Digital boom couldn’t stop 2012 entertainment slump in UK

Revenue from digital-format sales of music, videos and games jumped 11.4 percent through 2012 to pass the £1 billion ($1.6 billion) mark in the UK.

According to the country’s Entertainment Retailers Association, digital sales reached £1.033 billion, making up more than a quarter of the cross-format total – five percent more than a year ago.

But the association’s headline announcement of digital growth masks what is, in fact, a worrying pattern. Across the formats, UK entertainment retailers shed 12 percent in sales last year, as revenue from music, video and games each dipped.

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That means the industry is caught in the classic industry conundrum of swapping analogue dollars for digital pennies.

The ERA reckons (via release):

“Contributory factors included the decision by many music, video and games suppliers not to release key titles during the summer in order to avoid the Olympics, the fact the videogames business is in the lowest point of its format cycle and what is regarded by many as a lacklustre year for releases.”

ERA director Kim Bayley rationale (via release) calls for better content to help troubled retailers like HMV:

“The dearth of attractive releases during summer 2012 was clearly a significant factor. Suppliers need to do more to rebalance their release schedules and improve the quality of their releases. No retailer can afford to pay overheads on a store for 52 weeks of the year if all the key releases are going to be concentrated in the last quarter. And entrepreneurs will think twice about investing in new digital services if releases fail to excite the public. Luckily the message appears to be getting through and we look forward to being able to offer the public a much better release slate in 2013.”

Although gaming is the most lucrative UK digital entertainment sales segment, it grew by half the pace of music and video, which, spurred by new on-demand services, overtook games to become the highest-value segment across digital and physical.