Video game industry retail revenue tripled in growth in 2007 while at the same time consumer spending on music fell 10 percent and DVD revenues also flattened, according to The NPD Group (News - Alert).

 

A sharp increase in legal digital download revenues could not offset declines in CD sales, which resulted in a net 10 percent decline in music spending, from $44 to $40 per capita among Internet users, NPD researchers say.

 

As a result, the overall portion of music that consumers actually paid for fell to 42 percent in 2007 from 48 percent in 2006.

 

NPD estimates that one million consumers dropped out of the CD buyer market in 2007, a flight led by younger consumers. In fact, 48 percent of U.S. teens did not purchase a single CD in 2007, compared to 38 percent in 2006.

 

It is worth noting that several trends likely are at work. Once upon a time teenagers routinely bought singles, a state of affairs that is analogous to today's habit of buying individual songs. But when the music business shifted to the "album" format, singles buying shrunk. Some of that same process now is happening in reverse. People prefer buying only the songs they most like.

 

The percent of the Internet population in the U.S. who engaged in peer-to-peer (P2P) file sharing reached a plateau of 19 percent last year; however the number of files each user downloaded increased, and P2P music sharing continued to grow aggressively among teens, NPD says.

 

Legal music downloads now account for 10 percent of the music acquired in the U.S. market, and Apple’s (News - Alert) iTunes Music Store became the second-largest music retailer in the U.S. after Wal-Mart, based on the amount of music sold during 2007 (based on a 12-track CD equivalency for music track downloads).

 

Twenty-nine million consumers acquired digital music legally, via pay-to-download sites last year, which is an increase of five million over the previous year.

 

But note: sales growth was largely driven by consumers age 36 to 50, a segment that was aggressively acquiring digital music players in 2007.

 

Retail sales of video games, on the other hand, rose by 41 percent among teens last year, just as sales of CDs to this age group dropped 45 percent.

 

In fact, music sales have continued to decline in all age groups, but especially among teens. Among the top reasons teens cited for buying fewer CDs in 2007, than the year before, was the appeal of video games. They are, in other words, substituting one entertainment medium for another.

 

Users already are multitasking. And though money is an issue, time is getting to be a bigger issue. Busy lives don't leave lots of discretionary time. That seems to be as true of children, teenagers and working adults these days.

 

Ultimately, that's an opportunity for mobile applications and services that can cram a few minutes of consumption into otherwise interstitial time that isn't today an especially hospitable environment for any sort of media entertainment.