There is something spectacular about owning a copy of a video game. Having a shelf full of them that stands proudly in your house. Going to the stores to get a physical copy of a video game was always an excitement. Getting video games for Christmas was a memory that many have because it meant that you could spend the rest of your holidays indulging in the game.
However, if you haven’t noticed already, the video game market is changing more drastically than we anticipated. Everyone is transitioning from physical copies to Steam or instant downloads. One reason is that it’s generally easier than traveling to your nearest shop.
Is the change that drastic? Some think so.
Michael J. Olson and Yung Kim (from Piper Jaffray) have gathered data for a report on the gaming markets compared to physical and online. In short, their predictions are that the game market will shift from physical distribution to digital by 2022.
According to the report, sale distribution in stores drops approximately 10 points a year. Also, the revenue gained from digital sales goes up due to publishers shifting towards subscription and streaming models. This is beneficial from the issues of hardware and large installations, and better suits the gamers who own an Xbox One, PS4 or PC:
“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.”
What they mean by shift is that, “video games will be 100% digital in the coming years […] we think 2022 is a realistic expectation.” This is a strong statement, considering how much video game stores have been a part of our lives, but when considering the situation as it is now, it’s possible that it could happen.
In March of this year Grainger Games’, a British video game retail chain, closed all 67 stores and laid off 390 employees because of financial difficulties. In an article by Kotaku, it is mentioned that workers began to notice signs of a decline in revenue of game purchased when the store brought in Funko Pops and Alcatel phones in an attempt to save sales. This was part of their ‘Be More Geek’ approach to their stores, which focused on video game merchandise rather than games themselves.
GameStop have gone through a similar situation in March of last year when they announced that more than 150 stores were to close, because of a 29.1% decline in hardware sales. More recently, GameStop began to sell comic books and classic systems.
These attempts at video game stores increasing their sales reflects the true problems that these stores have, in that they cannot compete with the availability of a 24/7 market. The places that suffer even more happen to be indie game stores that either sell unique or second-hand games.
Some attempt to incorporate codes so that there’s a link with digital downloads. However, the truth is that gamers could either go to these stores, buy the codes and then travel all the way back, or they can just go online, where they’re guaranteed that the code they’re looking for is there.
The stores attempt to sell Funko Pops and trendy collectables just to increase turnover. They also need to realise that doing this is also difficult when competing with online shopping, that is more likely to have every single Funko Pops in existence than what their shop can stock.
High-street music stores is one example of what could happen in terms of video market. The sale of music was heavily affected by digital downloads and online shopping, but music stores do exist, just not in high quantities.
I believe that video game stores will still exist, but there will be a decline in their numbers and an increase in digital downloads. As consoles change and develop, and more people begin to realise the practicality of Steam and instant downloads, people will begin to see the online function of buying video games.
However, there will always be people, myself included, who just like to own a copy of a video game because of the cover art, the special editions, the idea of collecting them. It’s just unfortunate that the number of people like this is decreasing, and the number of people shifting to online downloads is only getting higher as the year’s progress.
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