Online sales of downloaded films, music and games added up to more than £1 billion in 2012; the highest annual sum in history.
Digital sales were up by 11.4% when compared to the previous year, and digital sales now account for a quarter of the entertainment market. In contrast, physical sales are expected to be much lower, spelling more bad news for high street shops.
Sales of CDs, DVDs and Blu-Rays and video games fell by 17.6% last year, though they still account for most of the market.
Director General of the Entertainment Retailers Association (ERA), Kim Bayley, lauded the achievements of online retailers. She said: "This reflects their huge investment in new and innovative services - which means you can buy music, video and games literally at any time of the day and wherever you are."
Ms Bayley continued by noting that traditional sales would prove resilient, in her opinion. After all, digital sales might now account for a quarter of business, but that still means that the overwhelming majority of purchases were made on disc. She said: "Downloads offer convenience and portability, but people still seem to value the quality and tangibility of a physical product."
Of the record breaking total in digital sales, more than half was spent on videogames. A whopping £552m was spent on videogames in 2012. Film and music enjoyed a smaller share, but a much more significant growth nonetheless as more consumers accepted the download as a viable option. Downloaded films increased by 20% in 2012, and music by 15%. While still the biggest seller, digital videogames sales only actually increased by 8%.
Also dampening the games world’s digital success was a poor showing in physical retail. Sales of video games in stores had been particularly badly hit in the past year. Many in the industry blamed a lack of compelling new titles for customers to choose from.