Further improvements in broadband connectivity due to the NBN rollout are expected to drive digital downloads over the next five years. For this reason, industry research firm IBISWorld has added a report on the Online Video Game Sales industry in Australia to its growing industry report collection.
The Online Video Game Sales industry in Australia comprises both bricks-and-mortar retailers that sell video game products online, and pure-play online companies such as Microsoft Xbox that sell games online as digital downloads. Traditional retailers such as EB Games and JB Hi-Fi sell physical video game products online, primarily to complement their retail store sales. Online sales of video games by traditional retailers serve mostly to expand their exposure in the digital space, as their retail sales still comprise a considerable portion of total revenue. Conversely, large console brands such as Microsoft Xbox and Sony sell solely online, through digital downloads, which have been boosted by improvements in broadband speeds over the past five years. Industry revenue is forecast to grow by an annualised 7.2% in the five years through 2014-15 with a rise of 7.8% in 2014-15, to reach 5.6 million. According to IBISWorld industry analyst Nick Flores, “the industry faces strong external competition from mobile gaming.” The rise in popularity of this gaming medium was driven by the prevalence of different types of mobile gadgets and smartphone applications. The lower pricepoint of smartphone games has increased competition for PC and console games.
Another source of external competition for the industry is online PC gaming platform Steam, which maintains no local subsidiaries and is therefore excluded from the industry. Steam, which is owned by Valve, has sustained considerable growth over the past five years, buoyed by its extensive gaming library and community features. “Valve’s decision to expand from PC games into gaming consoles is projected to provide strong competition for the Sony PlayStation 4 and Microsoft Xbox One,” says Flores. Valve is expected to provide software that would be compatible with gaming consoles, while simultaneously allowing third-party console manufacturers to customise their own hardware. Further improvements in broadband connectivity due to the NBN rollout are expected to drive digital downloads over the next five years. Sony and Microsoft are expected to continue intensifying their subscription models, which will partly constrain revenue for traditional retailers.
The Online Video Game Sales industry is characterised by a low level of market share concentration. The industry is highly fragmented, and players tend to specialise in particular segments of the market. For example, EB Games and JB Hi-Fi sell physical copies of video games, whereas Origin retails video games that are digitally downloaded. Consequently, there is no major player that holds more than 10.0% of the market, although they may dominate within a particular segment. Barriers to entry are minimal and do not have a significant effect in preventing new players from entering the industry. Depending on the type of segment a new enterprise wishes to operate in, the level of competition will differ.
For more information, visit IBISWorld’s Online Video Game Sales industry in Australia report page.
The industry is composed of e-tailers that sell video game products online, either as digital downloads or as online purchases of physically packaged games. These include PC and console games. Mobile games, and sales of console units and accessories are excluded from the industry. Retail sales of these products are not included in the report.
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IBISWorld Industry Report Key Topics
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.
Posted On: Melbourne, Australia September 18, 2014