Establishing market size is one of the core tenants of salesmanship.
It is something we have put a lot of effort into to try and ensure our tool really helps sales people maximise sales
Lies, damn lies and statistics...
Video games market sizes are surprisingly difficult things to establish: we have seen figures varying by tens of billions. It is, I think, just because video games have become so popular.
Moreover, the use of 'digital' creates a lot of confusion. A physical game sold on an online store like Amazon is clearly 'not digital'. Similarly FIFA FUT points used on Playstation Store are clearly 'digital'. But what about a gift card sold in retail? And why do we separate out a full game sold online by Amazon (and delivered) from a full game sold online by Playstation Store (and delivered). Is not the real difference games sold where primary revenue is generated in-game (e.g. Fortnite) vs games sold for $50 up front?
Think global act local
We find it less useful to lump full game digital sales with digital content/subs. We see significant sales gains with a holistic treatment of all full game channels. Essentially Sony Playstation Store is just another retailer in a market (albeit very important), and should enjoy the same promotional mechanics, pricing patterns and so on as you do to the rest of the market.
Indeed, this leads to a market-by-market approach rather than a broad 'global' approach and doing this can add 25% and more to total sales. The number of sales killers we typically see is amazing (Easter promos in the Middle East is perhaps the least). Most publishers have traditionally placed digital full game sales in a different sales division. This leads to all sorts of issues, including a loss of market related pricing, generic, bland 'global' promos etc. It has both an isolating effect on physical retail (as online is disconnected with the stock they are carrying, so they carry less!) and is bad for digital stores as they miss key local promotional periods (e.g. St Nicholas in Germany, Holland etc).
Moreover, full games are essentially an acquisition strategy for subsequent digital sales, and in this a holistic treatment of full game channels, digital and physical can lead to optimisation of DLC - DLC can equally be offered in physical retail as bundles to help drive DLC sales.
But DLC, subs and other can mean so much more...
We group cafe revenue along side DLC. Perhaps, if initiatives like Game UK's Belong really take off, we will start breaking this up further, but it seems that the industry generally treats this as digital.
Strategic Sales and Licensing (SSL) is also included. It is quite small, and much of it is content driven (e.g. a banner inside a game or a LAN party), so is not that far away from an in-game sale.
Gift cards are a payment method
On the other hand, we regard gift cards as a payment, even though the sale takes place in physical retail and is essentially not that different to buying a full game in many respects (lets face it even a full game will download a significant amount of update content when you first play it!). It is interesting that gift cards represent a significant percent of total sales of digital (upwards of 60% in some markets). And even more interesting is that the face value of the Playstation Store Card is often sold higher than its digital value (expect to pay $11-$12 for a $10 Playstation Store card in a souk in Medina).
Eebz 2019 market size waterfall
So here is our take for 2019.
Total world wide video game market size: $137bn (this includes online, offline, mobile, full game and DLC/subs)
Console and PC/mobile split: $58bn/$79bn (first point of contention!)
In console and PC: Full game/DLC, subs and other split: $29bn/$58bn
Of the full game: Physical retailer/digital download: $20bn/$9b
As a result, the total 'digital' figure is $9bn core games plus $58bn and equals $67bn.
What is your opinion?
There is a lot of estimation in all of these figures.
Digital download varies enormously by market, with reports of 60% in Sweden. It also varies by product with established franchises: as - FIFA - enjoying higher digital download and newer/younger franchises, - Days Gone - enjoying lower digital percentage.
We do have a bottoms up calculation inside our application (built from actual retailer offerings), which helps us cross reference (though in China we are largely unable to do this as this market's physical goods have been heavily influenced by last years game ban).
We welcome discussion and debate. If you want further insight or have queries please contact us at firstname.lastname@example.org.