The UK games market was worth a record £7.16 billion in 2021, according to trade body UKIE.
On Thursday it published its UK Consumer Games Market Valuation 2021 report, which was compiled using data from market research companies including ABC, the BFI, GfK, Kantar, OCC, Omdia, Nielsen and NPD.
It found that last year, the UK games market grew 1.9% from the previous record of £7 billion, which was set in 2020 when many people flocked to gaming during Covid 19 lockdowns.
Growth was led by hardware sales, which were up 17.4% in 2021 to £2.66 billion.
The growth in hardware sales offset a decline in software revenues, which were down 6.32% in 2021 to £4.28 billion.
Digital console game sales declined 5.59% to £1.65 billion and digital PC game sales fell 7% to £620 million, according to the report.
UKIE attributed the declines to a relatively limited number of major releases in 2021, when a number of high-profile games were delayed. These included God of War Ragnarök, Gran Turismo 7, Horizon Forbidden West, Hogwarts Legacy, Gotham Knights, Dying Light 2, and the PS5 and Xbox Series X/S versions of Grand Theft Auto V.
Mobile game sales were flat year-on-year at £1.46 billion, while physical sales of new and pre-owned games both fell by just under 21%, to £511 million and £33.8 million respectively.
Despite the overall decline in software sales, 2021 still marked only the second time annual software revenues have exceeded £4 billion. In comparison, the UK video market generated sales of £3.75 billion in 2021, while the music market generated almost £1.7 billion.
Revenue from video game licensed toys and merchandise increased 33.6% in 2021 to £159 million, with Pokémon products leading the way.
“The important story here is of how much of the lockdown-related boost seen in 2020 has been successfully retained during 2021’s year of correction,” said Steven Bailey, senior games analyst at research firm Omdia.
“We expect a return to growth for most digital areas in 2022, as game-makers continue creating new standards of compelling content, and explore combinations of business models that can help keep people engaged and connected even during unstable times.”