New figures also reveal Skyfall as the biggest-selling DVD in the UK in 2013.
Scroll down for top DVD sellers
Spending on digital video entertainment rose by 40.2% in the UK in 2013, helping boost consumer expenditure on video entertainment from £2.245bn to £2.256bn, according to the British Video Association.
The figures also reveal a 10% rise in Blu-ray Disc purchases.
This year-on-year increase in the value of the video market of 0.5% effectively maintains the overall market value as consumers shift their viewing habits.
Physical formats remain dominant, with more than 162.2m units sold this year, despite the reduced number of video retailers on the high street.
Discs represented 73% of the total video retail and rental sectors by value last year.
Skyfall, the latest James Bond film, was the year’s biggest-selling video, having shifted 2.96m units since its release in February.
The first instalment of the Hobbit franchise, An Unexpected Journey, was the second biggest seller, having sold 2.06 units since its release in April.
Consumer research shows that shops account for 88% of impulse purchases, while people mainly use the internet for planned purchases such as gifts.
Retail sales amounted to £1.438bn, down 6.8% on 2012. DVD volume sales fell by 11.5% as video audiences changed their mix of format use, including a 12.4% increase in Blu-ray Disc unit sales, as well as growing digital ownership.
The physical store-based rental market has seen gradual decline over the last 10 years, as audiences have moved to buying, thanks to falling average prices over the last decade, and to more convenient rental by post.
The rise in revenue from digital video entertainment reflects the growing number of people who are using connected devices and the increasing ease of access to video services in and out of the home, driven by the strong demand for the smaller tablets and large smart TVs.
Current estimates suggest that more than 10 million tablets have been sold this year alone in the UK, alongside 1.8 million smart TVs, as new models are launched and the prices of digital technology continue to fall.
2013’s total Top 10 best sellers by volume (DVD and Blu-ray combined) were:
- The Hobbit – An Unexpected Journey
- Les Misérables
- Despicable Me 2
- The Twilight Saga – Breaking Dawn Part 2
- Monsters University
- Star Trek - Into Darkness
- Django Unchained
- Life Of Pi
- Man Of Steel