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Study: Video Game Disc Spending Down, Format Still Tops Market

26 Mar, 2014 By: Erik Gruenwedel

Consumers are buying fewer video game discs while online and mobile alternatives flourish — trends that mirror the home entertainment industry, according to a new forecast from Strategy Analytics.

About 41% of games ($25.5 billion) will be purchased globally on disc, compared with 68% in 2009. Another 31% ($19.4 billion) will be purchased digitally online (up 21% from 2009), while 28% ($17.3 billion) will be for mobile (up 250%).

The projection underscores the importance of disc drives in gaming systems, a factor Microsoft took to heart when it included a Blu-ray Disc drive in the Xbox One.

“Disc-based games … won’t ever recapture the peak years of the PS2 and Wii generations, [but they will continue to lead],” Eric Smith, analyst at Strategy Analytics’ digital consumer practice, said in a statement.

Smith contends there continues to be a large and sustainable market globally for disc-based games, particularly in North America and Western Europe, where the format remains the bedrock of games spending — accounting for over twice the market share of Asia.

Indeed, 28 million consoles were sold globally in 2013, half the volume sold five years ago. Yet, sales are expected to jump 14% in 2014 to 32 million units.

Growth in the gaming industry undoubtedly will come from mobile and online gaming. The number of people playing mobile games is projected to grow 14% in 2014 to 1.7 billion and should cross the 2 billion mark in 2016.

Smith said evolving business models in retail, rental, subscription-based video-on-demand and micro-transactions will include cloud-based storage (i.e. Sony’s PlayStation Now).

“Console manufacturers must continue to offer a differentiated and higher-quality experience than is available on other devices such as handsets or tablets,” he said. “These [experiences] should be sufficient to sustain at least two high-end games consoles [PS4 and Xbox One] for another hardware generation after the current one. We expect spending on consoles and disc-based games to peak in 2016.”

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