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In contrast, DVDs and other video formats totalled £1.80bn in sales and music paled in comparison at £1.07bn.
Kim Bailey, director general of the ERA, 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."
The games industry has had a rough ride so far in 2012, with high-street retailer Game facing administration and major suppliers refusing to extend credit.
ERA said that video had outsold games by two-to-one during the first 11 weeks of 2012.
Games sales accounted for 40.2 per cent of the UK entertainment market in 2011, compared to 37.6 per cent for video and 22.2 per cent for music.