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[Shiggy]

"As for some critics calling packaged NPD data 'irrelevant' well... the strong majority of full game sales still comes from packaged retail, and will be for some years to come," Piscatella commented.

"I've been looking at the interplay between digital and retail sales data for years now, and the data suggests to me that digital is more incremental than cannibalistic to full games sales -- meaning that I simply don't see digital and retail competing in a zero sum game for full game sales. Yes, more digital games are being purchased, and the overall share of digital is increasing, but that's not leading to direct offsetting declines in the retail space.

"The data suggests to me that digital is increasing the size of the overall pie, and that both retail and digital are vital parts of the new ecosystem, and will be for some time. We have data that suggests, for example, that millennials and Gen Z game buyers have the highest purchase incidence rates of packaged retail games, likely driven by the way young people use packaged retail games as a form of currency for purchasing new games later when they are sold or traded in. It's quirks in the video games market like this that will keep packaged retail in the forefront of full game sales for at least the short to mid-term future."

Digital now represents nearly three-quarters of the entire US games market, but a big chunk of that revenue comes from mobile and PC gaming, so it's not an indicator that console retail is failing, Piscatella stressed.

"I can't see (and have never seen) any evidence in the data that increases in Mobile and PC spending have had any direct negative correlative impact on console or physical retail," he said. "Spending on console is where any digital cannibalization of retail would occur, and the growth in full game digital spending has not been met with anywhere near a corresponding decrease in packaged spending at retail. Changes in retail spending correlate much more closely to changes in the number of packaged games that publishers are producing, and don't correlate at all with changes in digital spending.

More at GamesIndustry.

 

[HMD]

I like physical cause my internet is too shitty for 50+ GB games, I assume it's why most people still buy physical games. I just wish we had a way to preload updates for physical games. Cause I hate buying a physical game and waiting hours for the 10GB day one update to finish downloading.

 

[Ricky_R]

Sounds good.

I enjoy both formats. I like the convenience and practicality of digital, but I also enjoy the feeling of opening up new games and putting the disc on, etc. I guess it's like tradition to me at this point.

 

[DriftingSpirit]

This is good news. Digital building upon physical instead of physical sales shifting to digital.

 

[andthebeatgoeson]

that millennials and Gen Z game buyers have the highest purchase incidence rates of packaged retail games, likely driven by the way young people use packaged retail games as a form of currency for purchasing new games later when they are sold or traded in.

I feel dirty.

 

[DriftingSpirit]

I feel dirty.

Lol, I just started doing this.

 

[SunDimension24]

Not surprising. A good amount of people still don't have decent internet or have outrageous data caps, physical can still be a better price than most digital stores when it comes to consoles and you can trade things in if you hate a game or grow tired of it and use that toward a new game. Until those things get better for digital stores (it is getting there with great digital game sales on PSN and Xbox live, and Microsoft is inplementing a self-refund system that will help) physical will stay relevant.

 

[Kyougar]

That would mean that Console gaming would grow nearly at the +% rate that digital is growing. I dont see it.

 

[Shin]

That's good to hear and healthy for the industry, I'm part of the digital crew (only bought 2 psychical game so far).

 

[cheesekao]

That would mean that Console gaming would grow nearly at the +% rate that digital is growing. I dont see it.

People buying more games =/= People buying more consoles.

 

[120v]

yeah i'm not seeing retail space going anywhere. not particularly a great time for brick and mortar but there's still a ways to go til the gaming section is but a rack of cards

 

[MatPiscatella]

Hey, I'm the guy quoted. Happy to answer questions or listen to why I'm wrong!

I feel dirty.

Why?

That would mean that Console gaming would grow nearly at the +% rate that digital is growing. I dont see it.

That's... that's not at all.. what?

 

[GodofWine]

--- Yes, more digital games are being purchased, and the overall share of digital is increasing, but that's not leading to direct offsetting declines in the retail space. ----

But is HAS to be leading to a decline in GROWTH. Weirdly stated conclusion.

The pie is sliced and now some pie is going to another mouth at the table...yea, maybe there is more pie than before and the slices are the same size, but the 'old mouths' aren't getting as much as they would have had the 'new mouth' not shown up.

In a revenue growth driven market, that kills retail. If you are publicly traded, just making decent profit over and over will actually lead to your demise when growth is absent.

 

[Kareha]

yeah i'm not seeing retail space going anywhere. not particularly a great time for brick and mortar but there's still a ways to go til the gaming section is but a rack of cards

I can see it happening here in the UK in the next 5-10 years as more and more shops are closing down on the High Street pretty much everyday. Plus, we have pretty decent broadband and by 2020 the Government has said everyone in the country will have access to at least a 10Mb connection (Universal Service Obligation) although the vast majority of people in the country will have access to much faster speeds because of BDUK.

Personally I've been fully digital ever since I installed Steam all those years ago and I love not having shelves cluttered with boxes anymore, threw them all out once I'd replaced them all with digital download versions.

 

[Oemenia]

Hey, I'm the guy quoted. Happy to answer questions or listen to why I'm wrong!

Always cool to see you drop-by! Slightly unrelated question but what are your thoughts on the used games market and how it affects the sales of new games?

