The ERA has said that the UK video games market declined 17.4 per cent to 1.598bn in 2012.
Those numbers include both physical and digital sales.
By contrast, music was down just 5.5 per cent and video 10 per cent. The overall entertainment market decline was 12 per cent, with games very much standing out as the worst performer.
In 2011 the UK games market was worth 1.934bn.
All of this is despite gains in the digital sector. Digital video game sales grew 7.7 per cent in 2012 to 552.2m making video games the most valuable digital entertainment sector in the UK – although it also commands the slowest growth.
Video was up 20.3 per cent to 97.9m while music jumped 15.1 per cent to 383.3m. Overall digital entertainment sales increased 11.4 per cent to 1.034bn.
Physical still accounts for the majority of the market, however, although its importance is certainly dwindling. Physical sales accounted for 65.4 per cent of the 2012 video games market – which is down from 73.5 per cent the year before.
Only music saw physical claims a smaller share with 62 per cent of its market still being sold on disc. 93.9 per cent of video sales are still on DVD or Blu-ray. Physical now accounts for 75.5 per cent of the total entertainment market, down from 2011's 80.6 per cent.
The bottom line here is that the7.7 per cent growth in UK digital games sales in the UK not enough to offset the 26 per cent slump in boxed games. Sales of physical video games are now down to just 1.05bn – an unimaginable low compared to the highs of just a few years ago.
The combination of a myriad of exciting new devices and compelling new digital retailing services is clearly exciting consumers,” ERA director general Kim Bayley stated. What is most striking is that these figures do not even include the impact of streaming services like Spotify, Deezer, We7 and Rdio, for whom full market value data is not yet available.
Despite digital's seemingly inexorable growth, the CD, the DVD and the physical games disc show incredible resilience. It is nearly nine years since iTunes launched in the UK yet over 60 per cent of music sales are still accounted for by physical formats. It is clearly way too soon to write off the CD and in video, digital barely gets a look in. Physical formats still account for three quarters of the entertainment market.
The dearth of attractive releases during summer 2012 was clearly a significant factor. Suppliers need to do more to rebalance their release schedules and improve the quality of their releases. 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.
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.”