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For console games, downloads are approaching a tipping point

On the PC, games distributed on discs in physical boxes have been a practical market rounding error for years now. Destiny 2‘s sales distribution highlights how the console game market may finally (and inexorably) be heading toward that point as well.

In an earnings call this week, Activision revealed that more than 50 percent of Destiny 2‘s sales on consoles came via download rather than on a retail disc. That’s “a new highwater mark” for the company, and it’s way higher than the “20 to 25 percent” of Call of Duty‘s console sales usually represented by digital copies, according to Activision (though Call of Duty World War II is seeing “higher digital preorders… relative to any prior Call of Duty title.”) Even for online-focused games like the Overwatch and the original Destiny, only 30 to 40 percent of console sales usually come from downloads, the company said.

More importantly, Activision doesn’t see Destiny 2‘s digital console majority as an outlier. As Activision CFO Spencer Neumann said in the earnings call, “historically, we’ve been seeing that digital mix increase at about five points a year.” With Destiny 2‘s console digital majority, Neumann says, “we believe we’re seeing some acceleration in that digital shift.”

It’s that acceleration that could quickly push the console market over a digital tipping point, and Activision isn’t alone in noting the speed of the console market’s digital shift. Earlier this year, EA said it expects 40 percent of its console game sales to come from downloads in 2017. That’s a big jump from 30 percent of sales in 2016, and a big step toward EA’s long-stated expectation that it is “going to be a 100 percent digital company, period. It’s going to be there some day. It’s inevitable.”

Across the worldwide console game market, sales of digital console games were up 25 percent in September compared to the year before, according to SuperData, thanks in large part to Destiny 2. And in the UK, data shows that digital sales now account for a 30 to 45 percent share of console game sales compared to a 20 to 25 percent proportion the year before.

Projecting these trends out, it’s not hard to envision 60 to 70 percent (or more) of all sales for major console games coming from downloads by 2021, when Sony and Microsoft will probably be thinking about releasing new consoles. That’s probably not enough to allow those consoles to go completely free of the standard disc drive, but it could push console-makers to offer cheaper, disc-free versions as an option. Even players that don’t want to give up the ability to buy and sell used games might be convinced to give up discs in exchange for a heavily reduced price on the hardware itself. And console makers could make up that reduced hardware price by eliminating physical games’ production costs and retailer revenue cuts.

One thing’s for sure: these trends could be a major problem for retailers like GameStop, which already planned to close two to three percent of its thousands of storefronts this year after heavily reduced retail sales. Maybe the PSP Go was just ahead of its time.

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