Vidgame biz eyes digital gains amid sales slip

10% growth not enough to offset declining physical sales, however

The videogame industry earned $3.4 billion in the U.S. during the first quarter, with consumers spreading out their dollars fairly evenly across physical and digital retail outlets.

And while that figure is down significantly from the $5.9 billion tallied in the first quarter of 2011 — which marked a 1.5% increase at the time — publishers’ eyes are keenly focused on the nearly $1.4 billion that was spent on downloadable games, add-ons, subscriptions and mobile games during the period. That sum marks a 10% increase over the same quarter last year, research org NPD Group said Monday.

Another $1.5 billion was spent on new games, while $525 million went to used games and rentals, off 5% from the same frame a year ago.

Major publishers have stressed during previous rounds of quarterly releases that digital represents the largest area of revenue growth for gamemakers. But the online sector has yet to make up for the decline in physical sales, according to NPD analyst Anita Frazier.

That area of the games biz exhibits similarities to what’s going on in the homevid sector, where Hollywood is encouraged by an uptick in digital dollars but is still waiting for the sector to make up losses from a decline in DVD sales.

NPD found similar results in the U.K., France and Germany, where consumer spending on used games and rentals amounted to $300 million and digital formats rang up $959 million during the first quarter.

Frazier said spending “on mobile games is still developing in the three European countries we are covering,while the spend on full game and add-on content digital downloads and subscriptions is more highly developed.”

Results were released in NPD’s “Games Market Dynamics: U.S.” report and culled from NPD’s retail tracking service, consumer research and consumer spend estimation provided by retailers and publishers.

Separately, NPD said 67% of all gamers reported acquiring at least one game in either a physical or digital format through March, which includes free or paid games. When looking solely at online gamers, the figure increases to 75%. Among all gamers, 40% purchased at least one game in both the physical and digital formats. Most gamers reported buying an average of eight games during the period.

“Gamers are growing more comfortable in acquiring content online, as we saw the preference for digital increase 10% from last year,” said Liam Callahan, industry analyst, the NPD Group. “The proliferation of free games on mobile devices has reduced the barrier of entry for online gaming to zero, fueling an increase in acquisition.”