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ENTERTAINMENT: Investments by UK entertainment retailers to encourage fans to engage with artists’ works are not given enough credit by content owners, declared executives from ERA (Entertainment Retailers Association) on 24 February.

At the Shaping the Future of Entertainment industry gathering in London last week, ERA (Entertainment Retailers Association) urged British government policy makers and rights holders to take the country’s physical and digital store operators more seriously for a sustainable market.

With the economy high on the agenda of the looming UK general election on 7 May, retailers feel their contribution to the entertainment market should not be taken from granted.

To illustrate their point, ERA CEO Kim Bayley and chairman Raoul Chatterjee came out with a list of figures highlighting their members’ direct and indirect contribution to UK entertainment.

DIGITAL & PHYSICAL RETAIL

*In 2014, 22,000 employees at more than 500 retail companies served in excess of 40 million customers and generated £5.5bn-plus in revenues and VAT (value-added tax) of more than £900m for the government.

*Since 2002, the digital services that have revolutionised retail in the entertainment space include Steam and Green Man Gaming for video games; 7digital, Spotify, Rdio and Amazon.co.uk for music; Netflix, Sky and Wauki.tv for videos, TV and film.

*More than 60% of UK entertainment sales come “from retailers and digital services that didn’t exist 16 years ago. There are more than 100 new players in the digital space alone”.

* Physical retail still accounted for 50.1% of music, videos and video games sales in 2014.

*Amazon.co.uk offers its customers 1.3 million CD titles, 250,000 DVDs and 40,000 video games.

*There are 123 legitimate digital services in the UK.

*The UK can boast some 2 million sq ft of retail space with a market value of £60 million that is being used to sell entertainment goods and services.

*ERA estimates that the £1.6bn invested in digital entertainment services in the past decade helped yield £2.8bn in revenues last year, an 18% increase from 2013.

*“While sectors such as fashion or furniture are accustomed to taking 50% or even 60% of the final selling price, entertainment retailers and digital services are fortunate if they can achieve 30%.”

MUSIC

*Credit Suisse investment bank predicts that profit margins for record labels will increase from about 14% in 2012 to about 27% in 2020 thanks to digital distribution. ERA says this is at the expense of the retailers that have taken on the required incremental costs of investing in distribution technology and platforms.

*“Music is less than 20% of (the UK entertainment) retail sales, but may be giving the entertainment industry 80% of the headaches,” said keynote speaker Brian Message, the Music Managers Forum director and a partner at artist-management firm ATC (which represents Radiohead, Laura Mvula, Faithless, Nick Cave, among others).

*Spotify has paid 70% of its revenues, US$2bn, to rights owners to date.

*Music streaming service Deezer offers subscribers 35 million tracks; “at an average of 3.5 minutes per track, it would take 233 years to listen to it all”.

* In the past 10 years, £315m has been invested in UK digital music services, excluding Apple’s iTunes and Amazon.co.uk.

*The average price of music albums has declined by 50%-plus and by 40% for DVDs, but has grown by about 8% for video games.

VIDEOS

*Netflix, the video-streaming giant, invests about £100 million a year in online recommendation engines. Netflix has sold more than 600,000 titles in music, videos and games.

VIDEO GAMES

*Video games retailer GAME launched on the London Stock Exchange’s FTSE 250 last year.

With the planned launch of new streaming music services in 2015, including Apple’s Beats Music and YouTube’s Music Key, entertainment retail’s juggernaut continues to charge ahead.

The ERA conference took place at Ham Yard Hotel in central London.

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