Are video game stores becoming irrelevant?

Posted by David Konow

An untold number of book and record stores have been shuttered over the past few years. Thankfully, there are still plenty of places to buy video games.

With the big holiday gaming season about to explode this Fall with Halo 4 and Call of Duty, I’ve been seeing a lot of gaming and game store commercials all over TV.

Yet as we've previously discussed on TG, digital game downloads could eventually beat out sales of physical games within several years - much like downloading eventually wiped out CDs in the music biz. 

As the site o.canada tells us, several gaming companies, including Nintendo, Microsoft and Sony, have been making the move towards "turning gaming into a service," for several years now.

Indeed, as most of you have probably noticed, they’ve been “slowly abandoning the traditional retail model of selling video games in stores.”

Then again, the story also highlighted abject failure of one cloud gaming service known as OnLive - even when numerous pundits were plugging the platform as the way of the future. Meanwhile, another cloud service, Gaikai, was bought by Sony for $380 million, with Sony claiming cloud gaming is "absolutely inevitable." As writer Patrick O’Rourke also points out, smaller developers will need cheaper distribution channels, like smartphones.
 
As thechronicleherald.ca also reports, the founder of Frontier Developments, a UK gaming company, recently noted, "The mobile industry is a big business. It’s on parallel to the console and it’s really growing." To be sure, Frontier coded a game titled LostWinds that racked up nearly three million downloads via Apple's App Store.
 
Meanwhile, Electronic Arts (EA) expects some $2.6 billion from packaged products by next March, $1.7 billion of it from digital, and by this point, digital revenue could be up by 55%.

There’s also a big move towards social and mobile gaming, like we just pointed out, where smaller developers will need less expensive ways to get their titles out in the world. And as we recently reported on TG, free gaming is also being used by  gaming companies to try and beat the pirates at their own game by generating cash via in-game transactions.

 
With Halo 4 and Call of Duty around the corner, a ton of money is obviously going to be pumped into gaming, both in the form of physical and digital media. The general consensus so far is that digital won’t completely take over any time soon - but it may indeed be the primary method generating gaming revenue within several years.