The NPD Group reported that in the first quarter:
- Digital revenues totaled $1.85 billion
- Traditional retail sales totaled $2 billion
- Zynga reported revenues of $235.4 million in the first quarter
The analysts are predicting further drops in retail revenue:
- Cowen & Co. predicts sales will decline 12%
- Wedbush Securities predicts a 6% drop
The Flurry blog has info from Michael Pachter of Wedbush Morgan Securities where he states that social gaming was:
- $600 million in 2008
- $1 billion in 2009
And the growth will continue as social gaming reaches:
- $1.6 billion in 2010
- $4 billion in 2013
On iOS platforms, in-game sales of virtual items is about 80% of the revenue generated per user, up to a current ARPU of $9.
GamesIndustry.biz has an article regarding used game sales which cites Wedbush Morgan Securities Analyst Michael Pachter and data on the used game sales market. He estimates the market at 100 million units per year. This is:
- One third of all games sold in the US
- Accounts for $2 Billion annually
The article goes on to defend game resellers including GameStop saying the trade-in value is low (usually around 20% of the original purchase price), and stating that the company doesn’t push customers to buy used games. It ends by estimating that used game sales stimulate 6% of new game sales.
Ultimately, the retailers make out where publishers and developers don’t see any incremental revenue after the initial purchase price. With Half-Life 2, Valve put a stake in the ground to curb PC game resales since it required an online connection and a registered Steam account to play. Online games such as EverQuest and World of Warcraft have also had single use registration keys for almost a decade, again eliminating the possibility of game resales. GameStop doesn’t resell PC games anymore, and shelf space is shrinking, but online and digitally distributed titles with key systems and account requirements have lower piracy then any other form of entertainment.
While there are many possible solutions for developers and publishers to deal with the resale issue, the industry has been reluctant to upset its major retailers by implementing similar online key registration and account-based content locks for console titles. Hopefully OnLive is a solution, but it may take the industry proposing a resale percentage on titles to get everyone involved and satisfied with the practice.