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Online sales to surpass physical retail by 2013

DFC Intelligence expects online software sales to hit $37.9 billion in 2016

A new report from DFC Intelligence forecasts that sales revenue from games distributed online will surpass physical retail sales in 2013.

Global sales of online games - including PC, console, mobile and tablet online games - are expected to rise from $19.3 billion in 2010 to $37.9 billion by 2016.

"On a global basis it looks like retail delivery of physical software peaked in 2008," said DFC analyst David Cole. "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 rise of online games will counterbalance the decline in physical retail, driving growth in total industry value from $66 billion in 2010 to $81 billion in 2016. The key drivers of that growth will be PC games and games for smartphones and tablets.

The report also predicts that the current generation of consoles marks a peak in the popularity of physical platforms.

"The dedicated console business is still the major driver of industry growth, but we feel overall it has peaked with the current console systems," Cole adds.

In a separate report, summarised by VentureBeat, DFC forecasts growth in game advertising, rising from $3.1 billion in 2010 to $7.2 billion in 2016. Advertising spend in North America alone will double from $1 billion in 2010 to $2 billion in 2014.

"Video games have reached beyond adolescent males into a mainstream entertainment medium that touches every segment of the population," said DFC's Michael Goodman. "Despite this, advertisers continue to under utilise video games as an advertising vehicle. This is slowly changing as more games go online."

DFC expects key growth areas to be advergames and "around-game" ads - much like advertising in Facebook games. These forms of advertising will comprise 78 per cent of of the total market by 2016.

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Latest comments (3)

Nick Parker Consultant 5 years ago
I agree with the trends but the absolute numbers are optimistic. There needs to be clarification on whether the total retail market of $66bn in 2010 includes hardware, therefore also the 2016 forecast of $81bn. These numbers are way to high if just software. Hardware should not be included as its lifecycle curve distorts the overall picture of games up-take measurement (popularity of gaming). The global online games sales are, by my estimates, $4bn to $5bn too high although the trend is in line and actually, online games could surpass traditional boxed before the end of2013.
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Christian Philippe Guay Technical Game Designer, Gameloft Montreal5 years ago
I don't think it can be applied to the current consoles, since they are strongly limited by their pretty small hard drives (and they are too expensive).
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Jason Sartor Copy editor/Videographer, Florida Today5 years ago
The key drivers of that growth will be PC games and games for smartphones and tablets.

Ironic after reading for a decade by the same prognosticators that PC gaming was dead. Now that consoles are dead, will somebody let me know when the sky starts falling again.
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