The Entertainment Retailers Association (ERA) has revealed that, for the first time ever, entertainment spending on subscription models outstripped money spent on physical and download formats in 2016. But music is trailing games and video in the switch to access over ownership.
Streaming-based entertainment access models – including the likes of Spotify, Netflix and Pokemon Go – were worth £3.24 billion in 2016, 51.3% of the total expenditure, with ownership models contributing £3.08bn (48.7%). Games (56.6% vs 43.4%) and video (51% vs 49%) also saw a majority of revenues come from subscription-type payments.
But in music, ownership models still held sway, contributing £690 million (62.2%) versus £418.5m (37.8%) for access models.
This is a sure sign of music's still-robust physical offering, with CDs proving resilient in the face of the digital onslaught, while the vinyl revival – with its high product price – has also played its part. But there will be also be worries for digital services such as Spotify and Apple Music that, despite their burgeoning subscription growth, they have yet to achieve the popularity of services such as Netflix or Amazon Prime, despite having more comprehensive offerings in terms of the content available.
ERA CEO Kim Bayley said: “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.
“We are seeing the rise of a pay monthly generation in entertainment,” she added. “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.”
Another trend identified in ERA’s Yearbook, published today, shows that Brits are now spending nearly 80% of their entertainment expenditure online, as opposed to in-store purchases.
According to ERA, last year saw digital content account for 57.1% of all purchased music in the UK. Home delivery of physical formats accounted for 15.3% and in-store spend totaled 27.6%. In total, online-derived spend accounted for 72.4% of expenditure – although, again, that was below the rate for both video (73.1%) and games (83.2%), as well as entertainment overall (77.7%).
Entertainment overall posted its fourth successive year of growth in 2016, scoring its best year-on-year performance since 2000 to reach sales of £6.32bn, up 3% on 2015. Games now account for a record 46.8% of the total entertainment market (£2.96bn). Music accounted for just 17.5% (£1.1bn), although that was up slightly up on last year, with total sales value rising 4.6% on 2015.