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Report: Game Distribution to Switch from Physical to Digital by 2022

July 2, 2018Written by Jeremy Winslow

video game distribution

It’s no secret that the sale of physical media has declined. CD sales have dropped 18.5 percent last year, prompting massive entertainment retail chain, Best Buy, to pull CD’s from its store shelves on July 1, 2018. And DVDs aren’t doing too hot either, with the sale of DVDs falling to 14 percent last year. It should come as no surprise, as streaming has become the method of choice for most people to consume their media, and it seems the popularity of streaming – or, more specifically, digitally downloading – is starting to impact physical video game media in a very real, very negative way. According to a new report by Piper Jaffray Companies, video game distribution will be 100 percent digital by 2022.

Michael J. Olson and Yung Kim of Piper Jaffray have gathered data to compare the physical and digital gaming markets. The data revealed that the physical market is steadily shrinking at approximately 10 points per year. Piper Jaffray commented on this data, saying, “We believe it is a certainty that video games will be ~100% digital in the coming years, and while exact timing is hard to pinpoint, we think 2022 is a realistic expectation.” The report also discusses how additional factors, like the shift towards subscription and streaming models, could lead to a “higher recurring revenue mix” for publishers. “Our expectation is that major publishers will increasingly test and commercially develop streaming game offerings over the next 3-5 years. Streaming games from the cloud, without need for dedicated hardware or massive downloads, would materially grow the TAM (total addressable market) for [high-end] console-style titles.”

This all comes hot off the heels of GameStop’s recent financial woes. The retail chain, at the beginning of June 2018, published its financial report for the first quarter of the fiscal 2018 year. In the financial report, which we covered, it was disclosed that “total global sales were down by 5.5 percent, amounting to $1.93 billion, [and] store sales were down 2.6 percent in the US and 11.6 percent internationally.” In the same month, it was also revealed that GameStop was looking for buyouts, as the company’s stock dropped more than 32 percent last year.

[Source: WCCF Tech]