 

[CloudStrife_ca]

I'm a physical media guy, I just like to have something in my hand for my money.

 

[Wereroku]

--- Yes, more digital games are being purchased, and the overall share of digital is increasing, but that's not leading to direct offsetting declines in the retail space. ----

But is HAS to be leading to a decline in GROWTH. Weirdly stated conclusion.

The pie is sliced and now some pie is going to another mouth at the table...yea, maybe there is more pie than before and the slices are the same size, but the 'old mouths' aren't getting as much as they would have had the 'new mouth' not shown up.

In a revenue growth driven market, that kills retail. If you are publicly traded, just making decent profit over and over will actually lead to your demise when growth is absent.

Well no it doesn't. He can probably clear it some more in the thread but it seems like he was saying that the digital percentage is going up but it is not causing a decline in the number of physical games purchased. So it is brand new purchases as opposed to physical buyers shifting to digital.

 

[Kyougar]

That's... that's not at all.. what?

Are you guys ignoring in-app purchases? digital DLC?
When Ubisoft is stating that their digital ratio of the pie is 80% in Q1, did the digital growth from Ubisoft up their game sales comparatively? If there is no cannabalizing going on, it would mean that the retail presence was the same for Ubi and had a hell of a growth in game sales.

Or if ubi is an "outlier", some other big company lost a hell of a digital presence.

 

[Wereroku]

Are you guys ignoring in-app purchases? digital DLC?
When Ubisoft is stating that their digital ratio of the pie is 80% in Q1, did the digital growth from Ubisoft up their game sales comparatively? If there is no cannabalizing going on, it would mean that the retail presence was the same for Ubi and had a hell of a growth in game sales.

Or if ubi is an "outlier", some other big company lost a hell of a digital presence.

What does in app purchases and DLC have to do with physical buyers converting to digital buyers? You understand the point of this article right?

 

[LordofPwn]

I mean the snake slowly swallows it's prey.

but the "snake" is operating on slow/expensive/data capped internet.

 

[Kyougar]

What does in app purchases and DLC have to do with physical buyers converting to digital buyers? You understand the point of this article right?

Do you understand the point? The author claims that there is no cannibalistic behaviour. So there is no retail to digital converting going on. The retail stays the same. If that is correct, the growth that the companies are reporting in their digital sales has to come from somewhere.

 

[Ricky_R]

Are you guys ignoring in-app purchases? digital DLC?
When Ubisoft is stating that their digital ratio of the pie is 80% in Q1, did the digital growth from Ubisoft up their game sales comparatively? If there is no cannabalizing going on, it would mean that the retail presence was the same for Ubi and had a hell of a growth in game sales.

Or if ubi is an "outlier", some other big company lost a hell of a digital presence.

I believe he's talking about actual games' sales. You can make IAP with physical games anyway, so I don't get your point.

 

[johnny956]

What does in app purchases and DLC have to do with physical buyers converting to digital buyers? You understand the point of this article right?

I think he's talking about this point in the article

Yes, more digital games are being purchased, and the overall share of digital is increasing, but that's not leading to direct offsetting declines in the retail space.

So if digital is increasing but retail isn't decreasing in the same amount wouldn't sales be up drastically for developers?

 

[Ricky_R]

I think he's talking about this point in the article

So if digital is increasing but retail isn't decreasing in the same amount wouldn't sales be up drastically for developers?

Ahh I get it now.

 

[MatPiscatella]

Are you guys ignoring in-app purchases? digital DLC?

I thought the article was pretty clear in that it refers to full game sales. DLC/in-app purchases are incremental to the pie (as they are not available in a packaged form, although more premium physical editions are including DLC/MTX content).

I'm still not certain how increases in digital DLC spend would be expected to lead to less physical full game purchases. The data certainly doesn't support this.

Like I state in the article, changes in physical game spending correlate much more closely to the change in packaged game release count than it does to changes in digital spend (which doesn't correlate, at all).

Always cool to see you drop-by! Slightly unrelated question but what are your thoughts on the used games market and how it affects the sales of new games?

Hey thanks! The data has always suggested to me that consumers use trade ins to primarily fund the purchase of new games. So I actually see Used adding as much to new game sales as it might take away.

I also think Used as critical for allowing younger people or those with smaller incomes participate in the space. $60 is a lot of money for a lot of people, and Used allows more people to afford to play the latest games.

The author claims that there is no cannibalistic behaviour. So there is no retail to digital converting going on.

I wasn't the author. And that's not what I said:

I've been looking at the interplay between digital and retail sales data for years now, and the data suggests to me that digital is more incremental than cannibalistic to full games sales -- meaning that I simply don't see digital and retail competing in a zero sum game for full game sales. Yes, more digital games are being purchased, and the overall share of digital is increasing, but that's not leading to direct offsetting declines in the retail space.

I think it was just comparing full retail game sales to digital game sales.

Aye.

 

[Wereroku]

I think he's talking about this point in the article

So if digital is increasing but retail isn't decreasing in the same amount wouldn't sales be up drastically for developers?

