Analyst predicts game download sales to surpass retail by 2013

For the past few years we have seen that downloading console and PC games, rather than purchasing boxed retail copies, is gaining traction in the game industry. Indeed, many people believe that the PC game business has been saved by the success of downloadable games. Now a new study by DFC Intelligence predicts that the online model for purchasing games will surpass that of the retail game industry by as early as 2013.

According to DFC analyst David Cole, "On a global basis it looks like retail delivery of physical software peaked in 2008. We expect a slow, steady decline for physical game sales, with a steady increase for online delivery of games and new business models such as subscriptions and virtual item sales." The report predicts that by 2016, retail sales of games will go down to $43 billion compared to its peak of $58 billion in 2008. DFC also predicts that by 2016 revenues from online distribution of games (including subscription and advertising revenues) will jump to $81 billion, compared to $66.6 billion in 2010.

The report also takes a look at the future of the console game business, predicting that Nintendo's planned launch of its upcoming Wii U console sometime in 2012 will achieve solid sales. However, it also predicts that the sales won't match the numbers of the current Wii console. And what about the successors to Microsoft's Xbox 360 and Sony's Playstation 3? Cole says the current consoles from those companies " ... are having their best sales ever five or six years into their lifecycle. Unfortunately this means Microsoft and Sony are in no hurry to launch new systems that would generate substantial consumer excitement and spending. The dedicated console business is still the major driver of industry growth, but we feel overall it has peaked with the current console systems."

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