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Annual digital sales of music, games and films have passed the £1 billion mark for the first time and now make up almost a quarter of the entertainment market.
The value of downloads to home computers, tablets and smartphones rose 11.4% to £1.033 billion in 2012, according to the Entertainment Retailers Association (ERA).
By contrast, physical sales of CDs, DVDs and computer games are in sharp decline, down 17.6% on 2011, although they still dominate more than three quarters of the market.
This is due to the majority being purchased from web retailers, such as Amazon and Play or the major supermarkets. The trend has led to the demise of thousands of specialist shops, including Game, and threatens the future of HMV, the last national high street chain.
Kim Bayley, director general of the Entertainment Retailers Association (ERA), which will release the figures, said that breaking the £1 billion barrier was an "incredible achievement" for retailers.
The biggest digital revenue driver last year was video games, which garnered more than half of the digital market with £552 million in total sales.
Digital sales of music were up 15.1% in twelve months, to £383 million, while movie sales rose 20.3% to £98 million.
In its quest for new revenue models, the music industry's move to offering its artists' material on streaming services - such as Spotify - has been a popular one, with 3.7 billion streams by British fans in 2012.
But revenue from these services is miniscule when compared to actual sales, leaving the entertainment industry looking over its shoulder - more so in 2013 than ever before.
For more information on the entertainment market, see the latest research: Entertainment Market
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