News : Video games to become UK's top entertainment form

LONDON (Reuters) - Video games are expected to outsell music and other video products this year for the first time, making them Britain's number one form of entertainment, research by retail experts said on Wednesday.

Verdict Research, which publishes studies on the retail industry, predicted that the video games market would grow by 1.37 billion pounds or 42 percent in 2008, outstripping music and video sales which were expected to stagnate.

That would value the games market at 4.64 billion pounds compared to the 4.46 billion pounds spent on music and videos.

"The music and video market is not just suffering from a slowing of growth but a massive transfer of spend to online," said the report's author Malcolm Pinkerton.

"So in actual fact, the sales via high street shops are being hit a lot harder than the overall growth figures would suggest."

The report said that while the music sector had been boosted by increasing digital download sales, it was suffering from piracy, price deflation, intense competition and a decline in physical CD sales.

Pinkerton said music stores were now diversifying their products to allocate more space to MP3 players, books and games.

Meanwhile innovative new technology, such as that offered by the Nintendo Wii, had helped boost the games market and make it more popular with a mainstream market, the report said.

That should also help games remain popular during the current economic downturn.

"Games represent a relatively cheap, but also exciting and innovative pastime," said Matthew Piner, author of the Video Games and Consoles Retailing report.

"As more people save money by staying in, a video game, although it may cost three of four times as much as a DVD or CD, offers much more longevity and hence better value for money."

The Entertainment Retailers Association said while the games sector had enjoyed an incredible year, the report's figures were slightly misleading as they included hardware and console sales.

"So to compare like with like, you'd have to add in DVD players and CD players," said ERA spokesman Steve Redmond.

He said music sales had been having a tough time and were going through a transition but that the appetite for music was as strong as ever.

"With the availability of downloads, people can cherry-pick from albums and maybe they are only buying one or two tracks," he said.

"From the perspective of entertainment retailers, they win whatever happens because they all sell music, video and games."

(Reporting by Michael Holden; Editing by Steve Addison)