DFC Intelligence had said that game software would reach $100 billion in revenues worldwide by 2018. But now it is revising that timeline.
DFC, a market research firm, explains that game sales won’t get to that milestone until 2019, according to Games Industry International. The delay is due to the console market losing parts of its audience. This is despite strong sales for the new PlayStation 4 and Xbox One consoles. Millions of consumers have already picked up those systems, but that doesn’t tell the whole story. Software sales on older systems have plummeted much faster than publishers were anticipating. That’s likely because the cost-conscious family consumers that would swoop in at the end of a generation to get inexpensive hardware and games are already happy with their often free-to-play options on smartphones and tablets.
“The console market is still very robust for triple-A products,” DFC analyst David Cole told Games Industry International. “The concern is losing that second-tier audience that made products like Wii, PS2, Guitar Hero, Kinect, Singstar, and more so successful. Basically, the more casual audience now has so many low-cost options.”
When more casual players do spend money, it’s often on those aforementioned mobile games. Android and iOS games generated more than $16 billion in consumer spending last year, and it’s on pace to surpass $20 billion in 2014.
DFC notes that publishers can adapt to this change by focusing on digital. More consumers are spending their money on downloadable versions of big retail release as well as digital-only games. Another DFC analyst, Jeremy Miller, explained that traditional game companies will have to continue balancing their physical and digital offerings.
“Day one digital releases on Xbox One and PS4 are helping the digital shift,” he said. “But we can’t overlook the value of strong catalog management on both Xbox Live and PlayStation Network. Digital catalog game prices have to compete with greatest hits, used games and the bargain bin at retail. It takes smart curation of these digital stores not unlike on the PC with Steam, which has gone through many evolutions in its history and not always smoothly as catalog sales become mostly dependent on discounts. That said, [Microsoft, Sony, and Nintendo] recognize the importance of digital sales of triple-A retail games. They will all have to simultaneously make it convenient and competitive for consumers while keeping retailers happy.”