Watch Dogs didn’t need to hack into your bank account because you gave up the money willingly to Ubisoft.
Digital game sales didn’t smash any records in June, generating a slight year-over-year increase of $774 million in spending, according to a report from industry-tracking firm SuperData. This is up 4.6 percent from the same period in 2013. That increase is largely to due the debut of Watch Dogs, which generated millions in spending by itself with full-game and downloadable-content sales. Developer Glu Mobile’s Kim Kardashian: Hollywood for mobile was another new game that brought in significant digital revenue.
“June proved a sluggish month for the digital games market despite the success of Watch Dogs and Kim Kardashian: Hollywood,” Super Data analyst Joost van Dreunen said in his analysis. “Both the digital console and PC downloadable categories were down 11 percent from the high in April, led by Ubisoft’s Watch Dogs, and totaled $240 million in June. As the new console cycle gains momentum, following the announcements of key titles at last month’s E3, we observe a slight year-over-year dip among social, mobile, and free-to-play in favor of digital console and PC.”
So while Watch Dogs and Kim Kardashian helped, they couldn’t maintain the industry’s momentum. That doesn’t mean these are underperforming. It just means they can’t make up the ground lost in other sectors — especially massively multiplayer online games.
“The pay-to-play MMO market has been shrinking since 2010, dropping from 30.6 million monthly active subscribers worldwide to 23.4 million this year,” said Van Dreunen.
The traditional MMO developers aren’t just letting that subscription revenue evaporate into the ether. Many now use a hybrid model freemium model or have shifted to free-to-play with in-app purchases — and while this is offsetting the shrinking membership revenues, it isn’t completely replacing them.
“In the past five years, the percentage of revenue for subscription-based MMO generated via additional in-game microtransactions has roughly doubled from 14 percent for 27 percent,” said van Dreunen. “Furthermore, the average digital spend, in addition to the monthly fee, has tripled from $16 to $46, worldwide. Despite the overall decline, this category has so far managed to maximize their ability to monetize a shrinking yet loyal player base.”
On mobile, Candy Crush Saga developer King has finally gained back much of the value it lost following its disappointing initial public offering. It is doing that by doubling down on new highly social mobile games. King is now trading at around $19.84 on the New York Stock Exchange. It reached $22.53 earlier this month, which is the first time it surpassed the $22.50 that it debuted at during its IPO.
“In June, it released Bubble Witch 2 on Facebook and mobile, which builds on the mechanics of several of its other titles, offering a clever mixture of bubble shooting, puzzling and animal rescue,” said van Dreunen. “On the business end, King is also making moves. It announced having entered into an agreement with Tencent to handle its distribution in Asia, and shifting marketing budget away from mobile (due to a lack in inventory) in favor of traditional TV advertising to expand its audience reach.”
Joost is co-founder and CEO of SuperData Research, a research firm specialized in the digital, mobile and online games market. As one of the first academics to study video games, Joost also ... All Joost van Dreunen news »