Digital vs Physical: Which one do you go for?

digital downloadsIt seems the writing is on the wall for hard copy CDs and DVDs, as new industry figures show digital downloads of movies, music and games have reached the £1billion mark for the very first time.

According to UK trade body, the Entertainment Retailers Association (ERA), we’re going digital in our droves, with a quarter of the entertainment market now digital.

The statistics, for 2012, show that digital sales of music, video and games grew by just over 11 per cent, compared to 2011, leading to a year-end tally of £1.033billion.

It’s not quite over for the disc market yet though. Lots of us still prefer to pop into a shop or order online and buy something that is more physical. Sales of CDs, DVDs, Blu-ray and video games still account for more than three quarters of the entertainment market.

But, if the pattern continues as it did during 2012, those figures could be reversed in years to come as disc sales fell by nearly 18 per cent compared to the previous year.

ERA calculates its data by combining information from three different sources – official charts company information on physical and digital sales, GfK statistics on videogame sales and HIS Screen Digest estimates of digital video and videogame sales.

Kim Bayley, who is ERA’s director general, described breaching the £1billion barrier as an “incredible achievement” for digital entertainment retailers in the UK.

She said the impressive statistics reflected “huge investment in new and innovative services which means you can buy music, video and games literally at any time of the day and wherever you are.”

cdsBut Bayley added: “At the same time, I suspect that many people will be surprised to learn just how resilient the physical business still is – with three quarters of entertainment sales still on disc.”

She said that while downloads offered “convenience and portability,” many people still “seem to value the quality and tangibility of a physical product.

While iTunes first launched in the UK nearly a decade ago, 60 per cent of music sales are still physical.

The biggest digital sector in 2012 was videogames, possibly in part because games cost more than CDs and DVDs. Cashing in just over £522million, the videogames market was worth more than the combined digital sales of music and video.

Bayley said she believed customers were going digital because of a combination of exciting new devices coming onto the market and new digital retailing services. Clearly, some of the figures will be down to people receiving the likes of iPads and Kindles this Christmas and rushing to download something onto them.

And, those digital statistics will be just the tip of the iceberg because there is no full market data available yet for streaming services including Spotify, Deezer, We7 and Rdio.

This year, however, may present a different picture. While the Olympics contributed to British pride and the economy, the Games weren’t good news for everyone.

Because many music, video and games suppliers decided not to release key titles during the summer, fearing poor sales during the Olympics, flagship releases mainly came in the last quarter of 2012.

But, Bayley believes they will be spread out throughout this year. “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,” she said. “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.

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