Video game retail sales were at an all-time low in many regions last week, and TIGA, a UK-based association of video game developers, announced its suggested plan for dealing with the downturn: place the industry’s hopes in digital downloads.
UK game retailers only pulled in £8.4 million a week ago, which MCV reports is the lowest haul the industry has managed in the UK “since records began.” In response to the downturn, TIGA published a press release titled, “TIGA Comments on Decline in Retail Sales of Video Games.”
MCV and TIGA both pointed out some possible causes of the decline in retail sales, including the Olympics (which take up a lot of leisure time), the ending of the current console cycle, economic factors like scaled back discretionary spending, the closure of many stores by a major games retailer, and of course, the intrusion of digital downloads.
TIGA takes it a step further by arguing that digital downloads are actually a promising direction rather than a worrisome threat to physical disc sales. One of the reasons digital is promising, the organization says, is that it brings gamers closer to developers without publishers or retailers getting in the way. Here’s a quote from Patrick O’Luanaigh, one of TIGA’s board members and chair of its self-publishing group:
Surely it is now time for retail publishers with their huge marketing experience to find a new way of working with independent studios with strong digital talent. The old model where publishers owned all the IP and offered ‘net of everything’ royalties can’t work anymore. Lots of UK studios are now self-publishing, but many talented teams still need either financial assistance or marketing expertise to bring a successful game to market. I applaud initiatives like the new Activision Mobile publishing label and hope that more publishers go down this kind of route.
Digital sales are rising, argues TIGA, especially with self-publishing platforms like the Apple App Store, the Xbox Live Arcade, and the PlayStation Network. However, there is cause for concern; digital sales are growing, but not quickly enough to make up for declining retail revenue.
This is a problem faced by many industries in their transition. Just as HBO would likely in the long run benefit more from distributing its content itself and directly to consumers over broadband networks, game developers would probably benefit from moving entirely to digital distribution. But the transition is a terrifying one for risk-averse businesses during a middle period in which lost retail sales and gained digital ones don’t line up.
That said, most people in the industry acknowledge that this is the path that games are going to take. We interviewed Sony SVP Scott Rohde who explicitly said that digital distribution is “inevitable.” In the end, it’s probably more convenient for gamers too. But just be ready for rock roads in the meantime.