Getting Physical in the Digital Age

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Is the gaming store coming to an end?

In the April edition of Exploring Digital Gaming, The NPD Group reports that 36% of US gamers over the age of 13 have purchased a digital game with 16% saying they no longer play physical games. SuperData confirms in Q1 2014, digital gaming has accounted for $2.92 billion in the United States. Compared to just two years ago when NPD informed consumers that the total revenue for 2012 equaled $5.9 billion. Now, Sony, Microsoft and even Nintendo have created consoles that are ready for the future, but should gamers be frightened?

For comparison, take a look at the current state of both the music and cinema industries. In 2013, the RIAA reports that 40% of all music purchases were digital, 35% physical, and 21% streaming. Even as CDs continued to decline in the US, physical accounted for $2.4 billion. At this time, gaming falls in line with the goliath of digital distribution. .

In the movie industry, the outlook was a little grimmer. According to The Wall Street Journal, year over year sales in 2013 of digital increased by 50% while sales and rentals dropped 8% and 12%, respectively. With the drop, sales still accounted for almost $8 billion in revenue.

The most important fact to take from the comparisons is the amount of revenue that is still generated from physical media. Almost $10 billion, a percentage of the market that no industry can ignore.

The most interesting aspect is whether game streaming will catch on with consumers. A 50% increase over 2012 resulted in $628 million increase in music revenue, while the Digital Entertainment Group reports a 30% increase in streaming video in 2013 with Netflix accounting for over $1 billion alone in Q1 2014. PS Now is on the horizon with rumors of Microsoft attempting the same with the cloud, but gaming will have a harder time penetrating the market. Consoles to televisions now have video and music services built it, while gaming has needed a dedicated system. That could change with Amazon’s FireTV and Google’s long rumored console still gestating. While these consoles may not directly compete with what Sony and Microsoft have to offer, they could sway consumers into the digital frontier.

While 70% of gamers do feel that digital and physical games have the same value when speaking to the NPD Group, there will always be room for physical; even if the market is shrinking. Specialized chain stores may not be as frequent, but will still exist. Just look towards the music industry for last week’s Record Store Day where fans and artists alike threw in their support.

Myself? I own six physical games and over 300 digital games across all consoles; same can be said about my movie and music collections. I can still appreciate the importance of physical media, as you can never replace a great vinyl record.

How do you feel about the digital movement? Do you think streaming is the future? Will gaming follow the trend of other industries? How does your collection look and do you have any apprehension going digital? Let us know in the comments.