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The rise of digital distribution

HMV’s and Blockbuster’s decline and fall into administration emphasised the shift by consumers from purchasing physical products to buying digital content and underlined the importance for game developers to self-publish digital content.

In recent years, there has been a significant increase in the number of self-publishing developers with smartphone and social media gaming proving especially popular.

The video game software market at retail fell 29 per cent in 2012, a huge drop. Yet research by the Entertainment Retailers Association showed digital sales of games totaled £552million, a rise of 7.7 per cent.

Apple’s App Store surpassed the 40 billion download mark and games regularly take up 70 per cent of the top 10.

The three major consoles – the PlayStation 3, Xbox 360 and Nintendo Wii U – also have digital distribution platforms and, when PC and Mac gaming are included, it is clear there is a great opportunity for developers to be creative and maximise their revenue.

Jason Kingsley OBE, TIGA Chairman and CEO and Creative Director at Rebellion, said: “Blockbuster’s and HMV’s fall into administration is very sad, not least because of the probable job losses but their decline and fall has been driven by the decisions of consumers to embrace digital downloads.

“The DVD space is being eaten away by services such as Netflix and Lovefilm, CDs have largely been made irrelevant by iTunes, Steam has made the PC a buoyant gaming platform and mobile platforms have made consumers more at ease with buying for non-tangible products.

“The future of games development will increasingly lie in direct marketing to consumers and this will not only enable developers to communicate directly with their buyers but it will also allow them to be more creative.”

Patrick O’Luanaigh**,** CEO, nDreams Ltd, TIGA Board member: “As someone who has spent a great deal of time and money in Blockbuster and HMV stores, I really hope that the companies are able to come out of administration in some form.

“Sadly for Blockbuster and HMV, there is no doubt that entertainment retail is an increasingly tough sector with more and more gamers spending their money on digital downloads with Apple, Steam, Google, PSN and the like.

“Like the music industry, I really do feel that this trend is unstoppable, and I hope that Blockbuster, HMV and other entertainment retailers are able to adapt their businesses to fit into the changing environment.”

This was posted in Bdaily's Members' News section by TIGA - The Independent Games Developers Association Ltd .