In 2007, console games were released digitally for the first time. Sci-fi war shooting game War Eagle PlayStation 3 games are sold on Blu-ray in stores, but can also be purchased digitally on PSN. The game is all but forgotten now, but it was the first domino to fall in digital’s slow but inexorable takeover of console gaming.
Seventeen years later, the way major video game companies make money has been completely turned upside down. While it once came from sales of boxed games at GameStop and Walmart, the vast majority now comes from sales of digital downloads at console stores. Publishers like Electronic Arts don’t even make the majority of their revenue from game sales at all, but through “recurring revenue”, i.e. microtransactions in online multiplayer and free-to-play games, e.g. Madden and apex legend.
“Back then, before PlayStation 4 launched, you were lucky to get 5% to 10% of digital sales of a AAA game,” said Daniel Ahmad, director of research and insights at Niko Partners. my city in an interview. “Today, depending on the title, it could be as high as 80 percent, but it could be as low as 40 percent.” He noted that while the average segment overwhelmingly favors digital downloads (platforms like PlayStation report more than 70 percent of annual digital revenue % ), but circumstances may still vary significantly.
In this year’s annual report, Capcom revealed that approximately 89% of the games it sells are digital copies. This number is expected to reach close to 94% by 2024. Kunitsujin: Path of the GoddessA new $50 Capcom game, with no physical version, exemplifies this move. As a result, the company was actually asked if it would continue to make physical games during the period. Latest Annual General Meeting this week.
“Given the large number of end users who want physical games, we do not currently anticipate eliminating physical products,” the company said. The statement echoed sentiments expressed by Ubisoft senior vice president Chris Early last year. “Some people always want to have physical disks,” he said said in Q&A Represented French publisher Activision Blizzard in cloud gaming transactions. “I just don’t think it’s going away. Do I think physical sales will go down over time? Sure, but will it completely go away? I don’t think so.
Aggregated data can sometimes mask small but substantive issues with trends. While physical gaming has certainly become a niche within the broader gaming landscape, a shift accelerated by the pandemic, Earle also points out that even a small piece of a larger pie can mean a lot of money. according to a Game Industry Network Infographic According to Newzoo, only 17% of console game revenue in 2023 will come from boxed games, but it will still amount to $9.5 billion. In other words, this is still better than Top 10 global box office hits last yearinclude Barbie, Oppenheimerand super mario bros movie,merge.
“When you really look at the absolute value of Sony’s games last year, it still sold 286 million copies,” Ahmed told us. my city. “Even if the ratio is 70%, that still means 85 or 86 million of them are physical, right? So, yes, it’s a small portion, but it’s not small by any means.
Similar games god of war ragnarok Reverse the digital trend
For example, the market for physical copies of some first-party games remains surprisingly strong. One of the pieces of data seems to be as Malicious Insomniac Games Hack yes Total digital downloads of PlayStation Studios games Until June 2023. Spider-Man and 2020 Miles Morales Downloaded a total of 13.6 million times, Less than half of the 33 million sold 2022 coverage. god of war ragnarok It seems to have only been downloaded 4.2 million times Compared to 11 million sales Reported in January 2023.
Ahmed said that while the overall trend is toward digital, physical sales of the Nintendo Switch are even stronger. Nintendo still reports that About half of software revenue From physical releases and digital spend, including digital-only games and add-on content. But when you compare the physical versus digital sales breakdown of the retail version of the game, the differences are even more stark. According to his estimates, in the first quarter of 2024, the proportion of Switch users purchasing the physical version will exceed 60% of the digital version.
“In terms of digital sales as a whole, it’s absolutely huge,” Ahmed said more generally. “But if we just look at the physical versus digital ratio of physically released games, then yes, it’s lower than the 70% number, and the ratio of AAA and first-party games is definitely higher, especially during the holiday season. , gift giving is a noteworthy part of it.
Even like some big games Baldur’s Gate 3 and Alan Wake II After initially skipping physical editions at launch, smaller and indie games that were previously only available digitally are partnering with companies like Limited Run Games to print physical editions and deliver them to die-hard fans. “I think there’s always going to be a demand for physical media,” Limited Run CEO Josh Fairhurst said. my city in a recent interview. “We saw that with music, things started to feel like it was going to be all digital, and then vinyl exploded because people started to see the downsides of buying digitally as opposed to actually owning the music.”
He said that the number of viewers on Switch is definitely the largest, while the number of viewers on Xbox is the smallest. It is estimated that for every Xbox version of the Limited Run physical game sold, 2 were purchased on PlayStation and 10 on Nintendo platforms. Buy. He believes that in addition to fans’ physical connection to products from the NES and PS1 era, concerns about a lack of digital preservation also drive physical collections.
“I think that’s going to happen more and more over time, more and more services will eventually shut down for one reason or another, because there’s always something newer, bigger, better. , will eventually fall out of the pattern, regardless of the current situation. “I think people will be frustrated when they see their digital purchases disappear. “
That’s not necessarily the case with Xbox, where most sales of this generation of consoles come from the disc-less Series S, and millions of people subscribe to the Netflix-style rental service Game Pass. Fans now regularly share photos online of nearly all-digital Xbox sections at stores like Target and Best Buy, where cards with download codes have replaced plastic game boxes. Large first-party releases, e.g. Senua’s Legend: Hellblade II Skipping physical editions, physical editions of some smaller games from third-party publishers earlier this year appear to have been cancelled. Meanwhile, leaked plans point to Microsoft working on a Diskless mid-generation update for X Series.
Earlier this year, Microsoft gaming chief Phil Spencer said game files The company has no plans to abandon physical media. “I would say our strategy does not depend on people going fully digital,” he said. “Getting rid of physical constraints is not a strategic thing for us.” But analysts all believe that Xbox will be the first game console to completely abandon discs. Circana analyst Mat Piscatella Tweets posted earlier this year He expects Microsoft to go all-digital soon, Sony to follow, and Nintendo to have at least two more generations of hardware with physical media.
“As long as there are disk drives in consoles, physical hard drives will never completely disappear, and as long as it’s part of the console package, there will always be a need for it,” Ahmed said. “But if, for example, Xbox’s decision to exclude next-generation optical disc drives, like we saw with the all-digital Series X, is unlikely to see a significant negative impact on earnings given the niche of physical sales on the platform today.
Even as companies continue to support physical formats, their advantages will continue to erode. Discs and cartridges, which used to be plug-and-play, now require installation on the console and often require extensive day-one updates. It can take weeks or months to fix important bugs or add highly requested game features in post-launch patches. “With that in mind, a lot of people would say ‘I’ll just buy the digital version,'” Ahmed said. “It’s the same thing, but more convenient.”
