Recession? What recession? Despite reporting its worst year-over-year retail decline since the September 2000, IGN is reporting the sales of digitally-delivered software is on the rise. Unfortunately for those looking for specifics, IGN's report is largely void of real-world numbers, outside the somewhat ambiguous percentage growth reported by Microsoft, Steam, and - conveniently - their own Direct2Drive service. Both Nintendo and Sony declined to report their respective digital sales figures, giving an incomplete picture on the health and vitality of this burgeoning avenue of game distribution.
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Microsoft's recent reporting had their Xbox Live service experiencing a whopping 73% year-over-year increase during the last six months for paid downloads. Unclear in the report, however, is just how much of that increase is attributable to game sales for the service, which also includes movies sales and rentals. Valve likewise reported an incredible 97% increase in download sales year-over-year for their delivery service, with Direct2Drive sales up an impressive 52%.
None of the major gaming consoles currently offer full-retail game libraries on their respective services yet (although Microsoft plans to add this feature shortly, and Sony is experimenting with select titles), which make direct retail-to-digital sales comparisons difficult. In the case of Steam and Direct2Drive, however, just how much of their impressive sales increases are derived from discounted software via publishers looking to subsidize losses from diminishing boxed retail sales remains unclear. It would be interesting to see if digital sales trends parallel their retail counterparts, as recent NPD reports have shown a growing interest in older, evergreen titles outpacing newer releases.
Famed videogame prognosticator Michael Pachter from Wedbush Morgan Securities estimates the market at $1 - 2 billion worldwide, or roughly 5% of monthly videogame sales. While not exact, he figures the growth in online sales as significant on their own, but not enough to offset a slowing retail sector with totals showing "perhaps a 5% incremental impact in a given month (there were downloads last year, too), but not likely that the impact was more than that."
NPD's Anita Frazier agrees with Pachter, stating that even with the uptick in sales digital delivery is still "not yet having enough impact on the console market to be an overly meaningful factor in the retail down-turn."
While digital titles may have a ways to go before catching up to their boxed counterparts, it's clear that attractive pricing and availability seem to be the greatest factors in spurring growth in digital download sales, with reports of discounted software experiencing sales spikes no doubt encouraging to those publishers with large back-catalogs and fans eager to pick up a good bargain. With the costs of producing and distributing new software higher than ever, look for both developers and publishers alike to not only continue their investment in digital delivery, but expand significantly to help survive in a period of economic uncertainty.
Thanks to IGN!
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