The future of the US gaming market: Downloadable, familiar

the future of us gaming market downloadable familiar videogameAre we finally beginning to see the possibility of a tipping point between analog and digital spending for videogames? A new report on game spending for the second quarter of 2012 shows that, while American consumers have dropped their traditional gaming purchases by a dramatic amount, digital sales are racing upwards in the same period. Although it was probably only a matter of time, it’s a change that nonetheless seems surprising; after all, they’revideogames. Shouldn’t that kind of thing be future-proofed a little better?

According to a new report issued by The NPD Group entitled Q2 2012 Games Market Dynamics: U.S., American consumer spending on new physical video game and PC game releases between April and June this year totaled $1 billion. Sales dropped by 29 percent by June, NPD reports, to around $699.8 million in revenue from traditional video game sales – but at the same time, revenue raised by digital products – defined as full game and add-on content downloads, subscriptions, mobile games and social network games for the purposes of the study -went up by 17 percent to reach $1.47 billion.

NPD Group analyst Anita Frazier summarized the movements by telling the Hollywood Reporter, “In the second quarter of this year, sales of content in a digital format have grown 17 percent over Q2 2011. While this growth is in stark contrast to the declines in new physical software and hardware sales, the size of digital sales is not quite large enough to offset these declines, leading to an overall drop in consumer spending in Q2 by 16 percent.”

Interestingly enough, this isn’t necessarily a US-centric situation, as Frazier compared the American report to similar ones handled by NPD in the United Kingdom, France and Germany. “While many European acquisition trends in the second quarter of 2012 mirrored those we saw in the U.S. due to seasonality,” she said, “Europe differed from the U.S. in terms of softer mobile spending, but greater stability in rental trends.  Growth in full-game and add-on content downloads in the second quarter is surprisingly similar as the content behind this increase is suitable to both markets.”

Clearly, gaming companies should start – if they’re not already – paying more attention to downloadable content as their fastest growth market, both in terms of deliverability and cost; but the status of the rental market may be worth looking into, as well. According the Games Market Dynamics: U.S., the secondary – ie, non-new-purchase – physical market brought in $386 million in the last quarter. What is to be made of the idea that parts of the market that aren’t new full-game releases are the parts that are growing fastest, I wonder? Perhaps we’re about to enter a time where consolidation becomes as important as expansion, and a new conservatism takes hold on creators as well as consumers…

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