It's Time to Admit Traditional Gaming Is In Trouble

Each month, the NPD's report on game sales disappoints. Sales are plummeting in both hardware and software, and many are wondering if it's a result of the economy or something else. As far as I'm concerned, it's about time we all admit that it's something else. The economy might not be helping matters, but the way I see it, the real problem is that gaming habits are changing, and the products that we once bought just aren't as valuable to us as they once were.[Image credit: Danny Yousif]

Take hardware, for example. Many folks are still buying consoles, but the real growth in the marketplace is in mobile devices. People across the globe are turning to the iPhones, Android handsets, and tablets to play video games. And publishers like Electronic Arts are capitalizing on that by offering their titles on those devices.

[aquote]Gamers aren't as willing to buy a portable device with gaming as its main function[/aquote]

Nowhere is the changeover as apparent as in the portable-gaming market. Nintendo once was the only player that mattered in that market. But with the 3DS collecting dust on store shelves, and selling just 110,000 units last quarter, it's time to question its ability to compete against devices like the iPhone 4, which during the same period, saw unit sales climb to over 20 million.

Today's gamers just aren't as willing as they once were to buy a portable device with gaming as its main function. Consumers today want a single device that will allow them to play a game, then turn that off to text a friend, place a call, and then go back to gaming. The 3DS and the upcoming PlayStation Vita don't offer that. And that alone puts their future in doubt.

On the software side, I think it's time all publishers realize that the old physical-disc model is dying. As NPD itself pointed out earlier this year, 40 percent of all game sales come from digital content. And NPD analyst Anita Frazier said this past week that sales on digital content and mobile and social games will help buoy the industry this year; physical retail will bring it down.

There will always be a hard-core segment of the market that won't waste time on simple mobile games and would rather have the high-priced options they'll find on their Xbox 360s; but those folks are becoming harder to find nowadays. As smartphones and tablets become more powerful, many are turning their attention to those platforms. And with social titles growing like gangbusters, it's harder for people to find the time to sit down in front of their televisions and play games for hours the way they once did.

[aquote]The times are changing[/aquote]

Does that mean traditional gaming is dead? Of course not. The industry is still generating billions of dollars each year on games, and there's no reason to suggest consoles and high-priced titles designed for those devices will die anytime soon. But it certainly appears that the times are changing. And the sooner traditional publishers and hardware makers embrace that and adjust their business strategies accordingly, the better it will be for them.

Say what you will about the video games industry, but I think the traditional model some companies are still trying to cling to is dying. And the companies that accept that will be much better off than those who don't.