James R | On 06, Jan 2016

Digital video revenue in the UK surged 30 per cent in 2015, as the entertainment industry marks a big step in the ongoing battle against piracy.

Buying and renting TV and films online has become increasingly popular among consumers, as the shift towards streaming continues to spread. Sales of DVD and Blu-ray discs declined 15 per cent last year, with overall physical rental market revenue dropping 28 per cent to £76.9 million, according to data from the Entertainment Retailers Association. DVD and Blu-ray sales totalled £1.07 billion.

Indeed, this year, digital video sales will overtake physical sales for the first time, accounting for more than half of total sales in the UK – but Liz Bales, chief executive of the British Video Association, insists that the future is bright for physical media.

“Despite the much-suggested decline of discs, these latest figures show that the format continues to be popular with consumers who are buying more than 320,000 discs every day,” she comments. “There are still plenty of reasons to be optimistic about the success of both DVD and Blu-ray for years to come.”

The best-selling DVD and Blu-ray of the year was Paddington, notes the Guardian, with Game of Thrones the best-selling TV show.

Thrones’ popularity arrives hot on the heels of the series being crowned the most-pirated programme in the world. Indeed, more and more consumers are beginning to pay for their entertainment, thanks to the availability of legal copies through digital streaming services. Netflix and Amazon Prime Video have proven big factors in that changing habit, as the subscription model makes media more accessible and affordable.

While studies have shown that piracy declines in markets where Netflix has launched, though, the figures arrive after a report that showed Netflix paid zero corporation tax in the UK in 2014, because subscription fees were paid to Netflix International BV, which was based in Luxembourg. (This is despite the UK being its biggest non-US market, with Netflix earning an estimated £200 million of revenue with 5 million subscribers.) However, Netflix was only based Luxembourg until the end of last year, which means that the company is expected to pay tax for 2015.

Nonetheless, the entertainment industry has welcomed the surge in legal sales as a big step in the battle against piracy.

TV sales online, including through platforms such as Sky Store and iTunes, helped to push digital video deals up 30 per cent, with revenue reaching £1.09 billion – the first time it has passed the billion-pound barrier and also £0.2 billion higher than the revenue generated by physical media. (Sky Store, which also sends customers physical copies of the titles they buy digitally, “regularly ranks number one or two among digital retailers for new releases”, the broadcaster said last year, accounting, for example, for over 30 per cent of all UK digital ownership sales for Gone Girl.)

“Ten years ago, the entertainment business was on the edge of a precipice,” says Kim Bayley, chief executive of the Entertainment Retailers Association. “Piracy was rampant and there were few legal alternatives. Thanks to huge investments from the likes of Apple and Steam and Netflix and Spotify there has been a significant turnaround.”

Together, physical and digital entertainment sales (including music and video games) grew by a total of 5.6 per cent in 2015 to £6.1 billion, eclipsing the previous record high of £6.04 billion, achieved in 2004.

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