Report: Game Industry Shouldn't 'Overreact' To Digital's Retail Threat

A new U.S.-based report from market research firm Interpret discouraged the notion that digital distribution will rapidly overtake physical retail in the near-term. The firm's new Interpretation report found that from calendar Q1 2009 to Q1 2010, 80 percent of gamers did not purchase games digitally. In light of the results, the company said that "anxieties" over a rapid game industry shift away from retail in favor of digital distribution "may be unfounded." Managing strategist Brenton Lyle said in a statement, "It is critical that both the publishing and retail sides of the game industry avoid overreacting to a vision of rapid transition to digital distribution that fails to reflect reality." Physical retail purchases were still strong among the remaining 20 percent of gamers that did purchase games digitally, as downloaders also bought more games at physical retail than those who did not buy games digitally, the study found. Gamers that did buy games digitally purchased 2.7 games on average every six months at retail, 20 percent higher than gamers that never buy digitally. The study found only "moderate" increases in digital distribution purchases on core PC platforms like Steam, Direct2Drive and publisher websites, and also moderate growth on home consoles through Xbox Live Marketplace, PlayStation Store and the Wii Shop Channel. Digital distribution actually decreased on major casual gaming portal sites as social gaming on Facebook and other networks has become more popular. Lyle added, "Whether or not all game sales are digital in 10 years, right now the virtues of the retail environment, including convenience, trained sales staff, and the opportunity to encourage impulse buys, are as important as ever." Interpret's results come the same day as research firm NPD Group found that customers purchased more PC games by digital download than at physical retail in the first six months of this year. Gamers purchased 11.2 million PC games in the U.S. as full digital downloads versus 8.2 million physical units, NPD said. Leading brick-and-mortar retailer GameStop -- which reported $9 billion in sales last fiscal year -- is taking steps in adopting more digital business models, including the acquisition of web gaming site Kongregate.