The Digital Revolution: How Consumer Are Driving the Future of Games Retail

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September 20, 2012 by axelordz

My article, titled “The Digital Revolution: How Consumers Are Driving the Future of Games Retail”, was interesting look at the change in video game industry; the dying of the physical market and a surge of the digital one. The physical game media, that is, physical copies of video games, and traditional business practices and models are no longer self-sufficient; even detrimental, some might claim.

The year 2008 marked the peak of global games market, partly because of Wii hitting the market and it nurturing the casual gamer; however, the amount of money made from physical software, hardware, and accessories at the retail level has been steadily dropping in the US, UK, Japan, and Australian markets.

The market research group NPD recorded that the first half of 2102 saw a “double-digit percentage decline every month, with June hardware sales down by 45 percent and software sales down by 29 percent”. Apparently, a “never ending series of sequels” have only instilled a detachment in the typical customer, resulting in less interest in new software purchases and a decline in software sales. The companies Activision, Electronic Arts, and THQ are offering up to fifty percent more titles than they did several years ago; however, there has been only one “new intellectual property launched among the three companies over the last year”. Thus, physical game sales are slowing, and digit market has been growing. The digital market, which includes “full games, DLC, subscriptions, mobile games, and social network games” have skyrocketed in sales annually in the U.S., as well across the European market.

The article spent some time explaining the situation with the European video game retailer GAME Group, and its tragic fall. GAME Group went in to administration after requesting its stock to be removed from the London Stock Exchange. However, before it went into the administration period, a number of publishers, including Electronic Arts, Microsoft, Activision, and Capcom stopped supplying GAME with their latest products. A week later, GAME Group was purchased be OpCapita, but later was soon forced to “shut down 277 stores and lay off in excess of 2,100 staff members”. To add insult to injury, EA’s “Mass Effect 3”, along with it’s other March releases would be not distributed by GAME Group because the publisher did not agree to GAME’s credit-based payment terms. A criticism GAME Group received for its downfall was that it had rushed its expansion; the Australian GAME market quickly collapsed after it opened too many stores and suffered from the increasingly unprofitable local market.

Companies who have ventured into the digital and mobile market, like Ubisoft and the US game retailer GameStop, have shown considerable growth in profits. It has been noted that digital distribution model has so many more advantages than that of the physical game market; like having an instant international market while avoiding expensive processes like the physical distribution of boxed games. The article included an unthreatening speculation that companies like Sony and Microsoft are going to get hit hard if and when the digital market soon dominates, while companies like Apple and Google, which aren’t as tightly tethered to the physical market, will thrive and might even takeover.

However, two big factors that have stopped companies from completely shifting into the digital model: firstly, that the tangible product holds more human attachment than any digital product; and secondly, that the digital market will never be able to produce the experience of interacting with a human retailer, which apparently an important part of the purchasing experience.

All in all, although a majority of revenue in the industry still comes from packaged goods, many people and companies can agree that the future will see the physical game market losing it’s grip on the industry as digital business gains more power.

This topic heavily ties into what were studying in our class, especially since the format of the class has us journeying through the evolution of the gaming system, starting with the Odyssey. New technological break-throughs keep pushing innovation in the video game industry, but whether it could usher in a new era in video gaming just like the Odyssey (or topple it, in the case of the surging digital market in the present day) and what that would entail is what really has video game makers and distributors thinking. The question as to whether the will be profitable is plaguing the minds of the makers.

The situationalist approach to studying video games could change all together with the shift to the digital market. Though there are already mobile games, this area of gaming would grow exponentially, feeding into our fast-paced American culture.

It’s strange how gaming culture started out as a very exclusive lifestyle, where one had to actively pursue the opportunities to game, like arcades (where usually only other members of the gaming culture would be). The home video game console was still young and not mature enough to really capture multiple players. After the mass commercialization of the home video game, the culture exploded, meaning now this was to be a communal experience, a family activity even.  Its expansion meant more human interaction, whether between other players, spectators, or vendors. Playing video games meant that interaction with humans was necessary. However, with the digital era at our heels, the gaming culture is lapsing back into cutting out human interaction. The digital medium combined with the mobility and easy accessibility are what not only make physical interaction costly but unnecessary as well.  This changes the whole aspect of how one will study the play (the communication/sociology of gamers, the human experience of gaming, etc.) and culture (of individual games and gaming culture at large) of video games.

 

 

Parker, Laura. “The Digital Revolution: How Consumers Are Driving the Future of Games Retail.” Gamespot. N.p., 19 Sept. 2012. Web. <http://www.gamespot.com/features/the-digital-revolution-how-consumers-are-driving-the-future-of-games-retail-6396713/&gt;.

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2 thoughts on “The Digital Revolution: How Consumer Are Driving the Future of Games Retail

  1. zack373 says:

    At first I thought I double posted. I find it very interesting that another student found the same article as me. Ironically, both of us posted about the situationist approach. However, Axel had some very interesting points about the every changing mediums in which games are accessed through.

  2. rcthames says:

    Digital distribution is certainly something to keep an eye on in the future. One of the questions that springs up with the turn to digital product is the potential for a lower barrier of entry for developers, which conceivably could mean more chances for fresh ideas. However, there is the counter-argument that it wouldn’t significantly restructure power relations and more product is simply more saturation without guarantee of making any creative impact. The changes in playing online together (or not playing together at all) and playing with one another in the same room (what I like to call co-located gameplay) that you point to are also important as we move forward.

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