Tough Christmas for Physical Entertainment

UNDER EMBARGO UNTIL 00.01AM 23 JANUARY 2017 23 January 2017

Tough Christmas for physical entertainment

The latest data on the physical entertainment market from Kantar Worldpanel has revealed a tough fourth quarter with a decline of 7.8% across music, video and gaming in the 12 weeks to 18 December. Music and video both witnessed double digit declines, with sales falling by 11% and 12% respectively, while gaming was down by 2.7%.

Fiona Keenan, strategic insight director at Kantar Worldpanel, comments: “The music market needs platinum selling albums to sustain its performance. Albums like Adele’s 25 can be worth more than 10% of the market in one quarter alone and with no major albums this period, music sales have taken a hit. There’s already a lot of hype around Ed Sheeran’s upcoming album release in March so we can expect a clear boost to the market.”

Fall in gifting hurts the market Fiona Keenan continues: “The increasing popularity of digital entertainment products is making it ever more difficult for retailers to maintain the relevance and excitement of giving physical entertainment products as gifts, and it’s not been an easy Christmas as a result. Over one million fewer shoppers purchased physical music or video as gifts this quarter, equating to around £31 million lost. Gift cards for digital music and video aren’t popular enough to offset this as yet, so it’s vital that retailers think creatively about how to use their stores as a platform to promote online gifting.”

“This Christmas was the first in five years not to feature an artist album in the top 10 most popular gifts. FIFA 17 topped the present charts this year – two places higher than its predecessor FIFA 16, which only achieved third place in 2015. Games took three out of the top five spots with Call of Duty: Infinite Warfare and Battlefield 1 joining the ranks as animations dominated in video, led by Secret Life of Pets, Finding Dory and The BFG.”

Argos beats off competition Argos saw the biggest gains this Christmas, increasing its market share by 2.8 percentage points to 9.9%. In the main this was thanks to its 19.1% share of the games market – it took over a quarter of gift sales in November and December to push this figure higher than any point in the past five years.

Fiona Keenan comments: “Having its outlets in Sainsbury’s stores will allow Argos to appeal to a much broader range of consumers among all entertainment markets, particularly in gaming. At the moment the majority of its games sales are to under-35s, and only 6% of Argos and Sainsbury’s gaming consumers buy across both stores, so its growing concession presence should put it in a good position to increase share again this year.”

Zavvi was another strong performer this quarter, managing to increase its value sales despite the deep declines in the wider market. Its performance in video – where the average basket spend was over £10 higher than the market average of £14.54 – strengthened this position, and with a third of physical entertainment purchases now made online it can take advantage of increasing consumer demand for greater variety and convenience.

Among the supermarkets, which traditionally perform less well in entertainment over the festive period, Tesco and Asda fared best. In gaming, Tesco’s share of 14.3% was enough to move it ahead of Amazon – the first time it has led the online giant over Christmas since 2012, while Asda made gains in games and video following two years of declining fourth quarter share.

Fiona Keenan continues: “The increasing competition in gaming has had repercussions for GAME, which suffered the biggest market share decline of any major retailer this quarter. While it continues to lead in games, it now only holds 27.4% of the market – down from 32.3% and the lowest it’s been since 2014. March’s Nintendo Switch launch will be critical for GAME if it is to regain its losses but it will continue to face strong competition from Argos, currently the number one retailer for Nintendo games.”

Kantar Worldpanel Entertainment* Retailer Barometer - Spend Share %

12 w/e 20 12 w/e 18 Percentage point December 15 December 16 change Amazon 20.8 20.4 -0.4 Tesco 13.4 13.7 0.3 GAME 14.6 13.1 -1.5 HMV 13.2 12.5 -0.7 Argos 7.1 9.9 2.8 Asda 6.9 7.4 0.5 Sainsbury's 6.7 6.5 -0.2 Zavvi 1.7 2.5 0.8 Morrisons 2.5 2.5 0 Other 13.1 11.5 -1.6 * Includes physical sales of videos, games and music. Please note: Kantar Worldpanel entertainment barometer data has been reworked as of October 2016. This is part of an on-going process to ensure we maintain the best and most accurate read of the physical entertainment market. The change has had a slight impact on retailer shares but has not affected reported performance. The period-on-period growth trends of the outlets remain unaffected as historic data has been reworked for consistency. For reworked 12 w/e historical data please contact Camargue.

For further information, please contact:

Alyona Levitin / Roisin Briody Camargue +44 (0) 20 7636 7366 [email protected] / [email protected]

About Kantar Worldpanel’s Entertainment Retail Barometer

The Kantar Worldpanel Entertainment Retail Barometer is based on Kantar Worldpanel data for the 12 weeks to 18 December 2016. The barometer includes physical sales of videos, games and music. Vinyl sales are not included. Kantar Worldpanel Entertainment is the leading provider of continuous consumer panel research, measuring the film, music and game purchasing trends of 15,000 demographically representative individuals in Great Britain.

All data is based on the value of items being bought by these consumers. Kantar will only support data that is published in the context in which we have presented it and our own interpretation of these findings: other interpretations may not be accurate and we cannot be held responsible for them.

About Kantar Worldpanel

Kantar Worldpanel is the global expert in shoppers’ behaviour.

Through continuous monitoring, advanced analytics and tailored solutions, Kantar Worldpanel inspires successful decisions by brand owners, retailers, market analysts and government organisations globally.

With over 60 years’ experience, a team of 3,500, and services covering 60 countries directly or through partners, Kantar Worldpanel turns purchase behaviour into competitive advantage in markets as diverse as FMCG, impulse products, fashion, baby, telecommunications and entertainment, among many others.

For further information, please visit us at www.kantarworldpanel.com.

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About Kantar

Kantar is the data investment management arm of WPP and one of the world's largest insight, information and consultancy groups. By uniting the diverse talents of its 12 specialist companies, the group is the pre-eminent provider of compelling data and inspirational insights for the global business community. Its 30,000 employees work across 100 countries and across the whole spectrum of research and consultancy disciplines, enabling the group to offer clients business insights at every point of the consumer cycle. The group’s services are employed by over half of the Fortune Top 500 companies.

For further information, please visit us at www.kantar.com.

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