Streaming Leads The Way For Home Entertainment in The UK

Streaming services like Netflix and Spotify are leading the way in home entertainment – but could they really put an end to traditional media?

The UK’s home entertainment business has plateaued in the last few years, but new figures suggest that streaming services like Netflix and Spotify are the driving force behind a new period of growth.

Figures published by the Entertainment Retailers Association (ERA) show that the home entertainment industry generated £5.3 billion in revenue last year – a four per cent increase. For the first rise in five years, that’s a particularly encouraging figure.

But perhaps more telling is the fact that so much of this was derived from the web. Internet-based revenues amounted to £3.18 billion altogether, which represented a jump of nearly 14 per cent from the previous year. What’s more this sector constituted 60 per cent of the market as a whole. Revenue from physical sales, on the other hand, fell by eight per cent.

The category of internet-derived revenue includes everything from digital download services to home deliveries of products ordered online, so it is not necessarily surprising that it makes up the biggest part of the total – though it is disconcerting for high street entertainment retailers like HMV, which has faced its own struggles in the past couple of years.

However, what’s really striking is the massive leap in so-called “video on demand” services. The likes of Netflix and LoveFilm posted a massive leap of 120 per cent last year from 2012, while music streaming services like Deezer, Spotify and Last.fm increased by a third.

Overall, some 40 per cent of consumer spending on home entertainment went on services which provide access to content, instead of actual ownership. So are consumers really losing interest in going to the cinema and buying albums, DVDs or Blu-Rays?

According to Rudy Osorio, head of video at HMV, there will always be a market for high quality physical products. For example, nobody really wants to receive a download voucher as a gift instead of a tangible object they can unwrap.

“We continue to be struck by the strong resilience of the physical market in the UK,” he explains.

“Early adopters’ enthusiasm for streaming may grab the headlines, but sales of £2.1billion through store-based retailers of entertainment product show there is still a substantial mainstream market of consumers who value the convenience of disc-based formats, particularly for gifting and impulse buys.”

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