Digital game revenues 47% more than physical, says NPD

Industry-tracking group says US spent $1.47 billion on downloadable, mobile, social, and subscription games for the April-June quarter, compared to just $1 billion in boxed retail games.

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The traditional packaged goods gaming business has taken a beating this year, but the online part of the industry is growing nicely, according to the industry-tracking NPD Group.

It stands for No Problemo Digital.

The research firm today released its quarterly update on the US games market, saying that from April through June, digital revenues for games (full titles, downloadable content, subscription fees, mobile, and social sales) hit $1.47 billion, up 17 percent year-over-year. That's considerably more than the packaged retail goods business, which the NPD Group put at $1 billion for the year, with an extra $386 million in revenue if one counts used game sales and rental revenues.

NPD Group analyst Anita Frazier noted the digital sector's performance in a statement, but added that it wasn't enough to offset declines in the sales of new games and systems. By the firm's reckoning, the US gaming industry as a whole was down 16 percent for the quarter.

According to the NPD Group's findings, US retail sales have been down year-over-year by double digits every month for the first half of 2012. That trend looks to continue as the firm is expected to report its July sales numbers this Thursday, with Sterne Agee analyst Arvind Bhatia expecting the numbers to be down 15 to 20 percent.

Discussion

32 comments
LusterSoldierGS
LusterSoldierGS

I think if you completely exclude mobile games from these numbers, you'll have a much better comparison between the retail and digital sales of console, PC, and dedicated handheld games (not mobile games).

 

 

A lot of the revenue for digital games is coming in the form of mobile games and other casual games.  I wonder how much revenue digital games would have brought in once you exclude mobile games.

farcorners
farcorners

Digital distribution may be a great cost cutting excercise for producers, but it shifts burden onto customers. In Australia, I can download something from Apple or Sony (and wait for it to download, and pay for the data), or buy it CHEAPER at a store. Is it any wonder I hate digital?  

superkadeemx
superkadeemx

ha, i may have missed out on some hidden gems but im happy to say i have not contribute to that digital bandwagon and never will.

cirugo
cirugo

uh, because digital is the only way to get half the PC games anymore?  Believe me, I wouldn't touch a digital download service if I could get a game that I wanted in a store.

JimmeyBurrows
JimmeyBurrows

How about a comparison between games available in digital and physical form, that would be more useful and would most likely prove most gamers prefer their (our) solid copies.

I personally downloaded ME1 from steam (because I was feeling too lazy to wait and no PS3 version) and it meant I had to plan for the monthly download limit... If I have to do that for every decent size game I buy, I probably wont bother buying a lot of games.

 

Everyone's getting sick of dlc cut from the main game, so sales from that will start to drop in a year or so, all this number spinning on digital downloads it to make it cheaper for publishers... Chances are those savings wont get to the consumer.

deadpeasant
deadpeasant

Subscription fees are not game sales though. And the figures were from april to june. Almost no good physical games came out in this time so of course there will be low sales figures. People are probably just buying iphone apps for the summer.

Landsharkk
Landsharkk

Nice tricky use of numbers in the above article.

 

1) They give us the year-over year increase for digital sales (17%)

2) They do NOT give us the year-over year increase for retail sales

3) They include DLC in their digital sales numbers, which a lot of the DLC is based on RETAIL games and wouldn't exist if the retail games didn't exist

4) They don't include $386 million in the retail sales numbers (which inadvertantly excluded rental profits). Games rented DOES equal games bought (it's not 1:1 ratio, but can't be ignored completely), because those companies renting games have to buy the game in the first place.

 

All in all, digital sales aren't as great as this article makes them out to be. 

FallenOneX
FallenOneX

 Digital sales included "full titles, downloadable content, subscription fees, mobile and social sales". Since you can only buy full titles and very little DLC in a physical package, the difference, while impressive, isn't that big of a deal.

leeko_link
leeko_link

Pretty much about 75% of those $1.47 billion were Angry Bird games downloaded by every ppl who had a mobile device, tablet, android, iPhone, PSP, etc.

Marcusraitor
Marcusraitor

That is a Wrong comparison. Its like comparing that Doritos, Fritos, Peanuts, Potato Chips sells more than the Mcdonalds French Fries. They have to compare product vs The same Product. Who sells more Mcdonalds French Fries or Burguer King French Fries. Its the same here, Who sells more COD Skyrim Borderlands vs Digital COD Skyrim Borderlands. And i bet Physical sells like 6 times or more than the digital product.

