NPD has surveyed gamers to see where they are buying games, with some interesting results. This study looked at over 3700 buyers from October to November, and found that 71% of the games acquired in the last 3 months were physical... so 29% of the games acquired were digital. Of those digital games, 47% were acquired through a service like Steam.
Obviously physical games are still the standard way to get new games, but customers are increasingly comfortable with buying digital game content. Especially with the number of different ways you can get it, from app stores or Xbox Live or from Steam. This is following the same pathway that music did; at first people had trouble with the idea of just buying a download instead of a CD. Now the situation is reversed; you have to have some special reason to buy a CD since downloading is so easy and commonplace. That shift didn't take very long once the technology was widespread; and with it as a precedent, I think the shift for games will happen faster.
Games still have the file size problem, though. Many big releases are gigabytes in size, which can take a long time to download (especially for a mobile app; the release of Riven for iOS is over 1 gigabyte in size). Plenty of games don't have this trouble though, and if ever we ever get the bandwidth that other countries are getting (hello, Japan!) the digital distribution model will be adopted even more swiftly.
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