Despite a substantial drop in physical retail gaming revenues in New Zealand in 2012, consumer spending on gaming is expected to grow faster than almost all other sectors over the next few years.

Physical retail gaming revenues dropped 18 per cent on 2011’s figures to NZ$149 million, and total unit sales were down seven per cent on the previous year, according to data from the NPD Group.

Those figures exclude sales from online retail, downloadable content, online games subscriptions, in-game micro-transactions, and mobile games.

The drop was the result of a growing migration to digital products, and the Interactive Games & Entertainment Association (iGEA) said it remained confident in the industry’s growth.

“As New Zealanders play video games across a broader range of mediums, it’s becoming difficult to get a true indication of the value of the industry via a single source,” said iGEA’s New Zealand director Mark Goodacre.

“While there is a decline in traditional sales, the gaming industry as a whole remains buoyant, as people shift towards a ‘hybrid’ model in their consumption of interactive entertainment.”

Despite the age of the PlayStation 3 and Xbox 360, HD console game revenues didn’t slow much in 2012, decreasing a mere 2.2 per cent, with the number of games sold across HD consoles increasing 3.4 per cent.

There was also increased spending on yearly franchises like Call of Duty, Assassins Creed, and FIFA during December 2012 compared to December 2011, said the iGEA.

However, overall hardware unit sales declined by 13.8 per cent.

Despite the declines in revenue, PriceWaterhouseCoopers predicted that the interactive games sector would experience an annual compound growth rate of 6.3 per cent for the coming four years.

That would see it demonstrate the biggest growth in consumer spending of any retail sector except that of the Internet, outstripping the forecasted growth of music, film, and subscription television.

New Zealand's 380 full-time game developers will be happy with that news, said the New Zealand Game Developers Association (NZGDA).

“Digital and smartphone gaming is a burgeoning industry, and there is now a strong ecosystem of talented local developers,” said NZGDA chairperson Stephen Knightly.

“Recent hit New Zealand video games like Path of Exile, The Blockheads, and Bloons Tower Defence 5 each sold millions of copies digitally.

“For exporters like us, we go direct to our players via the Internet.”

Goodacre added: “Bricks and mortar retailing is facing challenges in all sectors around the world, and our local interactive gaming industry is not immune to these changes.

“That said there remains a big place in the market for physical outlets as they are a terrific place for consumers to get advice, feel and play with the latest games, hardware and peripherals in one location.”