http://www.gamasutra.com/view/news/165690/February_US_game_sales_paint_bleak_picture_for_retail.php

Following the news that Game may go into administration by the end of this week, it looks like the same trends are happening across the pond also.

Points of interest (for me):

"Previously I've pointed to the collapse of the Nintendo Wii and music game markets as primary factors in the decline in U.S. retail software sales over the past few years. After the first two months of 2012, however, the malaise appears to have spread to the Xbox 360 and PlayStation 3 software markets"

"Analysts for Piper Jaffray were less confident, and attributed the current difficulties to "fatigue in demand for HD console software," specifically as "casual gamers who tend to purchase major titles several weeks or months after launch are having less impact on the market."

"According to Anita Frazier, analyst for the NPD Group, money spent on "other methods to acquire content including used games, full game and add-on content downloads, social network games, mobile games, rentals and subscriptions accounted for an additional $550 - $600 million in sales."
That sounds remarkable, since the total spent on software at retail was only $464.4 million for that same month. "

"Essentially, the industry across all segments appears to be treading water in terms of retail. It's entirely possible that the shift to a majority of digitally distributed content will take place in this flat market situation, and ultimately retail will stop contracting. Then growth in the digital economy can push the full industry up overall instead of simply substituting for lost retail sales. "

It may be we are seeing the end of retail games. While it is not unexpected for PC games, there is the decline (saturation?) of consoles sales. Maybe this will be used as justification for streaming game consoles.

Digital Download Revolutuion:

1. I used to buy retail games, but never again. Only digital download versions from now on. Dungeon Siege III and Duke Nukem Forever onsale for $5 at Amazon less than six months after release! and i also got $5 coupons that i used to buy GTA4 and Dead Space 2 for FREE. How can retail compete with that?

2. Indie Game Bundles ( 5+ games for $1 ). Again, retail cant compete.

3. Free 2 Play games like TF2, Spiral Knights, too many to list, all available on Steam for FREE. These are AAA titles folks, for FREE. I dont even have enough time to play all these games.

4. We the gamers are the real winners here :)

This article also has some very good insights on the current situation of retail.

And no, that joke will never get old.

I blame DLC. Nickel and diming consmers was inevitably going to lead to collapse.

It could also just be a general sense of boredom of the same old games on the same old platforms.

This console gen has gone on too long.

Sales of luxury items decline in a recession? Well bugger me!

Err, you have noticed that we are talking about retail here. Gaming itself is doing very fine.

And it was inevitable in the long run. Digital conent delivery is cheaper, faster and more accessible than distribution through stores.

Why bother going to a store, if you can get any game instantly on the web. And you can look up reviews, forum entries, etc while making the purchase decision.

It is bad that some people will probably lose their jobs because retail stores will close, yes, but in any case, I am all for DD.

True, but, you know, you could probably afford to pay a bit more than that. If you only give one dollar, neither the indies or the charities will profit from it. No offence, but surely, those five games are at least worth $10, preferably more. Eh?

Efit:
On topic: I too sympathize with those who loose their jobs. It is sad, but it's been a long time coming. That doesn't make it better, but there it is.

I don't know if there's really anything wrong with the console generation itself, but the games are most certainly a problem. If no one is willing to spend capital on anything new, no one is going to buy anything new.
$1 * (thousands) != 0?

If companies like Microsoft do go digital only consoles then they will monopolize it brutally. They may make sure only they can sell the games until some government gets wise, updates the law and makes sure other companies can get a look in. In the mean time they'll have full control over the pricing of the market and the end user will get royally screwed. Plus given the rip off prices of the hard drives Microsoft sells on the 360..... it's going to result in overpriced space for those overpriced games. Sony is the same, I mean the PSP Go majorly suffered because of how expensive they made the games on PSN (the only way of buying them.)

At least with disk and card medium we have the benefit of being able to put the game in and play it, instead of wait hours on a crappy internet connection to redownload it after working out what game we want to delete to make the space.

Right. Am I supposed to be excited about a 5th Assassin's Creed in as many years? Because I am not.
As long as there are multiple consoles, which there will be, I fail to see how digital means monopoly.

Remember that PayPal, Amazon and Google Checkout all take a percentage of the proceedings, so the indies and charities would be left with nothing but a few cents from one dollar purchases. If that. I think we can all agree that they deserve way, way more.

I can definitely agree. Mainly I am frustrated at the comparison drawn between customers paying a small amount of money and piracy.