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Friday, April 17, 2015

How PS4 and XBOX One are transforming the digital games market

The end of 2014 saw thousands of new digital shoppers enter the UK market, driven by new technology and cheaper prices. The PS4 and Xbox One have brought with them new platforms for digital gaming, with the sustained consumer interest in these devices contributing £28 million to the sector.

Increased sales of Xbox One helped the Xbox Live Marketplace boost its share of the digital audience to 29 per cent, while continued strong sales of PS4 have created more potential for repeat digital sales. In fact, out of all repeat shopper spend, 26 per cent was for Sony’s console, with its overall digital share growing to 35 per cent thanks to a wider owner base.


LETTING OFF STEAM
But while Sony and Microsoft are enjoying growth, it’s not as good a picture for the PC. This most established of the digital platforms has become squeezed by the new consoles, losing 15 per cent of its share of digital gaming during the final quarter of 2014.

Steam is famous for its sales, but that means more shoppers buy only discounted games through its platform than through Xbox or PlayStation, where consumers are more likely to pay full price.
Sustained consumer interest in the PS4 and Xbox One has contributed £28 million to the UK digital games market.
As seen with Steam, cost is an important factor for digital customers. With an average price of £9 almost three times cheaper than a new boxed title digital consumers take more risks in trying out titles they wouldn’t buy physically. In turn, shoppers are buying digital more frequently than last year, making on average four purchases in the three months leading up to January twice that of the average mint physical shopper. 

DIGITALLY DIVERSIFYING
Despite the rise in the number of digital games purchases, the lower price points mean that digital games need to be supplemented, by increasing individual spend or attracting more shoppers, if the sector is to remain in growth.

We saw 300,000 additional shoppers buy into the digital gaming market in the 12 weeks to January 18th, accounting for 46 per cent of market value. Over Christmas there tends to be a temporary step away from the traditional gamer profile young and male and this year was no different, with children and families making up 43 per cent of digital sales value during this time. 

If retailers and developers want to bring about long-lasting improvement and capitalise on positive trends in the market, they must do more to permanently broaden the digital owner base and bring in new customers throughout the year. Female shoppers, for example, still only make up 14 per cent of the digital market, compared with 34 per cent for mint physical games. Making an effort to appeal to
less represented groups will allow the market to take advantage of successes like the ongoing interest in the latest-generation devices.

THE GIFT OF DIGITAL 
As in other industries, the rise of digital sales is having a significant impact on physical retailers.

Yet, physical retailers have an advantage over the PS4 and the Xbox One, as neither allows shoppers to directly purchase digital content as a gift through their sales platform. Given that over a third of the annual value in the new boxed games market comes from sales intended as gifts, this is a factor that digital platforms are currently missing out on; gift purchasing remains one of the areas where physical stores have the advantage over digital, with retailers stocking physical gift cards for digital content, making them better placed to capture gift spend.

With over a million individuals planning to buy a latest-generation console and a number of big-name releases over the next 12 months, we’re likely to see more gamers propel digital gaming to record levels. Recent developments have proved that the market is still full of innovation and digital is likely to take an even larger bite out of the games market in 2015. However, opportunities are being missed to truly build on these successes.

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