According to the country’s Entertainment Retailers Association, digital sales reached £1.033 billion, making up more than a quarter of the cross-format total – five percent more than a year ago.

But the association’s headline announcement of digital growth masks what is, in fact, a worrying pattern. Across the formats, UK entertainment retailers shed 12 percent in sales last year, as revenue from music, video and games each dipped.

That means the industry is caught in the classic industry conundrum of swapping analogue dollars for digital pennies.

The ERA reckons (via release):

“Contributory factors included the decision by many music, video and games suppliers not to release key titles during the summer in order to avoid the Olympics, the fact the videogames business is in the lowest point of its format cycle and what is regarded by many as a lacklustre year for releases.”

ERA director Kim Bayley rationale (via release) calls for better content to help troubled retailers like HMV:

“The dearth of attractive releases during summer 2012 was clearly a significant factor. Suppliers need to do more to rebalance their release schedules and improve the quality of their releases. No retailer can afford to pay overheads on a store for 52 weeks of the year if all the key releases are going to be concentrated in the last quarter. And entrepreneurs will think twice about investing in new digital services if releases fail to excite the public. Luckily the message appears to be getting through and we look forward to being able to offer the public a much better release slate in 2013.”

Although gaming is the most lucrative UK digital entertainment sales segment, it grew by half the pace of music and video, which, spurred by new on-demand services, overtook games to become the highest-value segment across digital and physical.

The ERA end-of-year data, comprising Official Charts Company music sales and IHS Screen Digest estimates for video and games, do not include sales of unlimited-access streaming entertainment subscriptions like those offered by Spotify and Netflix.

Separately, the British Phonographic Industry (BPI) said UK singles sales continued to break records in 2012 thanks to digital downloads, which grew by six percent (by volume but not by revenue) to 188.6 million during the year.

“The final week of 2012 proved to be the year’s record week for digital sales as consumers redeemed their Christmas music vouchers and downloaded more than 1.3m albums and 5.6m singles,” said BPI CEO Geoff Taylor (via release)…

Ebook spike

In ebooks, one publisher, Hachette UK, saw 86 percent more global ebooks sales this Christmas Day and Boxing Day than in 2011.

The publisher’s digital head George Walkley tells The Bookseller higher ereader and tablet sales, price promotion and greater digital availability lifted the market, including the long tail: “This is not just a frontlist phenomenon as over 6,500 of our titles saw digital sales in the last two days.”

The growth coincides with new Pew Internet data showing the proportion of Americans who read ebooks to increased 23 percent in 2012, from 16 percent a year ago.

Some independent authors using Kindle Direct Publishing reported far more modest upticks to their already small-scale sales. Their titles are relatively unknown and don’t benefit from bigger-hitting marketing campaigns of the kind that catch new ereader owners’ attention.

Publishers had awaited Christmas with different expectations. Random House COO Madeleine McIntosh told The New York Times: “In the first years (of ebooks), people were getting just e-readers. This year they will be getting multi-functional tablets. You can put a lot of other media besides ebooks on these, and that may somewhat diminish the ultimate focus on ebooks.”

iOS wins?

When it comes to those multi-function devices, Apple’s appear to have won this season. A cursory examination of first tweets sent on Christmas Eve showed the iPad with a 7x greater prevalence than the nearest rival, Amazon’s Kindle Fire…

Game spike

What were people using their new devices for? Some apps have seen Christmas uplifts, too. Temple Run, a game that was previously ranked No. 20 on App Store, leaped to lead the store’s free and top-grossing charts, BGR reports.

Mobile data outfit Flurry reports a threefold hike in numbers of new tablets and smartphones activated on Christmas Day, which this year also smashed previous seasonal activation records.

App downloads grew by more than double compared with previous Christmases, Flurry found.

Now there is also a gloomy outlook for portable audio players, with consumer retail research outfit Mintel (via Telegraph) seeing MP3 players shedding 22 percent in 2012 UK sales revenue.

The common thread — consumers are now replacing these dedicated single-function devices with multi-function smartphones or tablets at an accelerating rate.

What once was, itself, a mono-functional device for making calls has become a Swiss Army knife for communication, entertainment and more. In fact, as Telegraph Media Group executive editor Edward Roussel comments:

Mobile phones: The term is anachronistic. They are the "remote controls" of our lives. on.wsj.com/Vr2JfT via @WSJ—
  (@edwardroussel) December 27, 2012

Mintel forecasts MP3 player sales halving again to £177 million by 2017. But it also sees a “worst-case” scenario of their revenue diminishing to just £25 million — that is £356 million less than Mintel’s 2012 sales estimate.

If it’s any consolation, this pace of decline — at least, for now — is less than that predicted by IHS iSuppli for ereaders.

A quarter of consumers polled by Mintel said they will buy a smartphone instead of a portable media player in future.

