IHS Screen Digest has added PC core games download-to-own market sizing and forecasting to Games Intelligence. Consumer spending and unit volumes are split into all territories and regions covered in Games Intelligence and may be found in each territory dataset eg, for the USA.
A standalone sheet containing all revenue and volume forecasts is also available in our "Online" section.
Our PC games download-to-own ("PC DTO") numbers comprise:
- spending on digitally downloaded games via PCs on a sell through or retail basis only: no subscription based or freemium spending is included. Hence we include spending on digitally distributed MMOG clients but not subsequent subscription based or other spending
- spending on PC games which are distributed digitally but which are also sold via packaged retail. PC games which are exclusively distributed digitally are not included.
Market Sizing and Forecasts
Our initial findings indicate that PC DTO is one of the fastest growing segments in digital and online gaming, with only social and video-streamed games-on-demand outstripping anticipated growth rates over the next five years (albeit from a significantly lower starting point for VSGoD). We believe global spending on PC DTO in 2011 will be around $860m and will rise to over $1.4b in 2015 with the majority generated by gamers in the US and key Western European markets which share the fundamental characteristics of high volumes of spending on core games, high broadband household penetration rates, wide availability of cheap and uncapped broadband consumer deals and targeting by the key PC DTO operator: Valve. As is common with other emerging digital distribution models, spending and usage patterns vary extensively between European markets. While usage levels of online PC gaming in Eastern Europe and Asia can be extremely high, we believe spending lags significantly behind territories in the Western World when it comes to PC DTO.
We have taken into account the decline of spending on packaged PC games which has halved in the last five years. We expect spending on packaged PC games to stabilise at around one third of peak spending across most major markets however we do not believe PC DTO will grow fast enough to replace the declines until well into the latter part of this decade. PC DTOs rapid growth rate is due to the adoption of increasingly mature and fully featured PC DTO platforms amongst PC gamers; essential background factors largely to do with broadband connectivity, cost and availability; the willingness of publishers to go day and date with major packaged PC releases on PC DTO services and the decline of shelf space for packaged PC games amongst games retailers in once key markets. Despite this growth we nevertheless expect total spending across packaged PC games and PC DTO to shrink overall as consumers move away from the retail model, however it is delivered, to a variety of increasingly service oriented models. The emergence and rise of on-demand gaming does not exist in isolation from these trends in our view: as broadband speeds and QoS improve we expect on-demand games services to encroach increasingly on this sector, which will (eventually) help turn around a shrinking market. However this is a dynamic which is likely to play out over the next ten to fifteen years at current adoption rates rather than the next five.
Operator Market Shares
While Valve's Steam service is unquestionably the dominant operator in terms of market share we expect competition to intensify over the next few years and for Steam's share to be eroded as a result. In particular as Blizzard release more games than its currently spartan release rate, peaking with the release of the successor to World of Warcraft, we expect Battle.net to take increasing levels of market share across all territories. We also expect Gamestop to invest in the recently acquired Impulse service and drive usage in the US market via its' loyalty card scheme and retail estate. Outside Steam the market remains relatively fragmented at present with only a few operators winning more than a few percentage points of market share across most markets. These include Direct2Drive (just acquired by Gamefly from FIM), Blizzard's Battle.net, Gamestop's Impulse and operators who have won share in particular territories only, such as Gamesload in Germany.
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