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Digital revenues are 37% of the total software market in the US

By on August 1, 2011
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I’ve just been trying to work out how big the AAA market is in the US (largely because of this post I wrote about the smartphone market in the US being forecast to be worth $1 billion in 2011).


The ESA provides a lot of useful facts and figures on the games industry. These are the key facts:

  1. Consumers spent $25.1 billion on video games, hardware and accessories in 2010.
  2. Purchases of digital content accounted for 24 percent of game sales in 2010, generating $5.9 billion in revenue.
  3. Sales of game software and content, including games made for consoles, portable gaming devices and PCs, as well as digital full game downloads, downloadable content and social games, accounted for approximately $15.9 billion of that total.

How is games revenue in the US split between hardware, boxed software & digital content?

Taking those three statements above, I’ve concluded that the $25.1 billion is split in the following way:

  • Digital content (which I assume to mean all software that does not come in a box): $5.9 billion
  • Hardware: $9.2 billion ($25.1 billon – $15.9 billion)
  • Boxed software: $10 billion ($15.9 billion – $5.9 billion)

Digital is already 37% of the software market in the US

According to the ESA then, digital revenues in the US are 37% of the total market ($5.9 billion / $15.9 billion).

That’s not to say that all of this revenue is going to new and exciting startups. It will include some of the billion-dollar revenue of World of Warcraft. It will include DLC for Modern Warfare and every other AAA franchise out there. It probably (although I don’t know this) includes the revenue that AAA publishers make from selling XBLA avatar items and branded stuff in PlayStation Home.

But the strides that digital is making into the boxed product revenue are huge. 37% already, and growing. The games retailers better hurry up and reinvent themselves (although they’ve got the $9.2 billion dollars of hardware – that can’t be digitised – to console themselves with for a while there.)


I haven’t seen the original reports, so my segmentation is based entirely on bullet points on the ESA website. I also *think* that this is US revenue, but the site is not entirely clear. If you have any further insight into the revenue split, this data, or other data sets, do let me know.

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:
  • JS

    [not wholly on-topic but I hope it is of some interest.]

    Earlier this year I attended two seminars, hosted by Microsoft and Sony respectively, about the past, present, and future of their digital businesses for the benefit of third-party publishers.
    Something that struck a few of us (independently) is that Microsoft staff were happy to talk about numbers of transactions, numbers of users, paid users, subscribers and so-one, and revenues in terms of percentage increases but not in terms of units of currency.  They showed graphs of revenues rising over time, but there was nothing on the Y axis to explain whether revenues are in the thousands, millions, or tens of millions of dollars (I have the PDF in front of me).  Sony staff were rather more ‘brave’ but I’ve yet to receive the presentation.
    That said, clearly there is huge potential, they’ve opened up lots of opportunities and they have a lot of passion.  But it seems to me (and other people independently raised this) that a major bottleneck is simply one of manpower (in terms of digital distribution, we used to worry about things like infrastructure and security, not manpower particularly).  For the benefit of readers who do not know about publishing on console, the platform holder (Microsoft, Sony or Nintendo) will assign an ‘account manager’ to liaise between the publisher and departments within the platform holder, on tasks such as proper submission of the content and negotiation of costs, prices and release dates and so on.  Account managers can be assigned 50, 60, 70 clients.  As someone at the seminars made very clear, this is not about the competence of account managers, because they are generally excellent, this is about them not having enough time to do the work being required of them today, let alone help us exploit all the opportunities the platform holders are offering us.  Unfortunately we were given no firm assurances that this will change in the near future.  As for Nintendo, it has some great people working there, again with excellent understanding of the opportunities and passion.  But, as a business, in stark contrast with the others, Nintendo has been clueless on digital.

  • I agree. Although Microsoft’s revenues from Xbox Live are pretty clearly known, and other people have tried to estimate the others in the past.


  • JS

    Given that Steam, MS, Sony and Nintendo etc are very careful about who sees their sales figures, I have to wonder how the ESA arrived at $5.9bn.