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Hardcore gamers not looking to abandon physical product

A Wedbush Securities report tackles the declines that have been seen in retail over the past few years

According to a Wedbush Securities report, casual players may be leaving for mobile and social titles, but "hardcore" users will stick with packaged products. Everyone is betting on digital for the future, with rumors that the next generation Xbox will ditch discs as a delivery mechanism for its titles. The Wedbush report states that all consumers moving toward digital is a "commonly held misperception".

"Many investors believe that consumers are abandoning packaged products in favor of mobile and social games, and think that the publishers who have lost share will never recover. We think that this thesis is only partly true; in our view, casual gamers are likely to shift their playing time from packaged products to mobile and social games, but hard core gamers are far less likely to do so," the report says.

"If we are right, the packaged goods business should be viewed as consisting of hard core games (the vast majority of sales on the Xbox 360 and PS3) and more casual games (the vast majority of sales on the Wii and DS). Our thesis has been borne out by the 2011 figures (according to the NPD Group), with Xbox 360 software sales up 12%, PS3 software sales up 4%, DS software sales down 21% and Wii software sales down 31%."

The report goes on to explain that the audience of many Wii and DS titles tends to overlap with the audience for mobile and social games: women and older consumers.

"We note that there is a large overlap of social gamers among the older and female demographics, and we believe that declines in Wii software sales are largely correlated to growth in free-to-play social games. Similarly, the game mechanic of many mobile phone and tablet games is similar to the DS game mechanic, and the price points of most mobile games (coupled with the ubiquity of smart phones) makes a mobile game purchase a compelling value proposition when compared to most DS games."

Wedbush also explains that hardcore users have gotten pickier as their game catalogs have grown, leading to purchases being concentrated mostly in the larger AAA releases. This has lead to a decline in software sales overall, but growth for top-tier titles. The report expects software sales to decline in the summer, but grow as we head into the holidays, with 3DS and Vita software making up for lost sales on other systems.

"We expect sales to once again decline in June - August, but expect another rebound in September - November, when the release slate is once again very strong. On balance, we think that a return to software sales growth overall in 2012 is likely, notwithstanding a disastrous first two months of the year, as we think that contribution from the recently released PS Vita and from last year's 3DS will help to mitigate declines in sales of the handheld category overall," the report reads.

"Later this year, we think that the launch of the Wii U will help mitigate the continued deterioration of Wii software sales, although we think that the casual segment of the games industry will forever favor free-to-play mobile and social games over relatively expensive packaged products."

The report lists three publishers as "OUTPERFORM" in the stock market this year: EA, Activision, and Take-Two.

[Image care of GameSpot]

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Latest comments (9)

Tony Johns9 years ago
I have supported the Wii software for a long time, almost 40 games and most are core games that also include the Operation Rainfall games Xenoblade, Last Story and I have already pre-ordered Pandora's Tower.

It is sad that the Wii is decreasing in software sales compared to earlier years, but I believe that only one hardcore gamer can only do so much.

It is all the casuals who jumped on the Wii bandwagon in earlier years that are abandoning the system for Apple's iPhone and iPads as well as Facebooks social media games.

I often blame Nintendo of America for only supporting the casuals and neglecting the hard core otaku gamers in their ignorance of amazing Japanese only Wii games that never got localized into North America.

Thankfully they are starting to wake up and deciding to release the Operation Rainfall games for the Wii's last software, but it could be already too late for those who have moved on.
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David Radd Senior Editor, IndustryGamers9 years ago
I hate to downplay the Operation Rainfall movement, but I think the critical and commercial success of Xenoblade in Europe was the deciding factor in bringing the game to the U.S. Also, NoA declined to localize The Last Story, and that's being handled by XSEED. Pandora's Tower is still pending and might not happen.

