The title of this piece likely isn’t a huge shock to you if you’ve been keeping up with this modern generation of consoles. Now, more than ever, it’s become much easier to pay for digital games than physical. Why bother heading down to your local brick-and-mortar store when you can just own a game with a few presses of a gamepad? In the world of retail, reducing friction for purchasing is paramount, and there are fewer things more frictionless than being able to buy a game the very second after watching the trailer in a store.
The obvious conclusion here is that it won’t be long until physical games go extinct. Analysts Piper Jaffray recently published a report (and shared with Wccftech), and in it, they point out that the physical market is shrinking by roughly 10 points per years. Here is their conclusion:
“We believe it is a certainty that video games will be ~100% digital in the coming years, and while exact timing is hard to pinpoint, we think 2022 is a realistic expectation.”
One big obstacle for gamers going all digital is hard drive space. Games are getting bigger and bigger, and it’s becoming a bit of a hassle to have to constantly make sure you have enough space to play the latest iteration of Assassin’s Creed. As a result, many have a mix of digital and physical games. The big solution? Streaming games:
“Our expectation is that major publishers will increasingly test and commercially develop streaming game offerings over the next 3-5 years. Streaming games from the cloud, without need for dedicated hardware or massive downloads, would materially grow the TAM (total addressable market) for high end console-style titles. Specifically, today the primary market for major video game publishers is tied to consumers that own an Xbox One, PS4 or gaming PC, which currently has an installed base of 150-250M (depending on how gaming PC is defined) and a minimum price point of $199 (Xbox One S), which creates a barrier to entry for many would-be gamers. With ongoing datacenter build-outs and improving internet speeds, streaming games from the cloud could be a commercial reality within 2-3 years.”
This seems to be positive for the industry all around, as gamers will be able to game more and publishers will have higher margins. One potential downside, however, would be for retail stores like Gamestop…but I guess that’s a them problem, right?
Do you see streaming as the future of games? Let us know your thoughts down below!
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