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Nicholas Lovell
Home   >   Analysis and Opinion   >   Analysis   >   Digital revenues are 37% of the total software market in the US

Digital revenues are 37% of the total software market in the US

By on August 1, 2011

I’ve just been trying to work out how big the AAA market is in the US (largely because of this post I wrote about the smartphone market in the US being forecast to be worth $1 billion in 2011).

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The ESA provides a lot of useful facts and figures on the games industry. These are the key facts:

  1. Consumers spent $25.1 billion on video games, hardware and accessories in 2010.
  2. Purchases of digital content accounted for 24 percent of game sales in 2010, generating $5.9 billion in revenue.
  3. Sales of game software and content, including games made for consoles, portable gaming devices and PCs, as well as digital full game downloads, downloadable content and social games, accounted for approximately $15.9 billion of that total.

How is games revenue in the US split between hardware, boxed software & digital content?

Taking those three statements above, I’ve concluded that the $25.1 billion is split in the following way:

  • Digital content (which I assume to mean all software that does not come in a box): $5.9 billion
  • Hardware: $9.2 billion ($25.1 billon – $15.9 billion)
  • Boxed software: $10 billion ($15.9 billion – $5.9 billion)

Digital is already 37% of the software market in the US

According to the ESA then, digital revenues in the US are 37% of the total market ($5.9 billion / $15.9 billion).

That’s not to say that all of this revenue is going to new and exciting startups. It will include some of the billion-dollar revenue of World of Warcraft. It will include DLC for Modern Warfare and every other AAA franchise out there. It probably (although I don’t know this) includes the revenue that AAA publishers make from selling XBLA avatar items and branded stuff in PlayStation Home.

But the strides that digital is making into the boxed product revenue are huge. 37% already, and growing. The games retailers better hurry up and reinvent themselves (although they’ve got the $9.2 billion dollars of hardware – that can’t be digitised – to console themselves with for a while there.)

Caveats

I haven’t seen the original reports, so my segmentation is based entirely on bullet points on the ESA website. I also *think* that this is US revenue, but the site is not entirely clear. If you have any further insight into the revenue split, this data, or other data sets, do let me know.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com