Digital spending soars while physical shrinks over 50% in ten years

Consumer spending in games has increased 72 per cent between 2007 and 2016, but physical spending has fallen by 54.9 per cent during the same period, according to a new report from the Entertainment Retailers Association (ERA).

Boxed games are now worth less than half their value in 2007, totalling 776m, but the growth of digital spending has skyrocketed by 1,436.9 per cent during the same time period, making the digital games industry a 2.2bn business.

There’s some good news to be found, though, as despite the huge increase in digital spending, physical games retailers have succeeded in securing higher consumer prices compared to their music and video retail counterparts. Over a period where average music album prices have declined by 25 per cent, and DVD prices by over 40 per cent, games retailers saw the unit price of games increase by 18.2 per cent to reach an average of 32.84.

This may be due to the introduction of a new console cycle, which has brought with it higher game prices, but the ERA says the decreasing number of games outlets has also played a role in the industry’s robust pricing structure.

In 2007, there were nearly 50 per cent more physical outlets selling games than were selling music or video, but by 2016, there were more than twice as many outlets selling music and video than there were selling games.

ERA research analyst Luke Butler stated: While [music, video and games] now conduct the vast majority of their business online, it is the games category that has embraced the channel most empathically. Over 83 per cent of games spend is derived via e-commerce channels, driven by a combination of growth in the micro-transactional world of mobile gaming, and a consumer switch away from boxed software and into direct-to-console digital distribution.

He added: The fact that games was the only entertainment retail category to record a drop in the number of shops trading last year is indicative of just how tough conditions on the High Street were. While specialist games retail is coming under heavy pressure, […] it still commands the lion’s share of spend in the physical space with around 40 per cent of total spend in 2016 going through its tills.”