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Do whales exist in the digital distribution of product-style games too?

By on September 21, 2010
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More on whales, I’m afraid.

This week, a lot of hoohah has been made about NPD reporting that digital sales of PC games have overtaken boxed product sales in the US.

At the same time, the fatfoogoo blog reports that between Q1 2009 and Q1 2010, 80% of gamers did not purchase ANY games digitally, according to market research firm Interpret.

The key finding in their press release:

“not only do 80% of gamers not purchase games digitally, but the 20% that do also purchase more games at retail than their non-downloading counterparts.”

They say that consumers who download content digitally also buy, on average, 2.7 games per six months, 20% more than their non-downloading counterparts.

So this had me thinking, what if digital downloaders are almost exclusively whales? Could the 20% who do digitally download not only buy games at retail, but they buy more DLC, more premium editions, more games in total.

I’m going to keep digging, but I wonder if the reason Steam is doing so well is that it attracts a disproportionate number of whales (high conversion rates, high ARPU), while retail stores have to work really hard to attract occasional gamers.

This is not a proven hypothesis, just one I’m working on. Does it ring true to you? Any data to back it up?

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
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  • They carried out a survey of 9,000 people, I think. but what makes you think their numbers are way off. Could it not be that a small number of people buy products online, but they buy a lot?

    And they are only talking about digital distribution of boxed games. It doesn’t include revenue (in fact, they don’t talk about revenue at all) from microtransactions, subscriptions, in game ads and so on.

    So I feel that their data might be right, but limited.

  • Amanda

    Um… where did this site get their data? Online games is a multi-billion dollar business and there are millions of users. Who is this marketing company and who did they poll? It sounds like they only tapped a small demographic or not very many people. This number is way off.

  • I agree. Dynamic pricing is the heart of capitalising on the power law, and something that only digital distribution enables. Flexibility is all.

  • One of the things that steam can do and retail cannot follow is pricing flexibility. Steam has special weekends/promotions etc… and can maintain and manage this very easy, without the flow of pricing compensations/creditnotes (& money) flowing between the partners in the chain (retailer/distributor/publisher)

    That is in my view a very strong driver for the current success of Steam.

  • If you spend more than $247 a year, most social games companies would consider you a whale.

  • Anonymous

    I’ve bought a huge number of games on steam. They do really well because they offer games at sale times that are really compelling buys (significant mark down on usual prices).

    I also buy retail games, but a lot less.

    FWIW I think youre just talking the difference between someone who buys and someone who doesnt buy/pirates. I dont consider myself a “whale” in that sense, because I dont really spend a huge amount.

  • i agree 100%. Whales need to go. True fans are taken. I need to find a term and make it my own.

    Time for some Creovativity(TM), I feel

  • Anonymous

    There’s a similar trend in music too.

    Common behaviour is that online purchasers are often true fans and so purchase more overall. And also the same is often said about pirates (which is why its not necessarily a good thing to go after pirates).

    I’m not sure I’d describe this as “whale” behaviour though. Perhaps it’s just the term itself that’s bugging me, but whale sounds more like a cashcow wandering around looking to be hunted. Online customers for music are often discerning, interested folks, which doesn’t sound like quite the same thing.

    What do you think?