With the increased accessibility of high-speed internet and consequential rise of digital distribution within the last console cycle, odds are good that this an upward trend we will see continuing through the release of Sony's and Microsoft's next-gen hardware.
Analytics firm IHS
projects that digital will account for up to 34 percent of games spend on PlayStation 4 and Xbox One by 2017. It sees this as a natural continuation of digital's growth through the lifespan of the PS3 and Xbox 360, shooting from 7 percent in 2008 to its current, considerable share of the market.
"it's clear that next-gen consoles will be more aggressively aligned to digital distribution and services than previous cycles," says IHS games director Piers Harding-Rolls. With the growing popularity of 'day and date' digital releases coinciding with packaged retail launches, Harding-Rolls says, "By 2017 new releases could be enjoying up to 18 percent digital sales depending on geography."
There are five key factors behind the growing adoption of digital distribution, according to the report.
Content and services:
The increased availability of day-one digital releases for console games, as well as the prevalence of DLC, in-game purchases and free client software through which to deliver these, will continue to drive adoption of digital. "While digital distribution of full games will drive the transition as it has in the PC sector, experimentation with new content and service models... will help accelerate the switch to digital consumption," says the IHS report.
"The nature of the 'closed' console platforms means that competition on pricing is inevitably less developed, but this is slowly changing," says Harding-Rolls. With digital marketplaces now beginning to price games aggressively against packaged retail, it seems natural this will be an ongoing and growing trend, leading to lower list prices for consumers.
"Especially relevant for high-end games, the ability to access content rapidly or even instantly would accelerate digital adoption significantly," says the report, citing in particular the PlayStation 4's ability to stream PlayStation 3 titles. "How these are built and rolled out will impact digital distribution adoption."
With more populous digital marketplaces, the inevitable issue of discoverability will crop up, as it has done on popular mobile platforms such as Apple's app store. On this vector, Sony and Microsoft's ability to build "effective discovery tools and recommendation engines" will deeply affect adoption rates by both customers and developers.
While the outgoing console generation has seen DLC become a normalized fixture of games' business model, IHS foresees the adoption of mobile-styled microtransactions and hybrid retail/digital models to propel spending on next-gen consoles.
"There is no doubt that this is by far the most competitive consumer electronics climate that Sony and Microsoft have launched consoles into," concludes the IHS report. "However... the shift to digital consumption coupled with lower up-front investment in console hardware design and custom components will lay the foundation for stronger profitability for the platform holders [Sony and Microsoft] across the next generation."