Basically, this is an update to a similar study we conducted last year. Actually, I hoped that during the last year more usage information with regard to the digital distribution market would become available. But so far none of the bigger download platforms has released any relevant information. Not even the established market research agencies seem to take an interest in this market yet or – probably more likely – are unable to attain any useful data for themselves.
I wasn’t particularly happy with the quality of information and methodology we used for our last study – measuring and comparing unique visitors of each download shop. However, it still seems to be the only available source of information.
Methodology and Limitations
While we tried to improve aspects of it the general methodology for conducting this study stayed the same:
We used “unique visitors” as the core metric, assuming that the more people visit a store the more people buy at that store. This obviously is not perfect since we don’t know how well the individual shops convert visitors to actual sales. Another limitation may be that some platforms like Steam don’t require their users to go to the website to purchase. Users can also use the desktop client to access the shop. This year we tried to address this issue by multiplying the direct site traffic with a factor of 2.
Further, all traffic data itself are estimated and therefore present another imprecision. This time we used traffic data from both Compete.com and Google Adplanner to calculate average values.
Some digital download stores like Amazon can’t be properly analysed using the above tools since they don’t use unique domain names for their digital services. For those we estimated the unique visitors based on our internally tracked data from deals4downloads.com. Other stores like GameStop and EA sell both physical and digital games via their online stores. Here we used both internal data and assumptions of the share of digital games. E.g., for EA we assumed that a third of all products sold at their online shop are digital.
We also know that both compete.com and Adplanner have problems with smaller pages, probably leading to inaccuracies with the smaller independent shops.
Our Findings
Enough with the disclaimer, let’s have a look at the results!
Digital Distribution Market has grown by 220%
The market for digitally distributed video games seems to have experienced a whopping growth of 220% since April 2010. This growth is attributed mainly to an increasing shift from physical to digital distribution. Additionally, traditional retail players like GameStop or Microsoft are making increasingly aggressive moves toward the new digital market.
The biggest new entry to the digital market though is Amazon, who made a strong push into the market with it’s own digital distribution service that covers both PC and Mac video games. Amazon is followed closely by GameStop and Microsoft, which both launched their own digital distribution platforms, too. All of them bring considerable traffic to the digital table, leading the digital distribution further into the mainstream. As you can see Steam also can boast a dramatic increase in unique visitors.
*Estimation based on internal tracking **Estimation based on publicly available usage data and internal tracking ***EA is also selling physical product in it’s online store. Assupmtion is that a third is sold digitally. ****Includes only the download to own shop: www.gametap-shop.com
While Steam shows substantial growth it still loses market shares to strong newcomers
Longtime market leader Steam is now facing more and stronger competition than ever. Steam itself shows a respectable growth of more than 150% but still loses more than 10% of it’s market share to its new contenders. While Valve’s digital distribution platform still holds a comfortable 55% of the market Amazon, GameStop and Microsoft grabbed 10% each on market entry, trailed by EA with 5%.
Here is another diagram comparing market shares from April 2010 and April 2011. Note the number and growth of new contenders in the digital market including Amazon, GameStop, Microsoft and EA.
Indies still grow both in unique users and numbers
Most of the established independent digital distribution services like Direct2Drive (+34%), GamersGate(+63%) or Good Old Games (+54%) still managed to grow despite this market shake-up. With Desura,GreenManGaming, and Beamdog we even saw a couple of promising new indie download shops entering the digital market.
The biggest losers
The biggest losers, including Bestbuy, Alienware, or Xfire seem to be download shops that didn’t manage to find a unique positioning or failed to address the increasing price pressure due to growing numbers of download deals. At deals4downloads.com we saw an increase of deals for digitally distributed games by a factor of 10! Bestbuy’s digital distribution service has all but vanished.
Bonus: More is not necessary better
During this study we also counted the number of digital games offered by each digital download store. So far one thing became clear very quickly. There is no obvious correlation between the number of digital titles offered and the success of a shop. For example, both Direct2Drive and GamersGate offer close to 3,000 digital games with let’s say medium success. On the other hand we have Steam with 1,200 or Good old Games with a mere 285!
Maybe that’s not such a big of a surprise but it’s still an interesting fact.
via deal4downloads
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