Digital Distribution Sales Up as Valve Reports 97% Steam Growth
Valve now says that year-over-year Steam sales have risen a significant 97%, while competitor Direct2Drive has logged a 56% boost, according to IGN. In the console sector, Xbox Live saw a 73% year-over-year increase in paid downloads, with the wildly popular Battlefield 1943--a game which sold over 600,000 copies online in its first week--providing an example of the potential for digitally distributed games.
However, it's not quite yet to declare a digital revolution, as analyst Michael Pachter notes that downloads still account for only about 5% of overall sales, and are likely not a major contributing factor to the current retail sales decline.
"Downloads are probably $1-2 billion worldwide this year, compared to a $26 billion packaged goods market," he said. "Significant, but not enough to cause a 20% monthly sales decline."
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tomservo
replyGreat deals, a good service and a large and ever growing catalog of awesome games? I'm not surprised by the 97% at all. I pretty much try to wait until things are on Steam before I buy them at this point.
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Doug Lombardi (or maybe it was Gabe) brought up an interesting point with issue. First off, weekend deals more often than not crush sale prices at brick and mortar stores. However, weekend deals are typically only for a few, or often one, title. And, they're only on the weekends. Second, often times prepurchases on Steam or other digital distribution services will net you a free game on top of what you're buying. One recent example is people who prepurchased Call of Juarez 2 got Call of Juarez 1 for free. It's not exactly a discount, but it is obvious added value.
Those points said, retail stores are going to be less likely to carry/stock games if they can't make any money off them. There are extra expenses in shipping, shelf space, print advertisement, etc. to pay for and if they are being undercut for basically the same product by the same partner (i.e. say EA sells games to Best Buy but also sells them direct to consumers via Steam at the same price they're selling to Best Buy for) then they'll fight back by just not carrying that product anymore. Since retail sales are still a significant portion of revenue, publishers do not want to upset brick and mortar partners. It's a fine line they have to walk. The interesting thing is that many publishers acknowledge when retail sales have dropped to a trickle, and typically respond by making significant cuts to the price via digital purchase.
Ubisoft and Take 2 are both good at generally making significant price reductions (via digital purchases) to products that have a retail peak and quick decline. Apart from Black Friday, you'll never be able to buy a game like Bioshock for $5, or a bundle of 10 AAA modern titles for $50 at a brick and mortar store. And Far Cry 2 was $20 on Steam 6 months after it's release.-
Good explanation.
Will digital distribution services like Steam, Direct2Drive, GOG.com dwarf retail outlets to the point where they won't even bother to stock any video games anymore?-
They pretty much have already done that in the PC department
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