Ofcom’s recent annual International Communications Market Research report shows how smartphones are the handheld devices most commonly used to access the internet…

This year, we saw the emergence of a mobile-first digital ecosystem, with many services beginning to report greater consumption on mobile than desktop devices. But Ofcom’s data shows computers are still the device on which people most frequently use the internet…

We have recognized that fact for some years now — but France’s lead is getting greater and greater. Now over a quarter of French homes’ primary TV sets receives an IPTV service, according to IDATE and other data crunched by U.K. communications regulator Ofcom’s International Communications Market Report 2012.

That compares with a measly five percent in the U.S. and below one percent in the U.K.

Why is France forging ahead? The relative slow adoption elsewhere is “due in part to the challenges of gaining a foothold in the face of a range of well-established competing digital platforms,” Ofcom said.

That is, many countries beside France already have strong broadcasting ecosystems with major pay-TV operators offering a multitude of content. In France, pay-TV only began over digital networks, which support wider choice, in 2005. But most French ADSL providers offer digital TV through internet-enabled set-top boxes.

Non-Francophones should not fret, however. The French may have more IPTV-enabled main sets — but that doesn’t mean they use internet video more than the rest of us.

According to Ofcom research, only 13 percent of French consumers use the internet to watch TV on a weekly basis. That’s less than 17 percent in the U.S. and almost half as many as do so in the world-beating U.K.

Says Ofcom: “This is probably driven by the popularity in the U.K. of internet TV catch-up services from the free-to-air broadcasters, such as BBC iPlayer, 4oD and ITV Player.”

The gap between France’s leading IPTV penetration and the U.K.’s leading internet TV viewing habit is explained by the relative higher attractiveness of actual internet broadcast content, and because many British viewers are using the web, not TV, to watch internet TV.

As adoption of internet-connected TVs grows, much of that consumption is likely to move from the desktop to the big screen. But whether actual French consumption of internet video grows in lock-step remains to be seen…

On Monday, the company announced a new metric called the “Nielsen Twitter TV ratings” that measures the social media activity of a TV show audience. The system is based on SocialGuide, a technology acquired by Nielsen that tracks Twitter activity for more than 36,000 programs and purports to identify how many tweet are associated with a given show. It will complement Nielsen’s existing ratings, which are derived from devices installed in the TV sets of a small number of “representative” households.

The new system is an acknowledgement of how the “second screen” has become a permanent feature of TV watching as Americans use smartphones, tablets and laptops to talk about a show as they’re watching it.

Nielsen’s release is short on details about how the system actually works. It refers to a “sophisticated classification process” but doesn’t explain how it will account for different age groups and audiences — does it, for instance, acknowledge that a show may be wildly popular among seniors but still gain few tweets? It seems likely that, despite a claim to measure the “number of unique tweets associated with a given program,” there will still be some hocus-pocus involved.

The system is slated to be commercially available at the start of the fall 2013 TV season.

In fact, more connected Italians already say they get their national news from online ahead of TV, says UK communications regulator Ofcom’s just-published International Communications Market Report..

The internet also now leads for international news consumption in both Italy and Japan. But, for some, it is local news at which the internet seemingly excels — that is how most internet users in Germany, Italy and Spain get their local info.

It is when you break down “news” in to sub-categories that you see how far the internet has come as a news medium, becoming the main source of sports news and celeb gossip in several countries…

Although the consumer research polled internet users rather than populations in general, in many of the countries the connected population is nearing high enough to represent the same thing.

In the US, a Pew nationwide phone poll revealed the same emerging pattern of the internet closing the gap on TV for national news consumption.

But that is indeed the case, according to annual research conducted for UK communications regulator Ofcom…

Although at least half of those polled in eight other countries said they never pay for content, that was just 16 percent in China, where more than half of internet users sometimes or regularly do so.

These are much desired numbers for online operators who find it hard to get consumers to cough up. So what’s going on here?

Back in the summer I questioned a different research exercise for finding unexpectedly high numbers of people who planned to watch the Olympics online. The finding did not tally with what we know about internet adoption that, whilst booming among urbanites, is growing more slowly elsewhere.

Like that research, Ofcom’s naturally skews toward young, urban and more affluent consumers — as opposed to the much poorer citizens in more rural areas — because this is where China still sits on its internet adoption curve.

In the same way, note how — surprisingly — a far higher percentage of people in China than elsewhere (around three quarters) say the internet is their main source of national news… Whilst internet adoption has reached mass-participation levels in many western countries, it simply isn’t true to say that three quarters of Chinese are online…

That is not necessarily a bad thing, depending on who you are — this early adopter herd is at least a ring-fenced segment of attractive demographics for any internet services looking for customers.

Amongst the most successful so far is Tencent, the diversified giant that ranks #9 on our paidContent 50 list of the world’s highest revenue-earning digital content companies and which this summer told us over 30 million of its then 752 million members were paying 10RMB  ($1.60) per month.

