Study: UK entertainment spending exceeds monthly subs over buying

The entertainment habits of British consumers are showing a marked trend to go online, and to “rent” rather than own. 

A report by the Entertainment Retailers Association (ERA) showed that for the first time, the British have opted to “pay monthly” for their music, games and video fix.

In other words, spending on subscriptions to services as Spotify and Netflix, and apps as Pokemon Go, are now greater (51%) than on "ownership models" such as discs and digital downloads (49%).

The report also shows that 80% of British spend on entertainment has gone online.

ERA CEO Kim Bayley said: “We are seeing the rise of a pay monthly generation in entertainment. Rather than buying music, video or games outright, the British public is being won over by rental or all-you-can eat services which are available 24/7.

“If downloads represented the first digital revolution in entertainment, we are now at digital 2.0, the subscription age.”

But the switch to access than ownership is more marked in games and video than music.

Streaming-based entertainment access models generated £3.24 billion (Australian $5.23 billion) in 2016. This represented 51.3% of the total expenditure.

Ownership models contributing £3.08bn (48.7%). Games (56.6% vs 43.4%) and video (51% vs 49%) also saw a majority of revenues flow from subscription-type payments.

Of games buyers, only 16.8% bothered to walk down to a store, while 83.2% chose the online option.

As for video, just 26.9% of purchases were in physical stores, compared to 73.1% online.

But in music, ownership models still held sway, contributing £690 million or $1.1 billion (62.2%), versus £418.5 million or $676. 7 million (37.8%) for access models. 

In the UK, 57.1% of all music was bought digitally. Home delivery of physical formats accounted for 15.3% and in-store spend totalled 27.6%.

In total, online-derived spend accounted for 72.4% of expenditure – although that, again, was below the rate for video (73.1%) and games (83.2%), as well as entertainment overall (77.7%). 

Bayley pointed out that music fans are still committed to ownership for a number of reasons. 

They are still being offered deluxe CD and box set editions in physical format. The vinyl boom also plays a major role: vinyl sales were up another 54.4% in 2016 to £65.6 million ($105.9 million).

The amount of mortar and bricks stores has also grown for the eighth consecutive year and now amounting to 15,300.

Bayley concluded: “Digital may grab the headlines, but we should not underestimate the fondness of the UK public for physical formats in particular.

“While the vinyl revival has been well reported, millions of people still regard DVDs, CDs and console game discs as the best way to access entertainment.

"Discs are durable, convenient and are still probably the best entertainment option for gifting."

Entertainment remains an important part of the lives of the British. Last year saw a fourth successive year of growth.

It also scored its best year-on-year performance since 2000 to hit sales of £6.32 billion ($10.2 billion), up 3% on 2015.

Games now account for a record 46.8% of the total entertainment market, representing £2.96 billion ($4.78 billion). Music accounted for just 17.5% or £1.1 billion ($1.77 billion) but sales were up 4.6% on 2015.