Traditional retail video game sales in Australia slumped 23 per cent in 2012 as consumers increasingly shifted towards game apps and digital downloads.
But bricks-and-mortar retailers maintain that comparing game apps to full-fledged console titles for the Xbox or PlayStation was like comparing a Happy Meal with a Big Mac.
I would consider app gaming more like a $2 Happy Meal at Maccas. Some people want the $2 Happy Meal some people want the Big Mac, they're not the same thing...
Shane Stockwell, merchandising director at EB Games
New data from NPD Group Australia shows that revenue generated by retailers from console hardware, games software and gaming peripherals was $1.161 billion last year.
A screenshot from Far Cry 3.
But Ron Curry, CEO of industry body the Interactive Games & Entertainment Association, said the sector was still "buoyant" despite the 23 per cent decline in traditional sales because the figures did not include sales from online retail, downloadable content, digital subscriptions, mobile games and in-game micro-transactions.
Technology analyst company Telsyte predicts Australians will spend more than $730 million on digital games in 2013, up from $620 million in 2012.
Telsyte analyst Sam Yip told Fairfax Media that with the move to game apps and online subscription games, bricks-and-mortar specialist game retailers needed to diversify or face irrelevance.
"You've got online games which are 10-20 times cheaper [than packaged games] and give you the same sort of experience," he said.
Yip said the quality gap was closing between Xbox and PlayStation games bought on disc and those available online or via devices such as the iPad.
But Shane Stockwell, merchandising director at EB Games, told Fairfax there was no comparison between game apps and console blockbusters, which are still largely sold on disc because of the large file sizes.
"I would consider app gaming more like a $2 Happy Meal at Maccas," said Stockwell. "Some people want the $2 Happy Meal some people want the Big Mac, they're not the same thing and they have a price difference. I'm playing Far Cry 3 at the moment from Ubisoft, there's just no way an app compares to that."
Stockwell said he had put 30-40 hours into the game and an app doesn't come close to the experience of playing it on a 55-inch screen at high-definition resolution.
"At the same time my son, who's nine, loves playing Minecraft on his iPhone, so it's horses for courses."
Stockwell said he was hanging out for next-generation games consoles from Microsoft and Sony, with Sony hinting a PlayStation 4 may even be unveiled next week.
Curry said that apart from the increasing shift to digital content, the figures from NPD showed the drop in physical sales was "due in part to the ageing gaming consoles, a trend we saw back in 2005 at the end of the last console cycle".
Stockwell said EB Games had been diversifying its business for years and now sold downloadable content that "looks like a physical product on the shelf but you take it to the counter and we sell you a code and you go on to Xbox Live or PlayStation Network to download the content".