In time, as China’s internet demographic begins to more closely resemble its nation’s — by way of low-cost handsets, for example — I would expect this curiously high proclivity to pay to wane. And content operators may be forced to accept lower fees than they do in other parts of the world.

The Oliver & Ohlbaum media strategy agency shows how 10.3 percent of surveyed pay TV subscribers in the UK plan to change their service over the next year…

That is twice as many people who said they would change in 2013 — and also more than the proportion of people who actually did so.

Where will they go? Whilst it might be tempting to look for evidence of widespread “cord cutting”, that is not what we see here…

Instead, most of those who plan to change say they will simply remove paid channels from their existing package. Channel additions by consumers look set to shrink markedly next year. And the numbers who plan to switch down to Freeview terrestrial TV are rising.

In all, this likely points to a consumer response to worsening economic times, with disposable income relative to many consumer goods shrinking, rather than the effect of new internet TV services.

The proportion of consumers who plan to switch from pay TV to on-demand services is up from last year, but only by one percent.

A minority, 16 percent, of those surveyed said they were likely to buy a box for YouView — the UK hybrid terrestrial and internet TV joint venture — in the next year.

But don’t rule out internet TV growth. Amongst those who do subscribe to internet video services, behaviour change is profound. Forty-five percent of Netflix UK and Lovefilm Instant subscribers say they have reduced their pay-TV subscriptions, though many of them are actually watching more linear TV…

Oliver & Ohlbaum’s survey found 33 percent of households already have a connected TV device other than that from a pay TV provider. Samsung’s models top the list of connected TV models that most frequently are actually connected.

Launched this morning, comScore’s “Media Metrix Multi-platform” shakes up the existing rankings in some dramatic ways. Music site Pandora, for instance, jumps from #61 on the list to #23 while ESPN jumped four slots to #19. The sports site’s jump comes thanks to the inclusion of the 35 percent of people who consume ESPN only on mobile, not desktop, devices. Other big winners included Amazon, Wal-Mart and e-Bay; the three companies all had an incremental mobile audience of more than 20 percent. Here’s a look at some of the US numbers:

The new metrics, which are based on a mix of internet tagging and census methods, also reveal that the number of so-called “unique visitors” to websites are much higher when mobile figures are included. For instance, comScore says that more than 10 websites have more than 100 million visitors when mobile stats are included (compared to only six such sites if only desktop figures are used).

comScore says its new analytics system also suggests other important lessons in how publishers and advertisers measure a website’s success. In particular, the company recommends valuing “engagement” (time spent on a site) over page views. Under the engagement method, comScore says Facebook ranked first in the mobile category.

comScore’s new metrics system is still in beta but, given that mobile consumption is an irreversible phenomenon, it seems inevitable that publishers and advertisers will have to get accustomed to the new measurements. The growing predominance of mobile also poses challenge to publishers and advertisers who are still struggling out how to extract money from smaller screens.

While comScore has offered mobile measurement tools in the past, the significance of the new product is that provides an unduplicated tally across all platforms. More details are available here at comScore’s release.

(Image by iko via Shutterstock)

So how are advertisers taking advantage of the trend publishers have noticed? Nearly 12 months ago, Google’s AdMob launched a range of swipeable new ad formats for websites on tablets, including galleries and instant video.

Since then, the noise has gone fairly quiet, and I haven’t exactly noticed an overwhelming volume of new native tablet ads. But now, Google is letting out some data on one of the new formats’ first clients. A swipeable gallery ad campaign run by air carrier Finnair in six European countries found…

• More interaction: Finnair’s campaign was interacted with in five percent of all impressions. That is far higher than conventional web display campaigns. Turns out, it is more than twice the 2.37 percent interaction rate seen by Google’s DoubleClick ad network before iPad arrived in early 2010.
• More clicks: What about actual clicks through to an advertiser site? Again, the tablet-native formats have seen better results. Of the five percent of users who interacted with Finnair’s ad, 60 percent clicked to take part in a competition, while 12 percent clicked through to Finnair’s website, Google says.

Bear in mind that Finnair’s campaign, which Google is relaying this week in a published case study, is likely one of the most successful it has seen since launching the new formats in December 2011. I would like to see a lot more evidence than just this.

But even more muted success than Finnair’s would likely point to increased effectiveness over conventional web display at a time when web display advertising is being questioned.  “The banner is about to die and is already cratering,” BuzzFeed founder Jonah Peretti said during an industry conference earlier this month.

There is nuance here, however. While a higher proportion of users clicked to enter a competition within the ad, far fewer actually made it through to Finnair’s website, suggesting that much of the interactive energy for fancy tablet ads may best be served in the ad unit itself. Alternatively, it may be that few users were ever likely to respond on the spot to Finnair’s “Book flights now” call-to-action button.

Google put no numbers on actual purchase conversion from the ad and Finnair says the campaign’s main goal was awareness raising.