And it's nice that these titles are getting a release, but they probably won't have a huge impact on the Wii's fortunes one way or the other - it's a nice swan song for fans before the Wii U comes out.
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Vincent De Clercq Level Designer, Larian Studios9 years ago
I'm a collector. I still got every box I've bought, the first one over 20 years ago.
I must say I was excited about digital download when I first started using steam, also x years ago. But nowadays, after having explored the digital side for quite a while (170 games on steam), I've noticed I still want a box. All my digital purchases are rusting away on some server somewhere, and I even lost track which game I've got on which download platform (another irritating point about digital, there are too many programs and sites).
My boxes on the other hand are, at least, still in my bookcases, smiling at me everyday, giving me some nostalgia everytime I pass.

To be in on the hype of the moment: I even passed on the LSL kickstarter, because they don't offer (the possibility of) a boxed version for the price of 50-60 dollars. I just don't want a new game without the box.

Digital is great for those titles that you might have wanted, but you couldn't buy at the time because some other titles had a higher priority in the buying list. In that case it's cool to still be able to buy the game during some promo, some years later.

Edited 1 times. Last edit by Vincent De Clercq on 4th April 2012 11:18am

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Morville O'Driscoll Blogger & Critic 9 years ago
No mention of the PC market.


So, one of the most hardcore markets out there, with the largest digital distro platform (which, btw, started leveraging itself onto the PS3 last year), is ignored entirely in their report.

Edited 1 times. Last edit by Morville O'Driscoll on 4th April 2012 1:42pm

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David Spender Lead Programmer 9 years ago
Hardcore gamers appreciate the concrete ownership of a physical product. There's something to be said about having physical media that I know I can install whenever I like, wherever I like without worrying that a hijacked account or stolen password will be the end of all my games.

This is a major downfall of all digital delivery systems that hardcore gamers hate. What happens if you account gets stolen? What happens if your account is labeled 'suspicious' and you are permanently locked out? What happens if the company housing your games goes out of business? What happens if the device your games are tied to breaks or is lost or stolen?

When digital games allow me to store a personally owned copy that can be installed anytime in the future, non dependent on some 'authorizing/decrypting' server, then I will switch completely over to digital. Until then, I'm so much more happy to have a physical copy in my hands that I know will always work, and that I can backup to be extra certain that it will.
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Greg Wilcox Creator, Destroy All Fanboys! 9 years ago
+10 David. Also, as a gamer some 1972 and collector since the 60's, I'm going to be falling off my rocking chair with s controller in my hand sitting in front of a console with a ton of games all around before I'm forced to buy a streaming box where I can't play a damn thing if it's not connected to the internet (a damn stupid and lousy idea that's going to kill the industry if its forced on EVERYONE this next cycle).
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Andrew Goodchild Studying development, Train2Game9 years ago
@David Spender, Good Old Games said they are moving into more new games, and their anti DRM stance means you should be able to do that with most things bought there :)
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Morville O'Driscoll Blogger & Critic 9 years ago
@ David

I class myself as a Hardcore Gamer.

I'm fully digital download, inasmuch as if I can, I'll buy a Steam version above others. Even if I don't buy a game on Origin, I'll register it on there if I can.


Auto-patches and updates.
Don't have to worry about discs being scratched.
Don't have to worry about CRC errors.
Don't have to worry about install issues due to my DVD drive being old.
Don't have to worry about ever getting another DVD drive, if this one breaks. Don't have to worry about manually typing in a serial, and keeping it safe for when the game asks me for it randomly in the future ("Oh, hello Rise of Legends").

And you think physical products don't require authentication/decrypting? What about SecuROM? Tages?

"What happens if the device my games are tied to gets lost or stolen?"

They're tied to an email, and Steam support returns accounts hacked or stolen fairly quickly.

Yes, all these relate to PC. But consoles are no longer just plug-and-play; they're getting closer to PCs. When I put a disc in my PS3, there's a good chance I'll not just have to install it to the hard-drive, but also download a patch for it. Physical media has a lot of annoyances, especially for hardcore gamers.
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Wesley Williams Quality Assurance 9 years ago
I'm with Morville. I'm a hardcore gamer (albeit one with limited time to play) and I want a 100% digital future as soon as possible.
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