GTA V will be unveiled for the first time tomorrow when Rockstar takes the wraps off the game's first trailer. It's unclear just how much information on the game will be provided, but one analyst believes the developer will be taking a bold step forward in advancing the digital market by making GTA V download only.
In a new report from Newzoo covering DLC, Pre-Owned and Digital Distribution, CEO Peter Warman commented, "There are a lot of reasons why publishers are pushing towards digital distribution of triple A games. Speaking out loud might harm the relationship with retail partners, but the benefits have become too large to remain silent about the desire to go completely digital. The ultimate objective being to launch games faster, create continuous revenues on a title and simply to make more money. Will retail disappear from the picture? Of course not. Retail will always remain an important channel to promote and distribute games. Retail has a strong hand to play when it comes to eyeballs and… boxes make a nice gift. Boxed games will not disappear, but what is in the box will. That is why the boxed GTA V version will contain a collectible piece of merchandise and a download code. No disc."
IndustryGamers does believe the industry is headed in a digital direction, but we think it's actually very unlikely that Rockstar would choose to go download only for GTA V. In fact, almost 12 million of the 28 million Xbox 360s sold in the U.S. have either a 4Gb hard drive or a 20Gb hard drive. So, Take-Two would be eliminating a huge part of their potential audience.
The rest of the Newzoo report provides some very interesting data on the still growing digital market and how it's affecting traditional sales. Here are the main points as summarized by Newzoo:
1. Free-Riders: Only 44% of US console gamers ever spends money on Console Games.
What many publishers, and sales tracking research companies alike, do not talk about often is that consoles already show the same characteristic as free-to-play MMO, social and mobile games, when it comes to people actually spending money on games. Of the 82M Americans that state to play console games, only 36M spends money doing so. Even after the broad uptake of free-to-play MMOs, the share of 52 million American MMO gamers spending money is 43%, just slightly behind console gaming. Mobile and social gaming are lower with 36% and 25% but still… the difference is not that big. Boxed games are often actively shared within families or groups of friends and “if you buy Battlefield 3, I will buy.
2. Pre-owned: 23% of console and boxed PC/Mac games budget goes to pre-owned trading
85% of all American PC/Mac and console gamers in the US also buys games second-hand. 25% states to spend at least half of its budget on second-hand games. Only France scores higher. We estimate the total pre-owned market to be worth about $2.2bn in the US, including consumer-to-consumer trade. Publishers see no kickback for this. For retail, selling second-hand games can be more profitbale than selling new boxed games, putting even more pressure on the publisher-retail relationship. Digital distribution does away with all of this.
3. DLC: Americans will spend $950 million in 2011 on game and add-on content downloads
A few months ago, Activision announced that they sold over $180 million worth of Map Packs for their Call of Duty franchise. Spending on downloaded PC/Mac games has already surpassed boxed sales end 2010 in the US. When it comes to consoles, DLC already accounts for 12% of total spending (including pre-owned and import) or an estimated $950 million this year for all consoles combined. Part of this goes to full game downloads but an increasing share goes to smaller games and add-on content exclusively available by download. And do not forget there are game developers out there making a living from selling virtual pets and other nifty items in PS Home’s virtual world. Publishers are growing in confidence because of this success and stand stronger in their negotiations with retail.
