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NPD: Full-Game PC Downloads Reaching Parity With Physical Purchases
NPD: Full-Game PC Downloads Reaching Parity With Physical Purchases
July 21, 2010 | By Kris Graft

July 21, 2010 | By Kris Graft
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    9 comments
More: Console/PC



NPD Group claimed Wednesday that full-game PC digital download purchases reached 21.3 million in the U.S. during 2009, nearly even with 23.5 million physical unit buys, signifying an important shift in purchasing habits.

The tracking firm said that, according to its estimates, PC digital downloads represented 48 percent of unit sales for PC last year, and accounted for 36 percent of dollar sales.

Retail sales of PC games declined 23 percent in the U.S. to $538 million in 2009, NPD reported in January this year. As online sales from downloadable content, full game downloads, subscriptions, microtransactions and mobile continue to increase, NPD is looking at ways to measure the impact of those emerging models on a regular basis.

Social gaming on networks such as Facebook also are bringing in new gamers who are willing to spend big money on virtual items. FarmVille developer Zynga alone is on track to bring in a projected $1 billion for 2010, according to recent reports -- and those revenues are going under NPD's monthly sales radar.

A recent Gamasutra analysis estimated that NPD's monthly U.S. retail sales reports may have overlooked $2 billion in non-retail revenues in 2009, or about 20 percent of the total reported industry sales for the year.

"The popularity of social network gaming increased from Q3'09 to Q4'09 as 4.8 million more people played games on a social network in the U.S.," said NPD game analyst Anita Frazier. "This demonstrates how consumers can now experience casual types of games through myriad vehicles, broadening the competitive landscape."

NPD also cited a 30 percent increase in iPhone and iPod Touch usage as gaming devices from Q2 2009 to Q4 2009. The firm said 97 percent of people who downloaded a game app last year also downloaded a free version of a game.

Additionally, NPD estimated ranks for the top digital retailers in the areas of frontline (retailers with a focus on games also offered at physical retail) and casual (focus on smaller games with a try-and-buy or ad revenue model).

Top 5 Frontline Digital Retailers –2009 (based on unit % share)

1. Steampowered.com
2. Direct2drive.com
3. Blizzard.com
4. EA.com
5. Worldofwarcraft.com

Top 5 Casual Digital Retailers – 2009 (based on unit % share)

1. Bigfishgames.com
2. Pogo.com
3. Gamehouse.com
4. iWin.com
5. Realarcade.com


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Comments


Jason Patterson
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It's not at all surprising that the tide is shifting away from brick and mortar stores. Discounting the casual gaming sites, which I know is technically impossible given their impact, it is still very understandable that more people would be using online retailers to purchase PC games and there's a number of factors to contribute to this. First is the undeniable attraction to buy something through Steam or any other frontline retailer like Impulse to avoid having to deal with the issue of lost or damaged discs or the annoying issue lost registration keys to reinstall a game that you already own. Second is a disturbing trend that I've noticed occurring in brick and mortar stores, the decreasing of number of hardcore PC games being offered. As PC games statistically don't sell near as much as console games they're getting overlooked. As big-box retailers look to increase the overall offerings in electronics departments I've noticed that more and more non-game software have been intruding onto the shelving units typically reserved for hardcore PC games while the casual game selections remain largely in tact. The result of this is that, between the highly expected big-budget titles or the few titles that have earned virtual immortality in terms of their shelf-life, such as Starcraft, there is little shelf space available for new and innovative non-casual PC games. These two factors, and I'm not denying that there are other factors, have resulted in an increasing shift toward digital-distribution.



