The value of the gaming market has risen to more than double what it was worth in 2007.
The video games sector is now worth £3.864bn, meaning that it is a larger market than video and music combined.
The Entertainment Retailers Association (ERA) said three games each sold more than one million physical units in the UK last year.
These were Fifa 19, Red Dead Redemption 2 and Call Of Duty: Black Ops 4.
Physical unit sales fell by 2.8% in 2018 but the industry still accounts for 51.3% of the total entertainment market, the ERA said.
The figures did not include digital game sales or mobile and free games that are downloaded and played, the most popular being Fortnite, which has 200 million players around the world.
Overall the entertainment market grew to £7.537bn, boosted by growth in streaming services such as Spotify and Netflix.
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ERA chief executive Kim Bayley said: "The games industry has been incredibly effective in taking advantage of the potential of digital technology to offer new and compelling forms of entertainment.
"Despite being the youngest of our three sectors, it is now by far the biggest."
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