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Small Games a Big Opportunity for US Video Game Retail

Feb 3, 2017
Mat Piscatella, Industry Analyst ;
Video Games

A dramatic change has been happening at gaming retail since the beginning of the decade. 

Retail game sections have shrunk, packaged game sales have declined, more games have been released exclusively through digital marketplaces, and it’s rare to see an optimistic forecast for future packaged game sales.

Over the same period, shrinking retail shelves have been taken over by the latest AAA shooter and action games almost exclusively.  Other genres, such as platformers, action RPGs and adventure games can go missing entirely, often because major publishers are no longer making packaged games to serve these audiences.

The good news is that video game retail has the opportunity and ability to increase on-shelf title diversity in both pricing and genres available to consumers.  By embracing physical versions of games that would at one point have been considered digital exclusives, retail can offer more reasons for a consumer to browse its shelves, to discover games she would have otherwise missed, and to make retail video game sections once again a destination for excitement and discovery.

Release Count may be a meaningful driver of retail video game sales

The drivers of the change in packaged video game sales might seem obvious at first glance.  Growth in digital and mobile channels is often singled out as the primary reason for the change in packaged video game sales.   

However, the data suggests that the number of titles releasing at retail is as meaningful a reason as any (perhaps even the most meaningful) for the change in retail sales.  The change in retail release count also happens to be the most quantifiable, and has what may be the highest correlation to the change in retail sales of any quantifiable metric over the period.

There are fewer publishers, and on average those remaining publishers are bringing fewer games to retail than they were at the start of the decade.

This has resulted in a dramatic reduction in release count; one that just so happens to correlate quite well to packaged retail sales.

NPD Group | US Video Game Retail

In addition, the decline in release count has resulted in more homogeneity in the kinds of games on shelf, and in price points.  Most retail shelves consist primarily of AAA action and shooter games originally priced at $59.99.  Only rarely will a platformer, strategy or family game reach the shelf.  This, in turn, has made browsing and discovery far less compelling for consumers.

Release count grew in 2016, with new publishers bringing smaller titles, that would formerly be digital exclusives, directly to retail

The good news is that the decline in packaged release count stopped in 2016.  The market actually experienced an uptick (which was detailed by James Batchelor at gamesindustry.biz) thanks to the expansion of this concept.

GameStop has proactively taken the steps to enter physical publishing of smaller scale digital games with GameTrust.  Its first title, Insomniac’s Song of the Deep, launched in July, was supported with significant presence and promotion at retail and in consumer marketing.  GameTrust also has partnerships in place with developers of digital games such as Tequila Works, Ready at Dawn and Frozenbyte.

505 Games  has been quite active in this space, bringing to retail physical versions of such digital hits as Rocket League, Terraria and, announced today, Stardew Valley.

Soedesco Publishing brought former digital exclusives such as Ziggurat, Giana Sisters: Twisted Dreams, and Among the Sleep to retail in 2016, while Limited Run Games has sold physical versions of digital games such as Oddworld: New N’ Tasty, and Octodad directly to consumers, without entering retail - at least not yet. 

While bringing digital games to retail isn’t a new thing (both the Sony PlayStation 3 and Microsoft’s Xbox 360 received disc versions of digital game compilations while developers like Telltale have been bringing its games to market in packaged form for some time), the importance such titles could have in today’s market is.

It would be unreasonable to believe that any one digital title could offset the revenue generated at retail by a AAA game it may substitute on shelf for.  These smaller, formerly digital exclusives generally retail from $14.99-$19.99, while a AAA product retails for $59.99. 

However, what these smaller titles can do is generate additional sales of the games themselves while at the same time driving traffic to the video game aisle, leading to incremental sales of other games while reengaging consumers that have gaming interests beyond the latest AAA big budget shooter.

Bringing the joy of discovery back to the video game aisle

What better way to encourage discovery, generate incremental game sales, and improve the shopping experience than provide retail consumers with more titles, more genres and more price points, to make shopping for video games at retail more engaging and fun?

The risk is, if the expansion of smaller digital games into the retail space doesn’t happen, and with AAA packaged release counts falling so low, at what point will consumers simply choose to look towards digital marketplaces first, not only for these smaller games but also for the big AAA blockbusters?  At what annual AAA physical release count does retail lose its appeal as a shopping destination for video games?

Bringing smaller digital games to retail would benefit developers, retailers and consumers.  It’s time for the model to be more fully embraced so everyone can benefit.

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