The latest report from Verdict Research has shown that there has been a huge shift in consumer attitude towards the entertainment market, with the video games sector surpassing both music and video to become the largest entertainment sector in the UK.
While video games spend is surging, the research points out that the music and video sectors have stagnated, with growth of just £0.03 billion between them.
Though the music and video sector has enjoyed a boost from the growing digital download market, general trading conditions remain challenging, says the UK Music & Video 2008 and UK Video Games & Consoles Retailing 2008 report.
Music is suffering from piracy, while the DVD market, having shown robust volume growth, has seen value growth impaired by falling prices and heavy discounting.
"The music and video market is not just suffering from a slowing growth, but a massive transfer spend to online," said Malcolm Pinkerton, senior retail analyst at Verdict Research and author of the Music & Video report. "So in actual fact, the sales via the High Street shops are being hit a lot harder than the overall growth figures would suggest."
Indeed, Verdict figures predict that by the end of 2008 in-store music and video sales will account for less than two thirds of the market.
Video games, by contrast, is proving to be a stand out performer in a sluggish retail environment.
"Whereas music and video has become somewhat stale, video games has enjoyed an array of technological innovation, which has widened the market demographic enormously and driven phenomenal growth," said Matthew Piner, author of the video games report.
"Games represent a relatively cheap, but also exciting and innovative, pastime. As more people save money by staying in, a video game, although it may cost three or four times as much as a DVD or CD, offers much more longevity and hence better value for money. Moreover, it offers a more involved and interactive form of escapist entertainment when compared to a CD or DVD."
The medium term prospects for the market are strong, with the current generation of consoles set to see a peak in hardware sales across late 2008/early 2009 and then enjoying strong software sales, driven by a widely installed console base, into the next decade.
The video games accessories market is also set to continue growing, with sales more than doubling in 2008 and now representing more than ten per cent of the video games sector value.