In the week the Prime Minister suggested New Zealanders would soon be paying GST on their online purchases, the Interactive Games & Entertainment Association (IGEA) published figures demonstrating the slow death of physical retail.
A very upbeat media release merrily skated over the drop in sales of physical product. Were it not for Sony and Microsoft releasing new generations of their Playstation and Xbox consoles, sales of physical goods would have looked absolutely horrible.
The overall earnings of traditional retail were $130 million, down 2% on the previous year. Console sales contributed $40 million of that total, up over $8 million. That rate of sales is not sustainable, so next year’s figures are going to look very unpleasant for games-specific retailers such as EB Games. The outlook for traditional retail offers little comfort as the ongoing roll out of UFB will make digital downloads even more common.
As that door closes, however, another is being kicked off its hinges. Double digit growth in each of the three categories of digital sales (and triple digit growth in some subcategories) contributed to a 34% growth in sales to $217 million.
What the IGEA figures don’t breakdown is how much income goes to NZ businesses as opposed to, say, Apple’s App Store. It’s fair to say, however, that the government’s plans introduce a requirement to collect GST for online game-related purchases isn’t going to make a lot of difference to the country’s coffers. Close to $30 million isn’t insignificant but it’s less than a quarter of what government spends on any day.