A “Christmas from hell” capped a disastrous year for high street sellers of DVDs and CDs, as the digital revolution fuelled a near-£250m decline in sales of physical copies of films, music, TV shows and video games in 2018.
In the week leading up to Christmas, sales of DVDs were down more than 31%, Blu-ray discs plummeted by over 33% and music CD sales slumped by 29%, a festive nightmare that pushed the UK’s biggest music and movies retailer HMV into administration last week.
“It was truly the Christmas from hell,” said Kim Bayley, the chief executive of the Entertainment Retailers Association (ERA), which publishes an annual round-up of sales and spending on entertainment products. “High street retailing is clearly suffering and that certainly impacted the entertainment business.”
HMV blamed the Christmas slump in DVD sales for its demise. Will Wright, a partner at KPMG and one of the administrators called in to run the 125-store chain when it collapsed on December 28, said the retailer had been hit by a “wave of digital disruption sweeping across the entertainment industry”.
The entertainment market is now more than three-quarters digital, and Britain’s growing love-affair with internet-based services – from Spotify, Netflix and Amazon to Apple’s iTunes and Sky’s store – meant total UK entertainment sales were up more than 9% at £7.5bn.
It was the sixth successive year of growth in the entertainment sector, and the first year that games accounted for more than 50% of total sales – more than music and video combined.
The total music market rose almost 9% to £1.3bn fuelled by huge sales of the soundtrack to the film The Greatest Showman, the biggest selling album of the year. George Ezra’s Staying at Tamara’s and Ed Sheeran’s Divide – which was released in 2017 – were the next biggest selling albums.
Streaming now accounts for nearly two-thirds of UK music consumption – and 91bn audio streams were served to British listeners in 2018 – up 34% on 2017, and 2,350% since 2012. The landmark of 2bn streams in a single week was passed in December. The most-streamed track of 2018 was God’s Plan by Drake, with One Kiss by Calvin Harris and Dua Lipa in second place.
Sales of physical music fell almost 17%, with the number of CDs sold down 23% to 32m. The rate of decline in CD sales was almost double the 12% decline recorded in 2017.
However, it wasn’t all bad news for physical formats. The continuing vinyl revival generated LP sales of 4.2m – up 1.6% on 2017. Some 12,000 albums were released on vinyl and the most-purchased was the Arctic Monkeys’ Tranquility Base Hotel & Casino, which became the fastest-selling LP in more than 25 years, shifting 24,500 copies in seven days after its release in May. Other big sellers on vinyl included Fleetwood Mac’s Rumours, Pink Floyd’s Dark Side of the Moon and The Greatest Showman.
The mini-revival of cassette tapes has also continued – with sales rising 125% to 50,000 last year - the most since 2004 – as artists including The 1975 re-popularise the classic format.
The video sector has also been hit by the digital shift. Total video sales, including physical products, were up 10% to £2.3bn, but the number of DVDs sold fell 23.5%, with Blu-ray discs down 12%. Rentals declined 22% to £31.7m.
Netflix is on track to pass 10 million UK subscribers in the UK in the first quarter this year, having passed the number of households with Sky’s satellite service at the end of last year. The number of subscribers to the UK’s three most popular streaming services – Netflix, Amazon and Sky’s Now TV – has already overtaken those signed up to all the UK’s pay-TV services combined, including Sky, Virgin Media, BT and TalkTalk.
The biggest-selling film of the year, by a large margin, was The Greatest Showman, starring Hugh Jackman, with 2.7m combined digital and physical sales. Its digital sales of 770,000 made it the biggest selling digital movie of all time in the UK.
Other big selling videos included comedian Kevin Bridges’ Brand New Tour, which sold 213,000 copies in just four weeks, with 90% of sales on DVD, and My World, a documentary about the life of 15-year-old US YouTube star JoJo Siwa. Peter Rabbit and Incredibles 2 topped the chart of family-friendly animations.
The ERA points out that despite the dire state of the market for CDs and DVDs, they are still crucial for titles to become a mega-hit. Nearly two-thirds of the combined 4.3m digital and physical sales of The Greatest Showman came from buyers of traditional CDs, Blu-rays and DVDs. This trend was seen across most titles in the best-seller lists for music and video.
In the games market – up 9% to £3.9bn across all formats – the biggest sellers were the evergreen Fifa football franchise and Red Dead Redemption 2.
Physical sales of console and PC games shrank slightly, by 2.8% to £770m, while digital income rose 12.5% to £3bn. The games market has more than doubled in size since 2007.