Economic Effects: Rise of the Digital Marketplace

This past Thursday night, thousands of serious gamers across the United States waited in anticipation for the midnight release of one of the most successful game franchises in recent memory: Call of Duty. As the clock struck midnight, thousands of fans rushed into video game stores across the nation seeking a physical copy of the latest installment in the series, Call of Duty: Black Ops 3. While waiting in line till midnight for a video game may seem foolish to some, the massive culture of gamers have come to embrace such events with open arms. Midnight releases, allows for gamers to start playing before the more recreational gamer even wakes up the next morning.

GameStop Midnight Release

Although the most popular game franchises, like Call of Duty and Halo, still have the ability to generate a massive turnout for midnight releases, the recent rise of digital marketplaces offering the same options to their customers have started to cause a declining trend in the amount of midnight releases being done each year. This is due to the digital marketplaces popular means of content distribution, which affords its customers the ability to download the latest titles directly to their system in the comfort of their own home. As the distribution of content through digital marketplaces continues to evolve, what is the future of the physical game medium? Will gaming culture come to abandon this older means of content playability? Or will the physical game continue its predominance over the the gaming marketplace, as it always has?

Xbox Live Marketplace

Microsoft was the first console developer to launch a digital marketplace through their Xbox platform called Xbox live in 2002. Initially, the game content being distributed over online marketplaces was restricted due to lack of connection speeds and size limitations stemming from the consoles internal memory card. However, now due to modern technology, the digital marketplace has been developed to include a wide array of content for distribution, such as music, movies, television shows, and video games. As the infrastructures continue to improve gamers access to a variety of content in the digital marketplace, the more serious gamers are relying on them to purchase content digitally versus physically from retail stores. According to a report from Super Data Research Inc., in North America alone last year, digital game marketplaces took in $11.8 billion dollars in revenue (Hawkins). 

As revenue figures continue to increase year over year, so does the amount of serious gamers converting to buying digital games every month. "Most growth in space came from existing players buying more full games digitally, as average monthly full game spending jumped 39% to $132.46 million" (Hawkins). I believe this trend in monthly revenue growth from digital marketplaces stems from the accessibility of content afforded to every gamer with an internet connection. This makes it easier to access any title the customer wants, whenever and wherever they are. Faster internet connection speeds has also been a contributing factor causing a rise in popularity among digital games, due to its ability to download games at extremely high rates of speed. Due to these affordances provided by the digital marketplace, gamers can stay at home, avoid long lines at midnight releases, simply press download and relax, wait for a short period of time and play. 

Playstation Network Store

So then, with the digital marketplace providing so many affordances to gamers, does the physical game even have chance? According to an article on Business Finance News, "physical software sales have been facing hindrances in seeing growth return. October showed that the growth had declined to -3%, while the quarter ending in October coming at -4.9%," (Pritchard). And with numbers projects to be even worse by the end of 2016, it seems like the physical format of video games has started its decline. Eventually, its possible that the physical game form will no longer exist and video ames will be solely distributed in the form of digital content. However, for now I believe the physical game is here to stay. Problems with internal memory hardware in consoles still provide restrictions on the amount of content one can download and store. And switching between hard drives is really the same task as switching physical game discs. Also, if game developers were to completely move to a digital platform, they would be excluding a major portion of their customer base, which would in turn hurt their immense streams of revenue. Game developers would need to provide some sort of universal system of access to the content available on the marketplace, in order not to exclude any patrons from their intended purchase. However, a viable system to do such a task just hasn't been developed yet. Therefore, although the digital marketplace continues to grow in popularity and accessibility, the physical and digital game will continue to co-exist side-by-side, at least for right now. 

References:
Hawkins, Z. (2015, November 3). An Increasing Number of Gamers Buying Full Games Digitally. Retrieved November 7, 2015.