Video Games Predicted To Go 100% Digital By 2020, Says Analyst
Having the ability to choose between physical and digital copies of video games is something that’s quite useful and there are benefits to both options. Unfortunately, according to recent report from Piper Jaffray, analysts Michael J. Olson and Yung Kim found evidence which suggests that video games will go to a digital-only market by the year 2020.
The report indicates that the physical gaming market has continued to shrink around 10 points per year, which has also negatively impacted choice retailers. The changes to retailers hasn’t been the only shift either, both analysts believe that most publisher margins will be “dramatically” higher as well. Below is a breakdown of some statistics regarding the revenue for the next few years for Activision, EA, and Take-Two Interactive:
The report also states that the movement towards subscription and streaming-based models could lead to a “higher recurring revenue mix” for publishers:
Our expectation is that major publishers will increasingly test and commercially develop streaming game offerings over the next 3-5 years. Streaming games from the cloud, without need for dedicated hardware or massive downloads, would materially grow the TAM (total addressable market) for high end console-style titles. Specifically, today the primary market for major video game publishers is tied to consumers that own an Xbox One, PS4 or gaming PC, which currently has an installed base of 150-250M (depending on how gaming PC is defined) and a minimum price point of $199 (Xbox One S), which creates a barrier to entry for many would-be gamers. With ongoing datacenter build-outs and improving internet speeds, streaming games from the cloud could be a commercial reality within 2-3 years.”
Overall, the report indicates that publishers in particular are not exactly thrilled by the idea of a subscription-based model. At the same time, they are intrigued by the various possibilities that streaming services could provide.
There is a lot of value when it comes to physical copies of games. Many gamers keep them as a way of showing off their extensive libraries or as a way to share with friends. Players can trade them in and purchase other used games at a lower price, something that digital purchases don’t do. Still, digital copies are far more convenient, they save space, and most online libraries offer some form of digital gifting.
Will physical video games slowly become a thing of the past? Let us know your thoughts on digital vs physical games and more in the comments section below. As always, don’t forget to follow Don’t Feed the Gamers on Twitter for 24/7 coverage of all things gaming and entertainment.
Chris Calles1560 Posts
Known as "Stash" or Yippee Calles. He's a student of everything, avid adrenaline junkie, and creator of random things. When he's not delving into a game, book, or movie - He's out teaching himself new things or taking part in some pretty epic adventures. You can find him on Facebook, Twitter, Instagram and Tumblr.
