Downloads Transforming Video Game Industry Landscape

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Although signs have been pointing toward the wider acceptance of digital downloads for video games, this holiday season was the year where it really became an industry trend.

With bigger hard drives and faster connections to the Internet, downloading games to consoles like the popular PlayStation 4 has become easier than ever. It’s so easy, in fact, that physical game stores, including GameStop, are starting to feel the impact.

In early November, gaming giant GameStop reported disappointing earnings that resulted in a dramatic stock tumble. At the time, the company blamed its less-than-stellar numbers on weak new hardware and software sales. It also announced that one of the hottest games of the year, Star Wars: Battlefront, had missed its internal sales forecasts during the quarter ending October 31.

Tracking retail sales for GameStop. NPD Group, a research firm that tracks retail sales in different sectors, would seem to be in agreement with GameStop, reporting a seven percent decline in November game sales from the month prior. Despite the bad news for GameStop, things are coming up roses for game developers like Sony, who say their PlayStation 4 console passed the 30.2 million units sold mark just after the second anniversary of its release, also in November.

The disparity, it would seem, is in the way that most marketing firms track game sales. Traditionally, they rely exclusively on retailers to report how many units were moved and completely ignore digital sales. Since a large percentage of games are being purchased directly from their developers via digital downloads, these older reporting methods are missing the bigger picture.

Electronic Arts, for example, says that about 20 percent of its new game sales are downloaded, up from 10 to 15 percent last year. Other publishers reported 25 percent or more of their sales via downloads, though the numbers are notoriously hard to pin down.

Unfortunately for retailers like GameStop, this increase in digital downloads is going to continue to spell a slowdown in in-store purchases. Besides being able to offer used games at a substantial discount, GameStop may still remain somewhat competitive in the video game industry due to its knowledgeable staff and willingness to allow gamers to trade-in popular titles. Only time will tell if digital downloads will surpass retail sales for video games.

 

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