Games 'to outsell' music, video

By Rory Cellan-Jones
Technology correspondent, BBC News

Hugely popular titles such as GTAIV have boosted sales figures

UK sales of games will outstrip music and video for the first time in 2008, says a report from Verdict Research.

A huge shift in consumer attitudes has turned video games into the UK's most popular form of entertainment, say the retail analysts.

It predicts spending on games will rise by 42% to £4.64bn in 2008, with sales on music and video at £4.46bn.

In the last five years the video games market has more than doubled in value, while music sales have stagnated.

The good news for game makers in the report was balanced by grim tidings for high street retailers.

"The music and video market is not just suffering from a slowing of growth but a massive transfer of spend to online," says Malcolm Pinkerton of Verdict Research.

It is online sales of CDs and DVDs that have grown rapidly, rather than digital downloads, which still only account for around 4% of music and video sales.

In contrast, video games spending has enjoyed explosive growth, with the launch of major new titles such as Grand Theft Auto IV and FIFA 08, and the Nintendo Wii continuing to broaden the appeal of games.

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But retailers warn that the Verdict report may not provide a completely accurate picture.

"There is no doubt that the games sector is having a fantastic year," says Steve Redmond of the Entertainment Retailers Association (ERA), "but these figures overstate that by including games hardware."

The ERA's most recent figures for 2007 show sales of games software at £1.7bn, compared to £1.4bn in music sales and £2.2bn for video revenues.

"Our prediction is that games will overtake video by the end of this year," says Mr Redmond, "but not music and video combined."

High street music retailers are diversifying as sales of CDs continue to fall.

Malcolm Pinkerton of Verdict says firms such as HMV and Zavvi are changing store layouts: "They're cutting back on space in music and re-allocating it to more lucrative areas such as MP3 players, books, clothing and video games."