and games industries were understandably nervous about the advent of new digital services, but these figures provide resounding evidence of the benefits of our members’ investment in innovation,” said ERA CEO Kim Bayley, noting that while the figures proved that physical entertainment retail is “clearly off its peak” physical still remains a multi-billion pound business.
“The growth of vinyl in particular shows that physical formats can flourish if they offer distinctive benefits,” said Bayley, adding that the “strength of the DVD and CD formats over the Christmas period shows that physical still dominates when it comes to gifting.”