Digital Games Vs Boxed Games: How Sims Social, Angry Birds Knock Out Fifa, Battlefield

The report by The NPD Group, titled "Q2 2012 Games Market Dynamics: US," shows that while sales dropped 29 percent in traditional games to around $699.8 million by June, digital products including full game, add-on content downloads, subscriptions, mobile games and social network games were up 17 percent to reach $1.47 billion, Digital Trends reported.

Speaking to The Hollywood Reporter, industry analyst Anita Frazier of The NPD Group said, "While this growth is in stark contrast to the declines in new physical software and hardware sales, the size of digital sales is not quite large enough to offset these declines, leading to an overall drop in consumer spending in Q2 by 16 percent."

This is not a U.S.-centric situation as Frazier has noted similar findings in United Kingdom, France and Germany. "While many European acquisition trends in the second quarter of 2012 mirrored those we saw in the U.S. due to seasonality, Europe differed from the U.S. in terms of softer mobile spending, but greater stability in rental trends. Growth in full-game and add-on content downloads in the second quarter is surprisingly similar as the content behind this increase is suitable to both markets," Frazier added.

This clearly shows how gaming companies need to focus on digital content both in terms of deliverability and cost.

Echoing the finds of the study, leading game developer Electronic Arts (EA), told Reuters in an interview that digital game sales would eventually overtake box games.

"There will come a point, whether it is two or three years from now, when we say 'we are doing more in digital media now than we are in physical media,' and it's clearly ... not far away," Peter Moore, COO, EA, told Reuters.

The NPD Report and industry veteran view point support research firm Ovum's gaming industry forecast that global digital games market will more than double over the next five years to grow over $53 billion in 2016.

In a press release issued late in 2011, Mark Little, an analyst at Ovum, said: "With the addition of more and more casual gamers, the market is no longer the sole preserve of the teen male hardcore gamer. Gaming is fast establishing itself with a much wider mainstream audience, with serious ramifications for other rich-media entertainment such as TV, video and music."

"Besides this, publishers are finding that digital distribution is delivering a host of other benefits. These include boosting margins from 20-30 per cent on boxed games, to 50-75 per cent on digital."