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Innovation the key for entertainment retailers

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The Entertainment Retailers Association (ERA) has argued that product and format innovation is the most important influence on the sector’s sales in the UK.

In its Yearbook 2011, published today, the ERA has released figures showing consumer spending on videos, computer games, and recorded music fell by four per cent in value to £5.26 billion across the country last year.

Computer games sales were hardest hit during the period, receding 15.8 per cent, whilst music sales fell 6.2 per cent and video sales dropped by 8.1 per cent but remained the largest slice of the sector’s sales, representing 40.4 per cent of the overall market.

Director General of the ERA Kim Bayley says that the lack of new products held sales back in 2010, pointing for example to the lack of new British musical talent during the year as a key reason for sluggish record sales.

“Consumers respond above all to innovation in the entertainment market. These figures clearly show that the more we can offer them new and exciting ways of enjoying entertainment content, the more they respond,” Bayley commented.

“We are also concerned at the lack of innovation in some physical markets. While digital models offer novelty, they are often not yet appealing to a mass market.

“It is worth remembering that across the entertainment market, products delivered on physical formats still account for over 80 per cent of sales, while in the debate about the future of entertainment it is digital which seems to take up most of the airtime.”

Nintendo’s gaming platforms the Wii and DS saw sales decline £214 million during the year but with the launch of the 3DS last week the sector will hope for an upturn in those console sales this year.

Newer formats performed better including gaming platforms PS3 and Xbox 360 which saw games sales rise £122 million.

Trade in digital versions of music, video and games jumped by £161.1 million and sales of Blu-ray DVDs increased sales by £69.1 million compared to 2009.

Piracy and the rise of digital formats was once again a main feature of the organisation’s yearly review, with the pressure group pleased by the passing of the new Digital Economy Act but frustrated by its slow pace of implementation.

Current copyright law is seen as another stumbling block to exploiting new technologies like cloud computing, but along with most things in the industry the ERA can see a bright side, with the government’s Hargreaves Review looking at possible reform of the law.

Bayley concluded: “Summarising the state of the nation in entertainment retailing in 2011 is a constant battle to decide whether the glass is half-full or half-empty.

“The challenge for entertainment retailers is to exploit the positives and to mitigate the worst impact of the negatives.”

Published on Thursday 31 March by Editorial Assistant

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