Home entertainment market slumps in face of free rivals

Consumers are spending 21 per cent less on video games, films and music than they were in 2008.

They now spend an estimated £6.1bn a year, compared with £7.7bn in 2008, says the report by Verdict Research.

It says consumers were being lured away from paying for products by free access to streaming services. The raft of free apps available to download for phones and laptops has reduced the value consumers attach to owning home entertainment products.

The economic downturn has exacerbated this trend, as consumers look for free alternatives to traditional home entertainment. It comes as Sony reported a 27 billion yen (£216m) loss for the latest quarter and predicted it would stay in the red for the fourth year running.

The company now projects a 90 billion yen (£719m) loss for the year to March 2012, rather than the 60 billion yen (£479m) profit it had predicted.

It blamed the results on poor sales of TVs, as well as production disruptions. It will cut back its manufacturing operation, making 20 million fewer TVs a year.

The global home entertainment market is forecast to fall by 28 per cent from £66.5bn in 2008 to £47.9bn by 2015, says the report. Fewer DVDs and CDs will be sold. They also blamed internet piracy for falling revenues.

Carly Syme, retail analyst at Verdict Research, said: “Society’s views on piracy remain fairly relaxed and people will talk openly about downloading or streaming products without any worries of it being against the law.”

But the analysts said there was an opportunity for growth if firms could tap into digital demand.

Ms Syme added: “There is potential for the (UK) market value to recover to £6.6bn by 2015 if new technology in video games can be effectively monetised and the digital market becomes more mainstream.

“It is expected that 21.4 per cent of UK entertainment sales will occur digitally in 2011 as a result of growing broadband penetration, faster connection speeds, increased use of mobile internet and greater online connectivity of devices such as TVs, tablets and games consoles.”