Digital game sales booming as retail continues descent

By on July 30, 2009, 11:47 AM
Typically, market research firms look at retail game sales for their reports and pay no mind to digital distribution services like Steam. Perhaps looking at only retail figures offers enough of a sample to reach a conclusion, but digital outlets are undoubtedly responsible for a sizable share of overall game sales Ė as emphasized by IGNís recent report.

Despite the economic downturn and slow sales abroad, IGN says that sales on Valveís digital distribution service, Steam, increased a stunning 97% compared to June of 08. IGNís own Direct2Drive service has witnessed a sales growth of 56% in that same period, and Microsoft has experienced a 73% growth in Xbox Live download sales. By comparison, those figures dwarf that of the retail sector. NPD recently reported that June saw the greatest decline in year-to-year sales since September of 2000, 41%.

At first glance, it may seem like the digital alternative is quickly surmounting retail sales, but itís not that simple. According to Michael Pachter of Wedbush Morgan Securities, downloads are probably $1 to $2 billion in global sales this year, compared to the $26 billion packaged goods market. While downloads are growing Ė and growing fast Ė there simply arenít enough of them to account for the fall in retail sales.




User Comments: 7

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TomSEA TomSEA, TechSpot Chancellor, said:

"While downloads are growing - and growing fast - there simply aren't enough of them to account for the fall in retail sales."

We've chatted about this before. There is the economy to blame for a part of it. But IMHO, the lack of quality game releases is the primary reason. In fact, here's this article I read today about the Wii - the golden child of stand-alones - taking a pounding because of lack of new quality game releases.

http://seattletimes.nwsource.com/html/businesstechnology/200
569697_webnintendo31.html

There are a number of potential blockbusters projected for the last half of 2009 and 1st Qtr 2010. Let's check those sales figures then.

As far as download vs. box sales - digital is the wave of the future. Any sales figures that don't include downloads shouldn't be even be considered as noteworthy.

Route44 Route44, TechSpot Ambassador, said:

There are a number of potential blockbusters projected for the last half of 2009 and 1st Qtr 2010. Let's check those sales figures then.

As far as download vs. box sales - digital is the wave of the future. Any sales figures that don't include downloads shouldn't be even be considered as noteworthy.

Yes, fully agree though I have yet to jump on the digital bandwagon. There are some serious PC releases to come soon. The RPG field ooks like it will have some stellar offerings.

insect said:

I'm surprised any buys hard copies anymore. The chance of losing a key, CD/DVD, etc are way to high versus a digital download. Heck, half the time it even installs faster (on a 25 mbps down) than from a CD/DVD.

I only buy hard copies when digital is not available (which is becoming a rare thing).

Guest said:

Downloads are the way to go for sure.

They still need to be 10-25% cheaper than a hard copy though.

cyriene said:

I like downloading games and have bought several from Steam. But, at the same time I like having the actual game so I can play outside of Steam.

The other week I moved and didn't have internet service for a few days. I tried to play single player Heroes of Might and Magic 5 that I bought on Steam but Steam wouldn't open. Kinda pissed me off since I just wanted to play single player and don't need the internet for that.

And, you can't sell your games when you are done with them. Most games I play through once then I don't touch again. No need to keep them around collecting dust. A quick sale can them be a down payment on the next game.

Vrmithrax Vrmithrax, TechSpot Paladin, said:

cyriene said:

I like downloading games and have bought several from Steam. But, at the same time I like having the actual game so I can play outside of Steam.

The other week I moved and didn't have internet service for a few days. I tried to play single player Heroes of Might and Magic 5 that I bought on Steam but Steam wouldn't open. Kinda pissed me off since I just wanted to play single player and don't need the internet for that.

And, you can't sell your games when you are done with them. Most games I play through once then I don't touch again. No need to keep them around collecting dust. A quick sale can them be a down payment on the next game.

Well, the no internet thing is an easy fix for Steam... Just set Steam to offline mode, and single player games work great (you can find the process explained a bazillion times in the Steam forums, it's one of the most common help requests). The anti-digital throngs love to point at issues like yours and say "See? Steam is evil!" when there is an easy fix for it, but they can't cloud their issue with things like facts

The resale thing is a big pro/con debate with things like Steam as well... Honestly, I'm rather OK with not having a PC version of Gamestop or something similar. The PC gaming market is small enough as it is, and shrinking daily... A massive resale market would probably kill it.

gobbybobby said:

I only buy pc games via Steam. I only have a 1 meg connection so it take up to a day download a game and them get the patches etc. Y do i do this? Well I always lose product keys and scratch disks. With Steam this does not happen. Also Steam has offers and free play weekends allowing me to try b4 buy and get a good deal. I also play games on my 360 and ps3. On the ps3 i have downloaded a few games. The 360s digital download service for 360 games launches soon. K just hope they release a bigger and cheaper hard drive. Disks and 360s don't go well. The number of games my 360 has destroyed is stupid. I never trade in games, but no thats a big factor for some people. I think digitat distribution is the way forward and the next generation of games consoles will not have optical media trays.

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