A couple of weeks ago, while looking at diminishing hardware
and software sales figures in the U.S. and the UK
, I brought up the issue of digital sales figures
. At that time I was looking at the estimates that the NPD Group has released for the U.S., but today I want to take a slightly more global view by looking at the worldwide retail and digital figures reported by five big publishers.
The data below comes from the publishing and digital sales results for Activision Blizzard
, Electronic Arts
, and THQ
. It has all been collected, or in a very few cases estimated, from statements made in the public quarterly statements of each publisher. You can visit their investor relations websites (linked above) to peruse the figures yourself.
Keep in mind that these publishers aren't the entire market. For example, I've not included any Japanese publishers, and there is probably a lot of revenue flowing through channels like Apple's and Google's App Stores, and distributors like Steam that isn't counted here.
For the sake of comparison, the data shown below will be referred to as fiscal year 2011, which ran from 1 April 2010 through 31 March 2011, and fiscal year 2012, which ran from 1 April 2011 to 31 March 2012. I'll refer to these periods as FY2011 and FY2012, respectively.
So, how big of a piece of the video game market do these publishers represent? In FY2011 these companies reported global revenues of $11.4 billion. In FY2012, that revenue had decreased 3.8 percent, to $11.0 billion.
Now, let's break it out and see how much of that revenue was digital and how much was retail. Here is a picture of the retail revenue from each year, subdivided by publisher.
That's a total of $8.7 billion in revenue in FY2011, falling to $8.1 billion in FY2012, or a contraction of 7.8 percent. For the sake of comparison, total software sales in the U.S. during the same periods showed a contraction of 9.4 percent, from $9.1 billion to $8.3 billion.
In terms of digital revenue, the picture is slightly more rosy. However, there are some interesting differences from retail. Here is the graph:
The first thing you'll notice is that Activision Blizzard and Electronic Arts dominate the digital sales among this group of publishers. They accounted for $2.5 billion out of the $2.7 billion total in FY2011 and then $2.6 billion out of the $2.9 billion total in FY2012.
Also notable is that Activision Blizzard's digital revenue decreased 13.9 percent from FY2011 to FY2012, mostly due to very sharp decreases in digital revenue in the last two quarters (from 1 October 2011 to 31 March 2012).
Before moving on, I want to note that in FY2011 the revenue reported here was 77 percent from retail sources and 23 percent from digital. That shifted slightly to 73 percent retail and 27 percent digital in FY2012.
Now, let's look at each publisher individually. I want to give a picture of how much each publisher is taking in from digital sources compared to its retail sales. First up is Activision Blizzard, which has seen its mix of retail and digital revenue remain basically fixed from FY2011 to FY2012.
Essentially what has happened here is that Activision Blizzard's retail and digital revenues both fell from year to year, but declined in such a way that the ratio stayed fixed. With the shrinking tail of Call of Duty
sales, and the launch of Diablo III
during May, it's quite likely that this mix will tilt more toward digital in the coming quarters.
Electronic Arts has been extremely aggressive on digital growth, and their revenue mix, pictured below, reflects that strategy.
Electronic Arts saw its retail revenue fall a mere 2 percent in the last fiscal year, while its digital revenue grew 47 percent year-over-year from $833 million to $1.23 billion. That gave the company a healthy 9.7 percent year-over-year growth across both segments. Moreover, I'd point out that over 30 percent of Electronic Arts' revenue now comes from digital sources. Ideally, that digital revenue carries a higher profit margin, which should help make up for weaknesses in packaged software sales.
Next up is Ubisoft, which has more than doubled its digital sales in the last year.
As the graph above shows, Ubisoft managed to hold its retail sales relatively flat from year to year, but grew its digital revenue at a rate of 115 percent. However, because digital revenue now accounts for a small fraction of the company's sales, its total revenue grew only 3 percent for the year.
Take-Two, by comparison, barely grew its digital revenue in the past year, as the figure below demonstrates:
Take-Two's retail revenues dropped by a stark 30 percent from FY2011 to FY2012, and unlike Ubisoft, it didn't have dramatic growth in its digital segment to help make up for that decline. In fact, Take-Two's digital revenues only grew by a meager 4 percent. It would be extremely interesting to know how much the release of Grand Theft Auto III
for Apple and Android devices contributed to the company's $105 million in digital sales.
Finally, THQ saw its digital revenue increase by 68 percent from FY2011 to FY2012, from $35 million to $59 million.
The figures above, I believe, help illuminate just how varied the digital picture can be. Some companies, like Take-Two, are barely growing their digital revenue while others are growing extraordinarily quickly, like Ubisoft and Electronic Arts. The net growth across all five of these publishers is right around 10 percent, year-over-year.
If current trends were to continue, these five companies could reach 40-50 percent digital revenue within the next three to five years. Of course, that will depend on many factors, including the launch of new platforms and the fortunes of future software releases. It will be worthwhile to watch the relationships between these publishers and the big retailers like GameStop and Walmart during this period, since they could be increasingly marginalized.
Check back after E3 for more on these publishers, and others. At that time, I hope to break out the figures for each of these companies further, beyond retail and digital and into other segments.