The ERA said that video enjoyed its first growth since 2008 thanks to the surge in digital video – which includes iTunes downloads as well as streaming services like Netflix, Lovefilm and Blinkbox.
Sales of physical formats, which still account for 70% of video sales, declined 6.8% to £1.44 billion. However, Blu-ray sales were up 10% to £251.8m.
The biggest-selling video of the year was James Bond film Skyfall, which sold 2.96m copies.
“Video has done well to maintain its physical presence while enjoying strong digital growth. The challenge for video companies in 2014 will be to establish attractive physical formats which offer digital copies which enable them to hang on to valuable store space,” said ERA director general Kim Bayley.
Combined, the ERA said that the UK music, video and games market was worth £5.4 billion in 2013, up 4% on 2012.
UK trade association the ERA represents the majority of retailers and digital services offering music, video and games.