The UK music, video and games markets generated record sales total of £9,716m, the trade body Entertainment Retailers Association (Era) reported.
Digital streams and sales continued to grow through 2021 with video up 13.3 per cent as more than half of UK households signed up to on-demand services including Netflix and Disney +.
Music revenues were up by 8.7 per cent, driven by the dominance of Spotify and Apple Music, boosted by blockbuster releases by Adele and Ed Sheeran.
A limited schedule of new films at cinemas during the pandemic made home viewing a popular option.
The delayed James Bond film No Time To Die was the biggest title of the year, with 1.148 million retail sales, of which 717,500 were physical units sold in two weeks.
That was the largest week one disc sales since 2017, and the biggest ever week one on 4K UHD. Along with the 450,000 CD, vinyl and cassette sales recorded by Adele’s 30 album within two months of release, 2021 demonstrated that there is still a market for physical entertainment products.
Cliff Richard’s The Great 80 Tour was the biggest selling music DVD title of the year, the British Association for Screen Entertainment said.
Video On Demand is growing in popularity with under 25’s however, with 27.4 million rentals in 2021 led by Wonder Woman 1984.
“Download and Keep” digital film records were broken at Christmas.
Nearly 90 pence in every pound spent on music, video and games is now online. Total digital revenues grew by 8.3 per cent in 2021 to £8.66bn, more than the entire entertainment market was worth just two years ago.
Only video games faltered with sales down by 3.3 per cent, although that was still nearly 14 per cent more than in 2019, the last full year before Covid-19 struck.
ERA chief executive Kim Bayley said: “The vast majority of the sector’s growth is being driven by digital services making entertainment more accessible and convenient than ever before. If we can repeat this success in 2022, the UK entertainment market will exceed £10bn for the first time.”