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Brick and mortar video game retailers may be obsolete by 2020

By Cal Jeffrey ยท 21 replies
Apr 20, 2017
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  1. Essential Facts About the Computer and Video Game Industry, an annual publication put out by the Entertainment Software Association (ESA), was released yesterday. The report is packed with information regarding just about every facet of the video game industry from demographics to sales growth.

    The crux of the release is that the gaming sector is still growing. Other than a slight stall from 2010 to 2011, video game sales have been on a steady rise. Consumer purchasing went from $17.5 billion in 2010 to $24.5 billion by mid-2016. That is about 71 percent growth in six years or just over a billion dollars per year increase. According to ESA reports from January of this year, 2016 finished at $30.4 billion in earned revenue.

    The video games industry was responsible for $11.7 billion of the U.S. GDP in 2016 and employed almost 66,000 workers (developers and publishers only). These figures are more than double that of 2010. Seven years ago, GDP contribution was $4.9 billion and employment was at 32,000 jobs.

    Not surprising was the fact that digital sales outpaced the sale of boxed video games. Digital sales have increased as steadily as overall sales. In fact, 2013 was the year that digital sales began to exceed disc sales. What is somewhat surprising is how far digital versions outpaced disc sales in 2016. Digital accounted for 74 percent of total sales that year.

    The steady decline in disc purchasing seems to indicate game publishers are already beginning to phase physical sales out. Sony and Microsoft have seen great growth in their online stores and bypassing the middleman means more revenue for them. It reduces production costs, and puts 100 percent of the sales into their pockets rather than splitting it with the retailers. From a business standpoint, the reasoning is sound. If the trend continues, disc sales will be eliminated by the end of 2020.

    Brick and mortar games retailers had better start thinking of a new strategy if they want to stay in business. Even still, it might just be too late for them. EB Game may survive since they have been selling toys and games other than video games for quite some time. However, shops like GameStop, which deal almost exclusively in disc games and consoles, may go the way of Blockbuster and other video rental businesses.

    Graphs by ESA

    Permalink to story.

     
  2. GreenNova343

    GreenNova343 TS Enthusiast Posts: 75   +27

    Hmmm, swear I've heard this song before...not sure it was correct before either...
     
    Reehahs and Cal Jeffrey like this.
  3. Cycloid Torus

    Cycloid Torus TS Evangelist Posts: 2,231   +422

    I imagine all other types of media is similar - music, videos, etc.
     
    GreenNova343 and Cal Jeffrey like this.
  4. Adi6293

    Adi6293 TS Rookie Posts: 22   +7

    As much as I don't mind buying on Steam I also own both consoles and I cant imagine not being able to buy the disk for that, I like to collect the games and have them on "display" :p
     
    GreenNova343 and Cal Jeffrey like this.
  5. Win7Dev

    Win7Dev TS Evangelist Posts: 688   +302

    Why would I go to a store to buy something I can download?
     
    ScubaRhys and Cal Jeffrey like this.
  6. Evernessince

    Evernessince TS Evangelist Posts: 1,583   +854

    Because your ISP has a tight data cap and only when you buy from their online store do you get full speed downloads that don't count against your cap.
     
  7. Skidmarksdeluxe

    Skidmarksdeluxe TS Evangelist Posts: 7,429   +2,579

    In 1st world countries where fast, cheap, uncapped data is plentiful, it makes all the sense in the world to download games digitally but in developing countries, like mine, a mixture of 1st and 3rd world economies, where the majority of the population still has slow, capped data, not so much. Fortunately I'm one of the relatively few not in that sinking boat but things are changing here for the better, and pretty fast, but only in the bigger cities. Many rural, outlying areas don't have any internet connectivity at all, not even cellular mobile data. Maybe the self centered, money grabbing government is finally cottoning onto the fact that the rest of the world is living in the digital age and not in caves anymore but I'm not holding my breath. This is Africa after all.
     
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  8. Uncle Al

    Uncle Al TS Evangelist Posts: 2,248   +1,149

    Frankly, I'm a little surprised that the specialty stores have survived this long. Between the download sites and Walmart, it's got to be a bear to compete and stay in business!
     
    ScubaRhys and Cal Jeffrey like this.
  9. kapital98

    kapital98 TS Enthusiast Posts: 62   +35

    Exactly. I live an area with only dsl. It's fine for patches but is basically impossible for 40gb downloads.

    I go through steam on pc but prefer to buy discs for larger ps4 games. Even then, some ps4 patches are 10+ gbs.

    This isn't just a developing world issue. A huge amount of the US is limited to DSL or satellite internet.
     
  10. BadThad

    BadThad TS Booster Posts: 106   +59

    As games move to purely online, even for single player games.....what happens when your internet connection or the host servers (like Origin & Steam) are down? That's right, you don't get to play! I admit, it's quite convenient when everything is working but dependence on the web functioning is still BS. If the internet is down and I'm bored and want to play my game, I should be able to.
     
