Digital download accounts for 50 percent of computer games industry

The computer video games market is running strong, but a certain portion of it is not. Major developers like Electronic Arts and Activision Blizzard are expecting revenue of digital downloads to overtake sales from boxed/physical copies within the next few years.

“There will come a point, whether it is two or three years from now when, we say, ‘We are doing more in digital media now than we are in physical media.’ And it’s clearly not far away,” said Peter Moore, COO of EA.

EA’s revenue from digital sales has spike drastically within the last 12 months as the Redwood City-based company reportedly raked in USD $1.3 billion from digital sales.

Adding to the ailing boxed copies sector is the insurgence of free-to-play and social games. Many of these games are readily available on almost all Android and iOS devices, and most importantly they come at no cost to consumers. These types of games rely heavily on in-game purchases to generate revenue—thus, it’s another example of how the video gaming industry is going digital.

NPD Group researchers estimated that U.S. sales of boxed games dropped 20 percent in July to $548 million, which accounts for about 50 percent of a $1.1 billion industry total.

EA, and other software developers, are taking the necessary precautions to remain relevant in the computer gaming industry, however. Activision Blizzard has been releasing digital downloads of popular titles such as StarCraft II, and Diablo III. EA, on the other hand, has a full-on online digital store it calls Origin.

As times are changing, EA is expecting that sales from its digital products to be $1.7 billion in its fiscal year to March 2013.

Analysts are expecting investors at the upcoming gamescom in Germany to look more at how each particular company are adjusting to the changes in the digital component of the video games industry. Creativity and innovation are strong components in luring investors, but the amount of money made from digital contents don’t lie—that is, investors will be aware of which company hasn’t adopted the trend.