The very fact that he is saying digital sales are not cannibalistic suggests that sales are increasing. That doesn't have to be a tremendous increase though. Digital only games would also increase the percentage without hurting retail sales. I think it was just comparing full retail game sales to digital game sales.

Hey thanks! The data has always suggested to me that consumers use trade ins to primarily fund the purchase of new games. So I actually see Used adding as much to new game sales as it might take away.

I also think Used as critical for allowing younger people or those with smaller incomes participate in the space. $60 is a lot of money for a lot of people, and Used allows more people to afford to play the latest games.

At least with my friends income has a lot to do with buying digital or not. My highest income friend basically only purchases digital except for collectors editions. Whereas many of my friends do the buy and trade in after beating to keep their game costs to a minimum. However the ones who trade in buy a lot more games since they are constantly shuffling them with whatever is coming out.

 

[Old Gimlet Eyes]

I still buy a lot of physical games because of my terrible DSL connection. Can't imagine I am the only one like that. Some game sizes would take me days to download, looking at you Gears of War 4.

 

[MatPiscatella]

I still buy a lot of physical games because of my terrible DSL connection. Can't imagine I am the only one like that. Some game sizes would take me days to download, looking at you Gears of War 4.

This is why digital share % will be capped at some point, barring major changes to internet infrastructure.

 

[Sectorseven]

I'm curious if digital is growing faster on the west coast. A digital game unlocks 3 hours earlier which would be 9 pm, essentially allowing someone to play a night early. It seems like it could be enticing enough not to bother stopping at a store the next day for a retail copy.

 

[MatPiscatella]

I'm curious if digital is growing faster on the west coast. A digital game unlocks 3 hours earlier which would be 9 pm, essentially allowing someone to play a night early. It seems like it could be enticing enough not to bother stopping at a store the next day for a retail copy.

From my experience and what I understand the case to be now, west coast "midnight" openings are now generally 9PM to allow people who want to buy physical the same release time as those buying digitally.

 

[LukasTaves]

I still buy a lot of physical games because of my terrible DSL connection. Can't imagine I am the only one like that. Some game sizes would take me days to download, looking at you Gears of War 4.

But unless you have a data cap and you are on reallyyyyy low speeds it shouldn't be a problem. If you want to play day one you can preload. If not then you just buy a few days before you are planning to play. Either case would be faster as you would have to go through the install and update process before getting to play it.

 

[Sectorseven]

From my experience and what I understand the case to be now, west coast "midnight" openings are now generally 9PM to allow people who want to buy physical the same release time as those buying digitally.

But even by 9 pm, I would think the majority of gamers are going to be home, probably on their console and in a prime position to just click the download button. I can't imagine most gamers are impulsive enough to go back out to the store once they've settled in for the night, plus they still have to install the game when they get home and won't won't end up with much time to play.

 

[Inuhanyou]

sounds good. Physical is the only real way i can buy games with my shitty internet, and with trade ins mostly to boot.

 

[Devilgunman]

I go wherever is cheaper. New games are cheaper at retailers. Old games something are cheaper digitally thanks to PSN sales.

 

[DriftingSpirit]

I go wherever is cheaper. New games are cheaper at retailers. Old games something are cheaper digitally thanks to PSN sales.

That is how it usually goes for me. Buy physical for the cheaper price (Amazon Prime) and wait for PSN sales for low priced digital games.

I've just started selling my older physical copies and put them toward new games. No need to have games just sitting there collecting dust when I beat them and got the plat. I won't be going back to them since there is so much to play anyway (sans the greats like Bloodborne, for example).

 

[sixteen-bit]

I feel dirty.

shoutouts to that killer gamestop deal, lol

 

[Oemenia]

Hey thanks! The data has always suggested to me that consumers use trade ins to primarily fund the purchase of new games. So I actually see Used adding as much to new game sales as it might take away.

I also think Used as critical for allowing younger people or those with smaller incomes participate in the space. $60 is a lot of money for a lot of people, and Used allows more people to afford to play the latest games.

Thanks for the reply, I guess with the used market being so important it will be a while before physical starts to fade away.

Can you see any similar trends with Bluray films?

 

[MatPiscatella]

Thanks for the reply, I guess with the used market being so important it will be a while before physical starts to fade away.

Can you see any similar trends with Bluray films?

I think physical will only go away when the console manufacturers stop putting physical media drives into the consoles.

But I don't think they'll go that way in the next ten years at least. If a console decides to go that way I don't think it will end well.

Regarding Bluray, have to admit I don't have expertise, although I do know there are enough fundamental differences in the way the businesses operate that taking findings from games and applying them to home video can lead to big problems, and vice-versa. So I'm not really sure.

 

[Inuhanyou]

I think physical will only go away when the console manufacturers stop putting physical media drives into the consoles.

But I don't think they'll go that way in the next ten years at least. If a console decides to go that way I don't think it will end well.

Mat's predictions fill me with hope for the future

 

[DriftingSpirit]

I agree. It will be a matter of time before we end up with digital only but we're not ready fr that yet. Anyone who tries to push it now is probably going to hurt their own product more than anything else. Physical is still a notable contribution to overall sales.