The physical entertainment market for music, videos and gaming suffered a brutal hit over the crucial Christmas period, dealing a sharp blow to retailers like GAME, according to data out Monday.

Figures on the physical entertainment market from Kantar Worldpanel show that the sales of music, video and gaming in the three months to 18 December slipped 7.8 per cent. Music and video sales both witnessed double digit declines, with sales falling by 11 per cent and 12 per cent respectively, while gaming was down by 2.7 per cent.

“The increasing popularity of digital entertainment products is making it ever more difficult for retailers to maintain the relevance and excitement of giving physical entertainment products as gifts, and it’s not been an easy Christmas as a result,” said Fiona Keenan, a director at Kantar.

She said that over one million fewer shoppers purchased physical music or video as gifts in the quarter, equating to around £31M lost.

According to Kantar, this Christmas was the first in five years not to feature an artist album in the top 10 most popular gifts.

The shift away from physical and toward digital is particularly proving a headache for retailers like GAME.

The Basingstoke-headquartered specialist retailer suffered the biggest loss in market share of any major retailer in the three-month period, according to Kantar.

While it continues to lead in games, it now only holds 27.4 per cent of the market – down from 32.3 per cent and the lowest it’s been since 2014.

Argos, by contrast, saw the biggest gains in market share for the 12-week period, rising by 2.8 percentage points to 9.9 per cent. Kantar said Argos took over a quarter of gift sales in November and December helping this figure to a five-year high.