Despite declines in the physical space, the number of games sold in the UK increased year-on-year, says the Entertainment Retailers Association.
Sales of boxed games were down significantly from £927.7m in 2015 to £776m in 2016 (ERA quoting GfK numbers - also note, there were 53 sales weeks in 2015 vs 52 in 2016). However, digital sales rose over 12% from £1.95bn to £2.2bn (IHS estimates). Assuming IHS figures are accurate, that means the overall games software market rose by nearly 3% to £2.96bn.
ERA says digital now accounts for 74% of the UK games software business.
The digital figure is just an estimate as publishers, developers and digital retailers have yet to reach an agreement on sharing download numbers and revenue.
Assuming the data is accurate, the UK games market was the most successful entertainment industry. Video (any TV or movie content sold, streamed or downloaded) generated £2.25bn, whereas music (downloaded, streamed or bought on CD) generated £1.1bn. Both markets also grew in 2016 due to the sharp rise in usage of Netflix, Sky, Amazon Prime, Apple TV, Spotify, Apple Music, Deezer and other digital and streaming services.
The most successful UK game of the year was FIFA 17, which has sold 2.5m copies since its launch (almost exactly the same as its predecessor). It just narrowly outsold the biggest video of the year, with Star Wars: The Force Awakens reaching 2.3m sales.
The most successful album was Now That's What I Call Music 95 with 908,500 unit sales.
It wasn't all bad news for the physical market. Boxed handheld games grew in 2016 (due to Pokemon Sun and Moon) and vinyl sales increased by 56.4%. Physical entertainment items (CDs, DVDs and games) generated a still sizeable £2.2bn in 2016 in the UK, which is a decline of 15% compared with 2015.