digital-downloads posts

As more and more games, both on the PC and console side, are being sold via digital downloads brick-and-mortar based game retailer GameStop is looking to get more out of that growing market. As part of its quarterly financial numbers today, GameStop revealed that it generated $290 million in revenues from console and PC game digital downloads in 2010. That's an increase of 61 percent compared to 2009.

While that number is still tiny compared to GameStop's total 2010 revenues of $9.47 billion it does show that the retailer is slowly moving towards the download business model. You may remember that in February the company hired former id Software exec Steve Nix to be GameStop's new general manager of digital distribution.

For the past few years we have seen the PC game industry make the transition from nearly all PC games sold in retail stores to having a large portion, perhaps a majority, of games sold via digital download. This week Electronic Arts' CEO John Riccitiello, in a chat with IndustryGamers.com, states, "At the end of [2011], the digital business is bigger than the packaged goods business, full stop. No questions in my mind."

One of the ways EA is making that happen is with a slate of free-to-play online games and according to Riccitiello, "Our highest ARPU (average revenue per user) are free-to-play games among paying users." One example is with the sports game FIFA Ultimate Team. Even thought its free Riccitiello claims some players pay as much as $5,000 a month to microtransactions to play the game.

More and more we are seeing the PC game industry move to a download business model. But according to the head of Take Two Interactive, this new way to distribute games doesn't mean that boxed game copies are going away anytime soon.

Speaking in a video interview on the Bloomberg web site, Take Two's CEO Strauss Zelnick states that while download game sales are growing, "Right now, digital distribution of our interactive entertainment represents something less than 15 percent of our revenue." Zelnick cites large file sizes as one barrier to having more downloadable games. Also cloud computing systems such as OnLive can still have latency issues. However Zelnick does state that OnLive is "doing a phenomenal job of addressing that challenge."

[Via Gamasutra]

Last month, the NPD Group released a new study that claimed digital downloads sales for PC games had come close to reaching the same level of units as those PC games that were sold in retail stores. That study's findings were disputed by game download sites like GamersGate and Impulse, with its founder Brad Wardell telling us at the time, " I can't think of a single publisher (including ourselves) that sells even close to a majority of its units digitally."

Now yet another study from the Entertainment Merchants Association claims that retail store sales for games still dominate the marketplace. The EMA says that based on data from several sources, including the NPD Group, game purchases in retail stores still account for 80-90 percent of all game sales. Bo Andersen, the president and CEO of the EMA, is quoted as saying, "While it is tempting for industry outsiders to say 'disc is dead,' as the saying goes, reports of its demise are grossly exaggerated."

Launched two years ago at GDC, the non-profit group the PC Gaming Alliance has been trying to both study the PC gaming industry as well as suggest improvements to help expand. Today the organization announced the results of their 2009 Horizons report, a research study on PC gaming revenues. The press release that announced the results showed a 3 percent increase in worldwide PC gaming revenues in 2009 with a total of $13.1 billion.

That number doesn't just contain sales of games at brick-and-mortar stores. In fact those sales actually declined in 2009 and now cover less than 20 percent of all software-based revenues. Digital distribution of PC games made up the difference. Other sources of revenue for their numbers came from monthly subscriptions for online games, sales of virtual items and sales of ads for gaming web sites. While revenues in the US and Europe were down between 10 and 15 percent in 2009, the still growing Asian market made up for the difference.

We've been seeing the rise of the digital download business model for PC games for the last few years but one PC gaming publishing executive believes that the industry will turn completely to that model within a year. MCVUK.com reports that 1C Company's international publishing director Darryl Still believes, ""Q1 2011 is my estimate as to when PC games will be sold completely via digital."

We don't think that's going to happen that quickly, at least in the US (we are pretty sure there will be lots of retail copies sold of StarCraft II released when it finally ships) . But it is clear that the presence of PC games in retail stores is getting smaller and smaller. Still states, "Digital is fantastic, and we're very pleased with it. But it is not us as the developers and publishers driving products to digital – it is because the options for the PC at retail are so limited."

PC gamers are buying more and more of their titles via digital download. That much is for certain. But according to a recent user survey of GamersGate customers, their customers are spending less and less on console games. According to an article at IndustryGamers, the survey of over 1,000 GamersGate users stated that 52 percent of them didn't spend any money on console games at all in 2009.

69 percent of the users stated that over half of their total purchases have been digital downloads and 48 percent of the users will spend even more on digital downloads in the next 12 months. 91 percent of the users have admitted to purchasing from a digital download site before with GamersGate, Steam and Direct2Drive as the top three services (not necessarily in that order).

We've been talking about how the PC game industry is transitioning from a retail store business to a digital download model for some time now. However, it's never been totally clear how much revenues digital downloads of games from places like Steam, Direct2Drive, Impulse and others have generated. Today Gamesindustry.biz states that a new report claims revenues from PC game downloads from various sources will generate over $1 billion in revenue in 2009.

The report comes from GfK Chart-Track which says that such downloads created just $600 million in revenue in 2008. If true that means this part of the industry is exploding. GfK Chart-Track director Dorian Bloch admits that they would like to include such data in the total sales numbers of individual games. However, they are unable to do so without "without a wider selection of data from multiple publishers."