Brits spent £4.8bn on video, music and games last year - but almost a fifth of those products had never seen the inside of a store or warehouse.
Sales of non-physical digital media have grown 17.3% year-on-year, according to the latest data from the Entertainment Retailers Association (ERA), with virtually all physical formats except BluRay video and Xbox 360 games in decline.
Supermarkets are expected to ramp up their non-physical offer as digital content becomes more important to the entertainment industry.
The greatest activity is set to come in the video market where just 5.4% of sales come from digital media, behind music at 31.2% and games at 26.2%. US video-on-demand giant Netflix entered the UK in January - joining established players such as Lovefilm and iTunes.
Physical video media will not disappear, according to ERA. “There is still a strong demand for physical products in impulse and gifting - and I don’t see that changing,” said director general Kim Bayley. “Supermarkets are good at retailing DVDs and I don’t see that dropping off a cliff anytime soon.”
However, retailers and publishers are looking to ensure video discs remain relevant by merging the physical and digital offer.
Since December, Tesco Clubcard users who purchase selected DVD or BluRay titles have been given free access to a digital version. This can be viewed on devices via the Blinkbox platform itacquired last year.
Tesco - and Asda owner Walmart - are part of a coalition of film studios, electronics manufacturers and retailers that have developed the Ultraviolet standard for digital content that enables consumers to view video on a range of devices and access it from a single account regardless of who produced or sold it.
Sainsbury’s is also looking at digital content and last October acquired ecommerce and digital media platform Global Media Vault.
It was likely some form of digital content delivery would be released by both Sainsbury’s and Asda before the end of the year, said Bayley.