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