Gaming

Physical console games are fast becoming a niche market

Physical console games are fast becoming a niche market

Enlarge / The number of game releases on physical consoles continues to decline even as the number of games on digital consoles explodes.

Anyone who watches the games industry knows that the console market is rapidly moving away from games sold on physical media and towards the digital download dominance that PC gamers have known for years. But a new exclusive analysis of NPD Game Pulse Data conducted by Ars Technica shows the magnitude of the decline in the production of games on physical consoles, even though the number of titles on digital consoles continues to explode.

In terms of distinct game titles released in the United States, the raw number of new games available on physical media (i.e., discs or cartridges) fell from 321 in 2018 to just 226 in 2021, a down nearly 30% (games released on multiple consoles are counted as one title in this metric).

The number of digital games released each year, on the other hand, remained relatively stable from 2018 to 2020. Then, in 2021, that number exploded to nearly 2,200 digital titles, a 64% increase from 2020.

The proportion of distinct console games released in physical form has steadily declined in recent years.
Enlarge / The proportion of distinct console games released in physical form has steadily declined in recent years.

In total, the proportion of all new console games available exclusively while digital downloads have increased from 75% in 2018 to almost 90% in 2021.

An uneven trend

The drop in separate physical versions isn’t felt the same way on major consoles. On PlayStation consoles, the total number of new physical releases decreased by more than 38% between 2018 and 2021, echoing a decline of almost 31% on Xbox consoles. On the Switch, meanwhile, the total number of new physical releases fell by less than 7% over the same period.

The total number of physical releases decreased year over year on PlayStation and Xbox consoles.
Enlarge / The total number of physical releases decreased year over year on PlayStation and Xbox consoles.

The number of distinct downloadable titles, on the other hand, increased significantly across all three console families in 2021. This was especially true on the Switch, which saw a 63% increase in the number of new digital releases from 2020 to 2021.

The number of physical Switch releases has remained relatively stable, while the number of digital releases has exploded.
Enlarge / The number of physical Switch releases has remained relatively stable, while the number of digital releases has exploded.

These diverging trends suggest that the decline of new physical releases isn’t simply an artifact of consoles like the Xbox One and PS4 nearing the end of their life cycle. Instead, on the whole, publishers seem to see physical release as a less relevant market for an increasing proportion of titles.

But the transition from physical console games isn’t evenly distributed among all publishers. Larger publishers are far more likely to incur the hassle and expense of a physical release for their flagship titles.

A small majority of console games from major publishers still deserve a physical release.
Enlarge / A small majority of console games from major publishers still deserve a physical release.

Among the major publishers, a slight majority (56.4%) of distinct titles released in 2021 were available in physical release. This is still a significant drop from 2018, when nearly 80% of titles from these publishers merited a physical launch.

(For this analysis, we defined the top publishers as those generating the highest total annual revenue, including: Activision Blizzard, Bandai Namco, Capcom, EA, Konami, Microsoft/Bethesda, Nintendo, Sega, Sony, Square Enix, Take-Two, Ubisoft, and Warner Bros. Interactive.)

With the removal of major publishers, physical console game releases are becoming relatively rare.
Enlarge / With the removal of major publishers, physical console game releases are becoming relatively rare.

However, when these big publishers are filtered out, physical game releases quickly become a very minor part of the market. Only 8.1% of new games from these smaller companies were available on physical media in 2021, down in both proportion and raw numbers from 2018.

The niche

Looking only at the number of unique titles released, of course, gives an incomplete picture of the console gaming market. Games that deserve a physical release tend to be among the most popular titles of the year and likely attract more total sales than the vast majority of low-end digital releases. These version numbers also give no visibility into the proportion of sales devoted to physical versions of games available both as discs and as downloads.

But data from elsewhere also supports the idea that games on physical media are rapidly becoming a smaller and smaller share of the console market. Capcom said last year that 80% of its new game sales were digital downloads, while Sony Results for the 2020 financial year showed that the majority of PlayStation full game sales came from digital downloads.

Many other data going back years point in the same direction. The wide availability of cheaper, disc-driveless console options from Sony and Microsoft in recent years also suggests that physical releases are becoming relatively less important.

The decline in physical options is increasingly relevant to gamers given the limited lifespan of digital console game stores. The upcoming closure of the Wii U and 3DS eShops will mean that hundreds of digital-only games on those platforms will no longer be available for purchase. If these games were also available on physical media, on the other hand, they would live on in the secondary market.

Physical games aren’t going away completely anytime soon. As long as there is a market of game collectors who appreciate a tangible product, there will be physical discs and cartridges to satisfy that market, such as vinyl records in the music business (whose sales have actually grown lately).

But the physical release data clearly shows that console gaming’s digital transition is rapidly approaching its end. In the coming years, games released on physical media seem set to become an increasingly niche concern.