Serpentes420
Serpentes420

This is not a big surprise and likely has little to do with gamers' preferences for digital vs boxed games or vice versa.  Fact is as far as boxed games go, very little was released during that period, and almost nothing in the "AAA" category that I can remember.  On the other hand Steam has summer sales for games and XBOX Live has "summer of arcade" sales.  If digital bests boxed games during the fall/holiday season or even more so after the holidays (since many of the big games seem to come out in January and February) then we may be seeing a trend towards digital.  This is but one of the reasons quarterly reports are stupid.

ScreamDream
ScreamDream

I'm going to guess this are mostly small microtransactions that add up quite a bit.  

ElJefeDeMedios
ElJefeDeMedios

This is a VERY leading article - break down GAME (full title) digital sales versus DLC / add-ons and then lets see how well digital GAME distribution is doing.

Mega_Skrull
Mega_Skrull

Lol, I was just thinking "who's this NPD and why should I care?" when I read the pic caption.

I still don't care about what they say, I only care about my beloved physical properly owned games.

servb0ts
servb0ts

I sense alot of Grey area not being mentioned lol.

MMaestro
MMaestro

Wait what? How is that possible???

 

"mobile and social sales"

 

Oh ok. In other words, the multimillion console/PC audience is being outspent by the multiBILLION cell phone audience.

fantasyfacade
fantasyfacade

Disc form won't die out, much like the smell of a good book, people like the feel of anticipation as you open the game box for the first time. To have something physical in your hand makes you feel like you actually own it and are in control. While I am open to digital download, I would prefer they didn't go fully digital. Just think of all the jobs that would be lost in retail because of a move like this. At a time when jobs are trying to be created I don't think that people who are opting for digital only are looking at the bigger picture of what will be lost.

SolidTy
SolidTy

Percentages.

 

NPD.

 

I wouldn't believe the HYPE fellow Gamespotters.

vochelli
vochelli

If the future goes fully digital, then the value of games will go down, and the price should reflect that. Gamers will lose the ability to resell the game, share it with friends, have it as a collectible item, and possibly play it offline. Because of losing all those benefits, fully digital games (AAA games that is) should be $40 max at release, at least in my opinion.

SamuraiSeven
SamuraiSeven

I will be one of the last hold outs.  Not a fan of digital.  Maybe I'm old school but I like getting a box and a disc and a manual and maybe even some extras if I get the limited edition.

egger7577
egger7577

 @Landsharkk Really?

 

http://www.pcgamer.com/2012/08/01/ea-financial-results-revealed/

 

Last night EA announced its financial results  for the first quarter of this year, and the figures say some fascinating things about the state of the games industry. There’s number crunching below, along with some interesting insight into the workings of a major publisher.

 

First, the big news, the report breaks down earning by platform. PC delivered $276 million, the Xbox 360 $292 million and the PS3 $267 million. So the EA, one of the biggest publishers in the world, made more money from the PC than from the PS3.

 

The PC’s good showing was mostly due to increasing numbers of digital sales. EA made $342 million from those, rising from $232 million last year, while physical sales made $592, dropping from $647 last year. If these trends continue, digital could outpace physical in a year or two, and when that happens at a studio the size of EA, some very interesting things are going to happen to gaming retail.

 

blackothh
blackothh

 @Mega_Skrull i would love to keep collecting boxes and disks, but i get my stuff off steam and impulse when they have the ridiculous sales, cant even come close to that in the stores

TrueGB
TrueGB

 @fantasyfacade Well, I wouldn't mind if they replaced discs with flash cards or some other things that's more durable and easier to read. It's usually the disc reader that gives out in a console if something does give out.

darius_danze
darius_danze

 @fantasyfacade Yes, while we are at it let us stop this automobile fad so that the farriers and buggy makers can recoup their loses. But why stop there lets outlaw e-mail so that the postal carriers can increase their revenues as well. We could also put a ban on orbital industries to give cable tv and land line phones an even playing field. Face it, when something better suited for survival comes along the Dinosaurs die.

