The days of admiring someone’s film/record/cd/cassette collections are fast becoming a thing of the past, today ‘renting’ or access’ is beating ownership in all areas of the entertainment market. This may not come as a surprise to everyone, but, the size of the switch in habits is quite startling.
A report was published last week by the Recording Industry Association of America (RIAA) which highlighted that streaming accounted for 75% of US recorded music revenue last year, paid subscription streaming remained the biggest driver of increased revenue for the American music industry at $4.7 billion, up 33% over 2017.
Now, the Entertainment Retailers Association (ERA) has released its year-end report for the UK. And, the influential UK trade body has made some very interesting findings.
Kim Bayley, CEO of the ERA, explained
“For the first time since the birth of the modern entertainment business in the late 1950s, more revenue is coming from payments for access rather than purchase in all three sectors – music, video, and games.
“New digital services have created a ‘Generation Rent,’ for whom access models seem natural.
“It is nothing less than a revolution in the entertainment business.”
“Innovation and investment by digital services and retailers have literally proven a lifesaver for the video, games and music businesses, creating new business models and supporting jobs across the UK creative industries.”
In 2018, 62.1% of music revenues came from subscription services, as opposed to 37.9% from discs and downloads. The shift was driven by a 38% increase in revenues from paid subscription music services last year, bringing in just over £829 million.
Physical formats still remain significant, with revenues of more than £505 million, although this side of music retail is in continued decline. CD albums remain the biggest source of income from physical music, with £289.1 million. Vinyl follows at £91.3 million.
ERA notes that declines in CD sales and the ongoing vinyl revival have had differing effects on different parts of the retail market.
In addition, subscriptions to video-on-demand services, including Netflix, accounted for 62% of total revenue. The medium now has a 55% market share. The video game industry showed a similar trend. Online subscriptions generated much more than downloads and physical game sales.
Still, it’s online where most of the money is coming in. Digital services account for over 76% of revenues, with sales of physical products through mail order operators like Amazon bringing the total up to 85%.
Although still seeing significantly smaller revenues than gaming and video overall, music subscription income helped to drive overall entertainment revenues from access models to over £4.5 billion. In total, UK entertainment retail revenues passed £7.5 billion last year – an all-time high, up 9.4% on 2017 – over £1.3 billion of which came from music.