Estimating digital downloads’ true weight
How much are digital downloads worth within the PC video games market? According to a recent report by NPD Group, in 2009 digital delivery of commercial products would have taken 48% of the overall marketplace in North America. NPD says that the 44.8 million games sold the past year would split in 21.3 millions in digital format and 23.5 millions on optical disks. The market research firm depicts a situation where on-line distribution of videogaming products would be on par with traditional retailers, positioning itself as the only business capable of putting back in shape the PC video games market.
But digital downloads’ real strength is a matter of discussion within the industry for some time now, Sony had even tried to market a handheld console with no reader for physical disks running into the huge fiasco of the UMD-free PSPGo. The Japanese giant has quietly admitted to have failed the digital business test, while the numbers published by NPD have been harshly criticized by Stardock‘s boss Brad Wardell. Besides having ideas directed at users’ needs satisfaction more than the industry ones, Wardell is in an ideal position as video games developer and publisher which at the same time owns the Impulse digital delivery platform.
“NPD’s numbers on digital don’t tend to have much reflection on reality – Wardell says when asked by Shacknews – As much as I would love digital distribution to take over the world, I can’t think of a single publisher (including ourselves) that sells even close to a majority of its units digitally“. “I am a big believer in the future of digital distribution“, Stardock’s CEO continues, “but the numbers we typically hear from publishers is that it’s about a third” of the overall sales figures.
A third of the copies in digital format is a “pretty darn good” result, Wardell admits, but the fact is that NPD’s estimates – built up from market researches and not upon concrete sales results – are marked as unrealistic and deceptive by a software company which has built a rather significant part of its business on digital delivery. Another important report refuting NPD’s digital “vision” comes from Entertainment Merchants Association (EMA), the organization representing the interests of the “$ 33 billion home entertainment industry“.
According to the numbers provided by EMA, the percentage of games on physical disk sold in 2009 is way beyond 52% as suggested by NPD, totaling between 80 and 90% overall. The organization promotes the activities of more than 1,000 international companies involved in the home entertainment trade, it certainly is in its interest to release figures which foster its own members activity and yet the data included in its latest report come from third party sources including Adams Media Research, Digital Entertainment Group, Parks Associates, ScreenDigest and NPD Group itself.
“Digital distribution is clearly an important segment of the home entertainment market and will continue to grow in market share in the coming year“, EMA president and CEO Bo Andersen said commenting on the data released by the organization. “While it is tempting for industry outsiders to say ‘disc is dead’“, Andersen continued, “as the saying goes, reports of its demise are grossly exaggerated“. As much grossly exaggerated as the foresight of an all-digital future for video games, in my opinion.