  11. amstech

    amstech TS Evangelist Posts: 1,583   +776

    Its a forced achievement and an advantageous one.
    It relishes on the laziness of the gamer to make things even more convenient; people who bought the physical copy of the game need to download it to their console anyways.
    It's a very good way of holding customers by the balls and forcing them into a closed ecosystem where the seller has control of the games/library and can imply fee's for these services. It's very a douchy and crook like model/practice that todays gaming industries are following.
    This generation is soft and completely open to exchanging convenience for freedom, something that will always cost you more in the end.
     
  12. TomSEA

    TomSEA TechSpot Chancellor Posts: 2,586   +634

    Usually I agree with the "brick & mortar stores are a dying breed" articles.

    But there are two GameSpot stores in my town, and every time I'm in one or pass by one, they are absolutely packed. Obviously that's an insanely small sampling. But if it's even close to anything like that in the other stores around the nation, I'd give them a lot more time than 3 years from now before closing up.
     
    Cal Jeffrey likes this.
  13. Timonius

    Timonius TS Evangelist Posts: 647   +58

    HMV was the latest victim of not being able to adequately change business models with the times. They tried by getting into entertainment related merchandise (books, t-shirts, mugs, etc) to support the inevitable failure of physical media in a digital age. The next possible phase for console makers is to strike deals with ISPs (or vice versa) in order that data limits are not an issue. Stores like GameStop may only survive in rural areas if at all. I really don't see a future for them. The physical media will still be available via the big box 'Walmart' or mail order 'Amazon' style for quite a while until the publishers decide it is no longer worth their efforts to reach the last few people not sufficiently connected to the digital age.
     
    Cal Jeffrey likes this.
  14. kapital98

    kapital98 TS Enthusiast Posts: 62   +35

    Brick and mortar stores still have a lot of clout. A huge problem with that graph above is that it counts app purchases and other small purchases. It doesn't give a good understanding of AAA game sales (where the most profit is). It also doesn't take into account the elasticity of demand at the end of the curve (a sigmoid function is likely).

    The big stores like Walmart will continue to do just fine. It's smaller boutiques, like GameStop, that need to be worried.
     
    Cal Jeffrey likes this.
  15. ScubaRhys

    ScubaRhys TS Addict Posts: 115   +51

    I live about 200m away from a game store and I can't remember the last time I bought something in there. It almost always costs a lot more than buying online. In fact I'm shocked they haven't died already. I won't miss it when it's gone.
     
    Cal Jeffrey likes this.
  16. Puiu

    Puiu TS Evangelist Posts: 2,178   +703

    luckily I have unlimited 1Gbps for 9$ :D

    (don't judge me, I just wanna brag a bit ^_^ )
     
    Evernessince and Cal Jeffrey like this.
  17. GreenNova343

    GreenNova343 TS Enthusiast Posts: 75   +27

    And even for patches, it gets ridiculous. I'm not limited to DSL nor capped, but most people forget that it's not just how fast your connection is, but how fast the entire pipe can go, as well as the end-server. I had Steam downloading the Ashes of the Singularity update the other day, & that patch was taking almost an hour to download (20 Mbps ~ 2.5 MB/s max; connection was hitting roughly 2MB/s, which translates to maybe 1GB every 8-9 minutes); had to finally stop downloading it because it was really making my Halo:CE pings skyrocket (usually get 60-100, but it was going up to 800+).
     
  18. Evernessince

    Evernessince TS Evangelist Posts: 1,583   +854

    That's insanely nice. I don't expect that coming in my area anytime in the next decade.
     
  19. Puiu

    Puiu TS Evangelist Posts: 2,178   +703

    in a decade it will come to you 100%. but there are already plans for 10Gbps home fiber connections where I live and in a decade maybe we'll get 50-100Gbps.
     
  20. amghwk

    amghwk TS Booster Posts: 120   +41

    Those days...especially during DOS gaming days, there were many things that came with the boxes.

    Most had thick manuals. Many came with maps. Some had books included too. Some had in-game items... those were the days...

    Later, especially during DVD games, the boxes came out like malnutritioned thin DVD cases. Manuals became skimpy. Some didn't even come with manuals. Of course, there were those who never bothered reading manuals - an art lost after DOS era.

    Games nowadays are nothing to shout about too..
     
  21. amghwk

    amghwk TS Booster Posts: 120   +41

    Online manuals? PDF? Meh
     
  22. Emexrulsier

    Emexrulsier TS Evangelist Posts: 537   +55

    For PCs I am fine with this, I use steam, like many I own 100s of games (and play like 2 :D). All my games are downloaded and updated and this is because storage is cheap and very easy to add to. On my consoles, storage is limited and not easily upgradable. My PS4 was 500Gb and full after like 6 game installs, I added 2Tb (recent ps4 update allowed usb drives) but this still isn't perfect as you need space on the main 500gb to perform certain installs etc. Also if when I sell consoles, I can make more money selling old games, can't do any of that on digital downloads. I'd love it if steam opened up a new online auction system. Let me add what ever games I wanted from my library and sell them (as long as valve wasn't greedy with their cut)
     

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