Now, with every trend, there is a way to reverse it. So how would the current trend be reversed? First big box retailers would need to grant more shelf space to hardcore PC games as well as change how they see them. In many cases, it seems that managers at stores don't see computer games as being on the same level as console games so they don't put as much effort into stocking the latest and best PC games. While this is largely speculation based on how rarely PC games will be found anywhere near console games in big box retailers, I did ask a Wal-mart manager before and that was the explanation I was given. The hiring managers simply don't view PC games as games but lump them in with standard computer software like anti-virus programs or operating systems. Another way that retailers can fight the current trend toward digital distributors is to move ALL PC games to shelving units near console games. Far too often when I go into a Target or a Wal-mart I find PC games on the opposite side of the electronics department from where the console games are at. PC games should be placed closer to where gamers focus most of their attention, on console game selections, resulting in increased visibility.



Moving onto a bit of a tangent, is there anything that digital distributors could do to loose their gains or developers could do to reverse it? Digital distributors are, by their nature, fairly simple. So long as they continue operating in the same way they currently do, I expect them to continue doing well. As for developers of the games, the primary thing they could do would be to drop registration keys physical games or introduce some digital record that would link games to a person's information. This way, if a gamer does loose a registration key on a game they had previously installed, it would be possible to go to the developer or publisher's website, enter the required information, and retrieve the code. This would be a relatively simple fix that would also eliminate much of the hassle associated with registration keys and diminish one of the advantages digital retailers have over brick and mortar stores.

Joseph Cook
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I'm also curious how NPD tracks sales. I remember reading an interview with Brad Wardell on Impulse, who claimed that according to publishers he had direct relations with, Impulse was at a "clear number two position".



http://www.bluesnews.com/s/104810/direct2drive-refutes-impulse-cl
aim

Michiel Hendriks
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I thought NPD stopped tracking PC games. Also, does NPD also track sales through online retailers? I mostly buy physical copies through online retailers. Browsing through the shelves of a real brick and mortar store is quite an tedious task.

Carl Chavez
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Something to think about: the average unit price of $538m / 23.5m sales = $22.50.



That means that people buying games at retail are mainly buying 1) PC games that have been marked down and 2) inexpensive casual games.



Also interesting: take out Sims 3, which was the #1 game last year. The last known sales number I could find is from August 2009, so we only have three months of data. By August 2009, it had sold 3.7 million copies. It was still a new release, so let's assume an average retail price of $48. That is a total of $177.6m in retail revenue, leaving $360m total PC game revenue and 20.1 million sales. That makes the average PC game price $17.91 after taking out three months of Sims 3 data! The adjusted average price would be even lower if we had the numbers for Sims 3 between September and December. Clearly, retail is not the domain of hardcore PC games. There's no way to make a profit on a hardcore game with unit revenue that low.



Despite the drop in average price, hardcore PC game developers are still making money. It's clear, then, that digital download revenue is the most significant part of their profit these days. They get more sales volume, they get a larger share of the revenue, and they can even get 100% of the revenue if the software is purchased directly from them (like Valve and Steam, or Stardock and Impulse). It's too bad that the sales numbers are unavailable from most digital-download portals. It would be a significant revelation to how the games industry works these days.

Derek Smart
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@ Joseph



Ignore Brad. That statement was rubbish.

Maurício Gomes
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@Carl Chavez



To me it shows that people that need stores, are the ones without money to get internet, thus they also don't have money to buy 50 USD games...



Here in Brazil where internet is utterly crap, people buy (not download) pirated games (for around 10 USD) as their primary mode of getting games...

Christophe Couderq
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@ Carl Chavez: I believe that the $538m figure is for U.S. only, while you're taking the worldwide sales figure for The Sims 3.

J Smith
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Without the cooperation of Steam and a couple other big digital distribution companies, it seems almost impossible for NPD to come up with any meaningful estimate of DD sales. They could try and poll PC gamers directly but how would they reach a representative cross section (or even know what a representative cross section looks like)? Intuitively and anecdotally, it feels like DD has already surpassed retail for hard core PC games.

We're operating in an environment right now where nobody really knows what the market opportunity is for a hard core PC game. It makes it very difficult to invest in creating one.

Michael Lubker
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And yet DarkSpore and Robot Entertainment's (probably PC) game are being invested in.



Also, I wonder if NPD is taking prepaid cards for social games and MMOs (played on PC) into account.


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