The shift from physical media to digital has been a long time in the making, marked by digital music, video, and book sales. Video games are no different. Although some still prefer the “classic” feel of having a physical game copy, especially if they’re special collectible editions, downloading a game allows consumers don’t have to worry about a store selling out, waiting on line, or finding storage space for the piles of discs.Having a “pre-load” option, where a encrypted version downloads ahead of the game’s release, makes the prospect of buying digitally even more enticing, since fans can start playing the minute a game releases.
Yet, shifting to digital game releases has been relatively slow going, mainly due to their size (ranging anywhere from smaller 1-2GB games to juggernauts like the 60GB Halo 5: Guardians). For years, a number of distributors, including Steam, Microsoft, Sony and Nintendo, have offered games for digital download in favor of purchasing physical copies of games. However, the easily availability and the sheer number of games means that consumers could afford to hold out and wait for a big sale instead of buying them at full price at launch.
Much of that reasoning goes out the window when it comes to Fallout 4. According to SuperData Research, the highly-anticipated sequel set sales records last week to the tune of $750 million, of which 1.87 million units were sold digitally. That’s a small, but still significant, portion of the 12 million units shipped overall, but there’s a reason that number counts so much.
Out of those numbers, 1.2 million digital copies of the game were accounted for on PC (making up a third of total digital sales), while the remainder were purchased for consoles like the Xbox One and PlayStation 4. The report shows that PC gamers don’t “exclusively purchase games at a huge discount and instead prove themselves willing to shell out full price for select titles.”
SuperData CEO Joost van Dreunen, speaking with [a]listdaily, estimates that digital sales of the game account for $100 million, a big number for a title that also released in physical format. As to when digital will become the new normal, he answers In many ways, we re already there,” said van Dreunen regarding the growth of digital sales. “What tends to drive digital sales on console is a wider offering of content. Both Sony and Microsoft are aggressively pursuing digital strategies by exploring, for instance, free-to-play console games. Offering a wider, more diverse selection of games will ultimately drive digital sales on console.
Marketing also plays a key part in advertising for digital versions, as it did for Bethesda’s juggernaut. “Fallout 4 has been a fan favorite since E3. The release of its iOS version [Fallout Shelter] received a warm response, and subsequent revenues, and triggered several months of increasing anticipation for the release of its main title,” said van Dreunen. “At the same time, PC and console audiences have been in the midst of transitioning to purchasing and downloading games digitally rather than through retail. Keep in mind, however, that the various promotional efforts (e.g. the Mini Nuke and Bobbleheads) kept digital sales relatively low in the first few days: around 1 in 6 sold copies for Fallout 4 were digital, compared to an industry average of 1 in 4 or 5.
As for the appeal of digital sales to the point that they could be a big factor in overall game sales, van Dreunen added, “Last year we were watching digital holiday sales very closely, but ultimately retail was the bigger channel. We anticipate that this holiday season the tables will turn for the first time. Keep in mind that throughout the rest of the year retail sales in the US amount to $300-$500M on a monthly basis, compared to $900-$1,100M for digital. But the holiday season is the last bastion for retail-based sales.
Much of the appeal from the publisher’s side of things is being able to cut out the “middle man” in terms of game sales. For physical copies, consumers usually need to go to a location like Best Buy, Gamestop and others in order to take the game home. By selling digitally, Bethesda and others are able to bypass that process, making more money on the product as a result. Thus, why $1.87 million in digital sales is such a significant number, compared to copies shipped.
Other titles sell exclusively online, and with big results. Last year, Yacht Club Games released Shovel Knight on Wii U and other platforms as a digital download. It performed remarkably well for a digital-only indie game, selling over 700,000 units as of July. That prompted the developer to give physical releases a try, which released last month. Although physical editions will always be important, especially when they come with collectibles or are bundled in with consoles, the benefits of digital editions are on the rise. There’s no worry of stores stocking the game on shelves, shipping physical goods, or any of the other issues associated with physical retail.
One possible barrier to for some console users may be the use of virtual currency. Although Steam uses real money, and Microsoft’s Xbox Live service switched to real money transactions for game and media purchases years ago, companies like Sony still require the purchase of virtual currency in order to buy items from the PlayStation Network. Some might not take well to the two-step purchasing.
On the other hand, as players become more comfortable with virtual currency as they become accustomed to digital purchasing, as exemplified by the record-breaking Call of Duty: Black Ops III digital sales on the PS4. Especially around the holiday season, as companies like Nintendo plan to mark down several of its titles by 50 percent during Black Friday week. When looking at Amazon’s recent best seller list, gift cards take up most of the company’s top 20 digital sellers.
It just goes to show that digital video games are slowly but surely finding their place in the market, right alongside the physical release. If marketing can continue to give them a proper push, the only limit to digital sales will be available hard drive space.