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Video games aren’t selling as much at retail as they used to, but digital distribution is starting to make up the difference.

In July, the U.S. digital-games market reached $1.1 billion, according to market-intelligence firm SuperData. That’s up 5.4 percent from July 2012. Social games continued to drive digital revenue, but the PC digital-distribution summer sales on Steam and GamersGate were also a big driver. PC digital sales are up 15 percent year-over-year.

PC digital sales reached $158 million in the U.S. This offset a decline in digital sales on console, which is at a low point and is unlikely to budge now that the next-gen consoles are so close.

Social game revenues reached $164 million in July, which is up from $133 million in June.

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“The underlying metrics for social games are improving, with July’s conversion rate reaching 2.11 percent across all categories,” wrote SuperData’s research team. “Nevertheless, we foresee a decline in August because of the summer season.”

A conversion rate indicates the percentage of players that converted to paying customers. SuperData also noted that developer King dethroned FarmVille publisher Zynga as the leading social game developer on Facebook in terms of monthly active users.

“King’s Candy Crush Saga generated an estimated $438,000 per day in July,” reads the SuperData report.

In the free-to-play massively multiplayer online and multiplayer online battle arena (League of Legends) space, the total number of players eroded by 45.8 million. Spending, however, remained strong. Average revenue per paying user was nearly $40. That kind of money is driving many developers into the MOBA market, and SuperData warns that market is potentially oversaturated.

Subscription-based MMO players also declined to 5.8 million in the U.S.

“This is consistent with market leader World of Warcraft’s announcement of losing 600,000 subscribers since its previous quarterly report,” reads the SuperData report. “The overall segment contracted 9 percent month-over-month as revenues totaled $76 million.”

Finally, mobile gaming is continuing to grow. The market as a whole produced $271 million in revenues for the month, which is up 32 percent from 2012. The conversion rate for mobile games is consistently above 5 percent, which suggests that players on smartphones and tablets are used to spending money on those games.

The top three top-grossing mobile games in the U.S. for July were King’s Candy Crush Saga, Mobage’s Marvel War of Heroes, and Kabam’s The Hobbit: Kingdoms of Middle-earth.

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