The industry moves away from physical: retail contributes minimal figures in video games

The physical format resists, but it has it increasingly complicated before the digital boom.

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The debate about the future of the physical market in video games is back on the table. The latest corporate report from Sony (we use it as an example since it’s one of the companies that traditionally bet on the physical format) reveals that retail sales account for only 3% of their revenue in fiscal year 2024, a figure that confirms what many analysts have been pointing out: the physical format is becoming increasingly residual in the strategy of major companies.

Painful comparisons

Meanwhile, digital software accounts for 20% of revenue, and additional content and add-ons lead the list with 29%, closely followed by online services. Sony makes it clear that their growth is based on recurring models, such as expansions, microtransactions, and subscriptions, a pattern that is repeated throughout the industry and defines where the business is headed.

The industry looks to recurring revenue

• This landscape is not exclusive to PlayStation or Nintendo. On Xbox, the push from Xbox Game Pass and digital purchases follows the same line: more convenience for the player, less dependence on traditional retail, and a clear bet on monthly recurrences and cloud services.
• The 3% figure doesn’t just mean a decline in physical sales, but a cultural shift in the way video games are consumed. Digital not only offers immediacy, but also integrates more stable and predictable monetization systems for companies, moving away from the classic “buy a game and you’re done” model.

What future awaits the physical format in the next decade?

If the current trend continues, the physical format will be relegated to a collector’s product, with special editions and limited runs for the most loyal fans. The rest of the market will almost entirely shift towards subscriptions, digital downloads, and cloud gaming, which could make buying a game on disc a nostalgic act rather than the industry norm in just ten years.

The question that remains in the air is whether the physical format will survive as a collector’s product or if it will almost completely disappear from the balance sheets over time. For now, the numbers seem to speak for themselves, although it remains to be seen how this will be resolved in the long term; the trend doesn’t seem to be deceiving us, and we’ll see how it evolves over the next ten years.