Digital Game Sales Pass Physical For Holiday 2014, Can GameStop Survive?

Holiday 2014 may have been the inflection point of when digital game sales for PlayStation, Xbox, and Nintendo console surpassed that of physical retail games. A new report Thursday from SuperData Research shows digital sales with an edge for the hot purchasing month of November. All eyes turn to GameStop, as the game retailer tries to survive a changing market the way Blockbuster could not.

December 2014 sales figures have not been revealed, yet SuperData’s research shows that the combined total sales of digital games for PC, mobile, social, and consoles is greater than physical sales for consoles and PC for October and November 2014. As the chart below illustrates, this is the first time that this has happened during the two holiday shopping months.

SuperData points blame at disappointing physical sales and aggressive console bundles for the new console cycle featuring the PS4 and Xbox One. Retail game sales for November were down 1 percent year-over-year. Meanwhile, digital sales of console titles continue to climb. The research firm estimates that Take-Two Interactive sold 446,000 digital copies of Grand Theft Auto V in November alone. At the same time, 17 percent of Destiny sales have been in the form of digital purchases.

This seemingly does not bode well for GameStop, the last of the major chain retailers that focuses solely on games. The company’s quarterly financial report for holiday 2014 is due out on January 13. However, the company will not host a conference call. That’s usually a sign that performance did not meet analyst and investor expectations.

Interestingly, GameStop is featured in a Bloomberg Businesweek article out Thursday on how the company plans to survive and thrive in the evolving digital game landscape. The company claims that it has a 30 to 40 percent market share on DLC content sold and 15 percent of full game downloads. Ubisoft stated that 70 percent of its Season Passes for Assassin’s Creed and Watch Dogs come from GameStop. For Microsoft, that figure is 40 percent, and Sony says it is 33 percent for them.

GameStop hopes to stay relevant in part by the relationships its store managers and associates create with the gamers who walk through each location’s doors. The Businessweek article spent a significant amount of time on Tim Brooks, a 25-year old store manager in Philadelphia who has worked for the retailer since he was 16. He claims to know 98 percent of the people who visit his store, and can remember all of the games he’s sold each one.

“GameStop wraps its arms around the gamers in a way that someone else hasn’t done yet,” Sony’s John Koller said of the company.

What happens to those relationships though when customers stop visiting GameStop locations because they are downloading their games straight from the PlayStation, Xbox, or Nintendo digital stores? Additionally, any future trading of used digital games is likely to come via those same digital store fronts and not GameStop.

Company President Tony Bartell seems more hopeful that high digital prices will keep gamers buying physical copies and trading them in for new titles at a discount.

“All of a sudden you have a situation where publishers can’t charge $60, which we think will be bad for the ecosystem,” Bartel told Businessweek. “You don’t see many digital items being sold at a $60 price point. Movies are $5. Songs are 99 cents.”

He’s made similar statements in the past, as Inquisitr reported.

Building relationships with customers, extolling the benefits of physical ownership of console games versus digital copies, and expanding to mobile devices seems to be GameStop’s strategy for now. The growth of digital game sales is rapidly changing the market, however. Analysts and investors will be keeping an eye on how the company’s leadership responds.

[Images via SuperData Research, Businessweek, Dallas News, PlayStation]