Game Disc Supporters Still Clinging to False Hope
I recently read an article online that demonstrates how those who believe that that the main method of distribution of games will be on a disc that is sold in retail store, may just not be making a sound evaluation of the facts.
Here is a link to the article:
The headline on this article reads …Report debunks “disc is dead”. This conclusion is drawn because of results of a study. The article also claims that “80 to 90 percent of videogames bought in 2009 were on physical media” The key statement that everything in this article appears to be centered around is “According to the Entertainment Merchants Association, combined DVD and Blu-ray disc sales totalled $17.9 billion in 2009, nine times the revenue generated by digital distribution.”
Future not the Past
My first question is has anyone ever claimed that the disc is already dead? My belief is that digital distribution will overtake disc distribution soon. The disc won't even “die” soon it will just be overshadowed by digital. This report covers 2009 and not it’s about this year, or even more important, it has little to do with the next couple of years. Even more interesting is that the decision to put effort and money into the digital games released in 2009 most likely was made in 2008 and in some cases in 2007. I’m more interested in how much effort is going into digital games now and next year than I am about decision made two years ago.
Number of Games VS. Gross Revenue
It also appears that the study results didn’t compare the number of games purchased but instead compared gross revenue. This actually makes the claim that 80% to 90% of the video games purchased were bought on physical media inaccurate. Instead the real fact is that 80% to 90% of the gross revenue came from retail games. If only 90% of the revenue came from retail games that can cost 6 times as much as a $10 downloadable game, the actual percentage of digital games purchased would be much higher than this article suggests. A real percentage of digital games sold might paint a very different picture of the state of the industry.
Profitability is the Key
Of course revenue is important and in some ways reveals more important information than the number of games sold. But again, I also wonder how this article would change if the study revealed profitability instead of just gross revenue. Some important questions need to be answered to give a clear picture. How much more money was spent on the retail titles compared to digital in 2009? How much smaller is the percentage, of that gross number, that publisher earns on a retail game compared to a digital game? How much of the money included in gross earnings for a retail game goes to the retail stores, making the disc, shipping, returns, etc.? Profitability is what will really drive the market not gross revenue.
I’m also not sure what they included in the research study. Did they count all of the iPhone games, Facebook games, MMo subscription fees or money earned from in-game advertising of digital games? Did the study only count full game sales or did they also count DLC and all of the other extras that often accompany a digitally distributed game?
I read the other day that over 20 million copies of DLC have been sold for the latest Call of Duty game alone. At an average of $10-$15 that provides some huge numbers. This fact alone makes it appear that digital game downloads are a lot bigger right now than this article implies. What does this mean for the next couple of years?
This article has a link to another article that seems to discredit the assumption made in the title. The second article claims “US PC game digital downloads are reaching parity with in-store purchases”. The study that the second article focuses on seems to count the number of games sold and not necessarily the gross revenue. However, no matter how you look at those numbers, it seems like digital distribution in the PC market is huge. Did the author just ignore this information or does the new research study somehow cancel out this previous information.
Don’t be fooled by the unbelievers. The digital gaming future is very close.