UK lockdowns fuel record year for home entertainment spending

British consumers spent a record £9bn on entertainment last year as the pandemic fuelled a boom in the popularity of digital services such as Netflix, Amazon and Spotify while the public sought to alleviate lockdown boredom.

Overall spending on entertainment, which covers digital and physical video, music and gaming including sales of CDs, DVDs and video games software, soared by 17% year-on-year in 2020 – the fastest annual rate in the 25 years the Entertainment Retailers Association (ERA) has been compiling figures. Frozen II was the best selling video, with Fifa 21 topping the game charts and Lewis Capaldi’s Divinely Uninspired to a Hellish Extent the biggest album.

The figures highlight how the pandemic has accelerated the pace of the shift in consumer habits away from physical products, with a record £7.8bn spent on digital-delivered services, accounting for 86% of total UK entertainment spend last year.

Spending on digital video services, led by Netflix, Disney+ and Amazon’s Prime Video, surged by 38% year-on-year to £2.9bn, by far the fastest-growing sector of the UK entertainment market.

Last year proved the biggest ever for new UK subscribers to streaming services, hitting 32m, more than double the number signed up to traditional pay-TV providers such as Sky, BT TV and Virgin Media.

This week Netflix, the UK’s biggest streaming service with 13 million UK subscribers, raised its prices, with its most popular package increasing by £1 per month to £9.99.

Disney’s Frozen II sold 973,000 copies including renting and buying or downloading a copy physically or digitally – as families sought to keep their children entertained while stuck at home.

Overall, the physical and digital music market rose 6.8% to £1.5bn, with Lewis Capaldi producing the most popular album of the year of the pandemic, with total sales of 455,900.

The total digital and physical games market grew 14.5% to £4.2bn last year wit FIFA 21 shifting 2.18m copies.

Music streaming revenues leapt by more than 15% to £1.2bn as a rush of new subscribers to services such as Spotify, Apple Music and Amazon Music pushed the overall music market to £1.5bn – the highest level since 2006.

Music streaming revenues are now bigger than the entire music market was worth as recently as 2016. Earlier this week the industry body the BPI revealed the amount of music streamed last year rose 22% last year to 139bn audio streams, up from 114bn in 2019.

The trend was the same in gaming, by far the largest segment of the overall UK entertainment market, which saw a 16% rise in spend on mobile and streamed games to £3.6bn.

“If there was ever a year in which we needed entertainment, it was 2020,” said Kim Bayley, the chief executive of the ERA. “The trend towards an increasingly digital entertainment market may be long established, but no one could have foreseen this dramatic leap as digital services filled the gap left by shuttered cinemas, concert halls and retail stores.”

Last year, UK consumers spent almost £150m less on physical entertainment products, such as buying and renting DVDs and CDs. Total sales of physical entertainment products fell by 10.7% last year, from £1.4bn to £1.2bn. In just a decade the physicals entertainment market has shrunk by three-quarters, from £4.7bn in 2010.

The closure of high street stores exacerbated the downward spiral of sales of most physical products last year. Sales of music CDs plummeted 28% to £156m while DVD and Blu-ray disc sales fell by a quarter to £355m. And the UK’s physical video rental market is edging closer to disappearing completely, falling 28% to just £16.9m.

However, the lockdown proved to be a boon for the vinyl market, which enjoyed its best year in decades as fans deprived of going to gigs diverted their spare cash to their record collections. Sales of vinyl, which has seen a revival in recent years, rose 13% to £110m, and rather remarkably now accounts for 40% of the total £271m physical music market.Overall, the physical and digital music market rose 6.8% to £1.5bn.