The global market for PC game downloads is poised to surge an energetic 78 percent during a five-year period ending in 2017-partly because retail demand for physically packaged games will generally transition to digital over the years, but also helped by strong growth from PC gaming markets like Germany and Russia that have yet to fully embrace digital distribution, according to the latest Games Intelligence report from information and analytics provider IHS.
Worldwide consumer spending on PC download games is forecast to reach $2.77 billion in 2017, close to double the $1.55 billion level posted in 2012. Growth this year alone is projected at 28 percent when spending hits $1.99 billion, with another year of double-digit expansion set to take place in 2014. The forecast does not include spending on downloadable content (DLC) or freemium microtransactions, but covers only paid-for full, retail-like and indie games.
Share of PC game spending from downloads in 2013 is forecast to eclipse traditional packaged software in 2013 for the first time. Last year consumer spending on packaged PC games exceeded the PC game download sector by $310 million, but PC game downloads will surge ahead by $340 million for 2013. The gap between the two competing forms of distribution will continue to widen in the years ahead, with the download space emerging substantially ahead in 2017, separated from packaged PC games by a whopping $1.78 billion.
Various factors will help propel the PC game download industry to experience strong growth, IHS believes. These include ongoing consumer acceptance of games downloads, expanded access to competitive digital retail channels around the world and the continued evolution of independent digital game retailers.
Valve's Steam dominates the market
The dominant PC game download platform is Steam from Washington-based Valve Corp. Steam's digital rights management technology is used by most third-party and independent games publishers to manage the licensing of their product. This means that even when games are sold through independent retailers, consumers are asked to download and authenticate their games on the Steam platform. Such a strategy provides Valve with an ongoing source of new users that they can engage.
Steam also offers the most developed social and community features across all download platforms. Platform users commonly sign in even when not playing games and make up an active part of the Steam community-similar to how online console users participate on Microsoft's Xbox Live or Sony's PlayStation Network.
And given its success as a sales channel, Steam is the key platform for developers when publishing PC games. More than 7,200 games are currently available from Steam, a much bigger portfolio than other PC game download retailers.
More recently Steam has been joined by rival platforms Origin from EA and Uplay from Ubisoft. Both services have been scaled up by their companies based on the popularity of in-house PC game releases, and also act as download portals for other publishers and smaller independent games retailers. While both platforms add to the overall market competitiveness and help drive sales, neither is comparable to the scale of Valve's dominant platform.
US to remain the top PC games download market
The top 5 countries last year in the PC game download market were the United States, Canada, the United Kingdom, Germany, and France. By 2017, IHS expects Russia to eclipse Canada and to grow to be the fifth-biggest market.
While North America has already reached a maturation point, substantial non-digital PC game markets in Europe-Germany and Russia, for example-will drive expansion moving forward as consumers transition toward digital distribution. Western Europe, as a whole, will show stronger growth than North America during the forecast to 2017.
Potential disruptors to paid-for PC games sales growth
Despite the glowing signs ahead for the PC games download market, audience shifts could occur and new disruptions could enter the market.
One key factor is the rise of freemium game experiences, and further traction in this area will see a shift away from the upfront transactional model as already experienced by the PC online game and games app segments. Freemium games now reside on a number of PC download platforms, including Steam.
Streaming technology could also disrupt this PC-based market, prompting players to consume games on other devices including tablets, Android-based consoles or other devices connected to the TV including Valve's own long-mooted but as yet unrevealed "Steam Box."
Such alternative channels for consumption could undermine growth in this PC-based sector, which in turn would result in a more sedate growth outlook than originally expected.
Read more >> Worldwide PC game download-to-own market forecast