The UK music, video and games markets could break the £10bn sales barrier this year, according to ERA, the trade body for UK digital services and retailers of music, video and games.

Preliminary 2021 figures from ERA show the music, video and games markets generated an all-time-record sales total of £9.7bn, the ninth successive year of growth.

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Streaming video revenues driven by services such as Netflix increased by 28.2% to £3.2 billion

Contrary to fears that 2020’s lockdown boom in streaming was a one-off, digital streams and sales continued to grow through 2021 with music revenues up another 8.7% and video up 13.3%. Only games faltered with sales down 3.3%, but that was still nearly 14% more than in 2019, the last full year before Covid-19 struck.

ERA CEO Kim Bayley said, “The entire sector was braced for revenues to settle down in 2021 after 2020 grew an astonishing 18.7%, but growth continued – for the ninth successive year.”

Nearly 90 pence in every pound in the UK spent on music, video and games is now online. Total digital revenues grew by 8.3% in 2021 to £8.66bn.

Overall physical revenues declined 18.5% in 2021, but there was one notable exception: physical revenues in music grew by 7.3%, their first growth since 2001, driven by the continuing boom in sales of vinyl, up 23.2% to £135.6m.

Added Bayley, “The return of physical music sales to growth a full two decades since they started to decline is nothing short of a miracle. It is a testament more than anything to the doggedness and resilience of physical retailers, led by the indies, who have driven the vinyl revival in the face of some initial scepticism.”

Streaming video revenues driven by services including Netflix, Amazon Prime Video, Disney+ and Now TV increased by 28.2% to £3.2 billion.

The video streaming market in the UK has more than tripled in size since 2017 as more services launch and more users adopt them.

However, the physical disc and download-to-own businesses suffered significantly. DVD, in particular, took a dramatic dive with revenues down 39.5% on 2020.

Games has been the dominant player in the entertainment sector for the past decade but in 2021, it suffered a slight reverse, down 3.3% to £4.3bn.

A key factor in that 2021 performance is likely to have been continuing supply problems with the latest PlayStation and Xbox consoles due to the worldwide semiconductor shortage.

The best-selling game yet again was the latest edition of football title FIFA. The new FIFA 22 sold 917,000 units on physical alone with an additional 1.3m digital units taking it to more than 2.2m in total.

Said Bayley, “The UK games market is more than double the size it was 10 years ago, a compound annual growth rate (CAGR) of 7.8% which is extraordinary by any standards. The strong growth in mobile gaming can only benefit the market long-term. Despite the slight reverse in 2021, we can be confident that the games business will continue to prosper.”

Music’s growth was once again driven by subscription streaming services from the likes of Spotify, Amazon, Apple and YouTube Music which reached £1.33bn in 2021.

With around 70 pence in the pound paid by streaming services to the music industry, this means the services delivered around £900m to record companies and music publishers.

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