Digital game sales up, used games and rentals down in first quarter

By Alex Pham

July 2, 2012 12 AM PT

It’s not entirely doom and gloom in the games business -- just mostly.

While sales of disc-based games have fallen into a cycle of despair, sales of digitally distributed games have grown. Just how much, though, has been the subject of serious conjecture for the last several years.

The NPD Group, which has collected physical game sales data for decades, on Monday pegged the increase of digital game sales at 10% during the first three months of the year, as compared with the same period last year.

Digital games, which include full-game and add-on content downloads, subscriptions, mobile and social network games, generated an estimated $1.38 billion in the U.S. between Jan. 1 and March 31, up from $1.26 billion during the first three months in 2011, according to NPD estimates.

Though digital revenue is increasing, it’s not growing fast enough to make up entirely for the steep declines in sales of packaged media and game consoles.

“While the growth in digital format sales does not yet offset the declines in physical format sales,” said NPD analyst Anita Frazier, “clearly the changes occurring within the industry are reflected in the trends we are seeing in the research.”

The total amount collected in the first quarter by the games industry, which includes sales of consoles, accessories, games, game rentals and subscriptions, was $4.81 billion in the U.S., down 15% from a year ago.

Sales of gaming hardware, which includes consoles but not tablets on which consumers are increasingly playing games, fell 30% in the first quarter to $905 million, while accessories such as extra controllers were $506 million, down 14%. In addition, revenue from renting games and selling used games fell 5% to $525 million in the same time frame.

Sales of disc-based games have increased in only four of the last 24 months, according to NPD.

Why is this happening? Consumers are increasingly turning to downloadable games on tablets, smartphones and free, browser-based games on computers and social networks.

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