Games software overtook video for the first time last year to become the UK’s biggest entertainment category, according to the Entertainment Retailers Association.

However, in the beginning of 2012, sales of video on physical formats, including DVD, have been twice that of games.

The flip comes as specialist retailer Game filed its intention to appoint an administrator yesterday. The retailer has 670 stores.

The surge in videogame sales last year was driven by digital downloads and app sales. UK games sales were £1.9bn last year, and it now makes up 40% of the entertainment market. Digital sales accounted for £504m of the total games market, up from £333m last year according to the Official Charts Company, GfK Chart-Track and IHS Screen Digest.

Digital and physical product bought online or via mobile now accounts for 32% of the video market and 45% of games. The surge in this area has put pressure on high street entertainment retailers.  

The overall entertainment market, including games, video and music dipped 3.3% last year.

ERA director general Kim Bayley said: “This is a dramatic time for the entertainment market. It is an historic development for the games sector to have overtaken video last year. Video has long been the biggest entertainment sector. Sales so far this year, however, suggest video is not going down without a fight.”

Virtually all physical entertainment formats registered falls in sales, apart from vinyl albums, Blu ray and games for the Xbox 360.

Bayley said: “Online and mobile are doing very well, and this reflects the huge investment, much of it by retailers, in producing new products and services. Physical formats still account for the vast majority of entertainment sales – 80% of albums are still sold on CD – but lack of investment and innovation in physical product means it is increasingly under pressure.”

In music, physical stores account for less than half of sales last year.