Dr_Corndog
Dr_Corndog

 @SamuraiSeven I'll download drm-free PC games, but console downloads are terrible. They're often more expensive, and they're tied to a particular manufacturer's platforms.

darius_danze
darius_danze

 @SamuraiSeven I haven't seen a manual in years. Beyond that little two page epilepsy warning that they pack in every game. I've been robbed twice lost hundreds if not thousands of dollars in physical media. With digital all I have to do to reclaim all my stuff is type in my password and re-download, I love it. In regards to all the extra bells and whistles of a collectors edition, just look at the Kickstarter business model to see that kind of thing won't end even in an all digital world.

jinzo9988
jinzo9988

 @SamuraiSeven I'd share the same sentiment if the PC section of most retail stores weren't so astonishingly abysmal in terms of selection.  I've gotten used to it.  While digital games hasn't been the norm for very long, there were still downloadable games here and there even as far back as the 90s.

 

For console gamers, especially ones who've been console gaming for a couple of years now, it'll be a hard switch since physical media has been the staple of the industry for over 30 years.

Landsharkk
Landsharkk

 @egger7577

 Yes, really!

 

To clarify terms for the rest of my comment (I misused these in my original comment above):

1) Disc = physical copy

2) Digital = digital copy

3) Retail = full retail game (with no paid DLC, etc)

 

EA has a combined console game sales of $559 million (that's PS3 + Xbox), compared to PC sales of $276 (less than half of console game sales!)  Console game sales are primarily disc (I don't have hard numbers, but it seems logical), so that helps confirm that disc sales are still hugely outnumbering digital (presuming the PC = mostly digital sales).

 

Of course, EA is the same company that publicly stated they want to go full digital in the future, so of course their digital sales are going to be higher (that's the direction they are taking their company). They are a digital sales biased company.

 

Also, Digital Sales includes DLC.  I haven't seen any numbers that are for digital vs disc when it applies to only the initial game/retail purchase (i.e., no DLC, no addons, etc). 

 

It could very well be that the number of digital retail sales is actually lower than disc retail sales, but the income from 'overall digital' is higher, because they now include things like digital DLC (which helps boost digital sales).

 

In conclusion, I stand by my original comments, that digital sales aren't really that much better than disc sales, as the article above would lead you to believe.

fantasyfacade
fantasyfacade

 @darius_danze You seem to be missing my point. I never once said no to digital I said I was open to digital download, but that I would prefer it didn't go fully digital. I'm trying to make a point that there is room for both digital and physical copies on the market. Some mediums will die out of course as they are replaced with other ones, eventually blu-ray will take over from DVD or something else will take over the physical market. Who knows! My point is that a good few developers/publishers are calling for digital only consoles when a load of gamers would rather go out and buy it in a shop and own a physical copy. Maybe in a decade or so they'll change their tune as digital gaming increases in popularity, which it more than likely will. But writing off the physical copy of games in an instance could have some bad repercussions for the market as a whole. Many broadband providers aren't yet at the level to cope with many of our gaming habits.

fantasyfacade
fantasyfacade

 @darius_danze Yes the market will decide, and many consumers are still calling for physical copy of games, so for the time being there is room for both as there is the demand for both. So it is not a good idea to suddenly write off the ideas of discs and cartridges in the next generation of consoles. At that broadband around the world is not yet on the level to be able to cope with digital download only. The statistics above are for the US only, most other countries broadband providers are not on par with US broadband abilities. Many other countries broadband providers still have download caps and small bandwidths and therefore cannot sustain a digital download market. Therefore cutting out the physical side of gaming so abruptly will not just affect the physical side of the gaming market, but the gaming market as a whole since parts of the world are unable to avail of the full potential of the digital market. Really there are too many factors to take into consideration. If it were to be done gradually phased out over the next few years, giving broadband time to grow to the level needed to sustain a global digital market then there would potentially be no negative impact even to the retail side.

 

I am opposed only to the next generation of consoles going digital only since its just around the corner, but after that who knows what will happen. Personally though I would prefer both sides of the market to exist, but that's my collector side talking.

darius_danze
darius_danze

 @fantasyfacade And the market will decide that, not a sentiment of think of how many jobs will be lost. My reply was not a rebuke of your stance but of your defense for not doing it. If there was no market for a digital only system the Ouya wouldn't have been funded to the tune of $8.5 million on Kickstarter. Protectionism of a failing business model at the expense of progress or efficiency is counter intuitive to the needs and wants of the consumer. For example spending billions of tax payer dollars to build an electric car that is three times the cost of a petrol based car and randomly catches fire, that no one was asking for in the first place, is not in the best interest of the consumer. No matter how many jobs may have been "Saved or Created".