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If you want to make a hardcore gamer roll their eyes in exasperation, tell them that the PC gaming industry is dead and/or dying. Variations on this well-worn statement have been circulating for years, and it’s never been particularly true. In 2011, it’s less true than ever: thanks to digital distribution, more people are buying and playing PC games, so it’s no surprise that developers and publishers continue to invest heavily in the space. Their efforts don’t necessarily have the goal of extracting gamers’ wallets from pockets, either: the burgeoning ‘free to play’ model is being taken seriously by publishers like EA and Activision. And though the hardcore among you might be loath to admit it, those who choose to while away their hours playing Facebook games are technically PC gamers, too.
All told, PC game sales accounted for $16 billion in revenue worldwide last year, according to research conducted by DFC Intelligence on behalf of Nvidia. If DFC’s forecasts are to be believed, PC games will eclipse console game sales in 2014, and incur a sense of deja vu among those gamers old enough to remember a pre-console period where the PC ruled the emerging market for home video games.
In this two-part feature, GameSpy will examine the health of the PC gaming industry across two fronts – retail and digital – in an effort to dispel those pesky death rumours once and for all.
The PC should surpass consoles in 2014.
Bricks and Mortar
When compared to the reams of laudatory material that have been dedicated to praising the virtues of digital distribution platforms, it’s easy to overlook the roots of PC gaming: the humble bricks-and-mortar retailer, a place where chunky, colourful cardboard boxes containing CD-ROMs once received pride of place on shelves a few short years ago. Though the cardboard boxes have been downsized and the CD-ROM technologically superseded, Steve Nix counters that there’s still a significant market for over-the-counter sales of PC titles.
As general manager of digital distribution at GameStop, the world’s largest video game retailer – who employ some 17,000 full-time staff, and whose annual earnings in 2010 were $9.47 billion – Nix is well-placed to survey the PC gaming landscape. It also helps that he spent four and a half years at id Software, as director of business development and later, director of digital platforms. He’s been with GameStop since February 2011. “Many years ago, PC games were the largest category for GameStop,” he says. “But PC retail sales didn’t look good over the last ten years. There’s been a steady decline. As a PC gamer first and foremost, that always was very concerning. In the early 2000s, I was wondering, ‘What’s going to happen to the PC? Is it going to become completely extinct at some point, as a gaming platform?’”
We now know that the answer to this question is a firm ‘no’. At the time, Nix reflects, “my strong belief was that we were seeing a user experience problem with PC games in a retail box, versus console games. Really, if you think about the fastest, easiest way for people to get a game and start enjoying it, it’s the consoles. They offer a really nice experience: you get your game disc, you pop it in, and you’re playing in under a minute. Whereas, by the mid-2000s, for PC gamers, games had gotten quite a bit larger. Before the DVD, you’d have nine CDs for some games. And then you might have to search the web for the latest patches. If you’d done everything correctly, maybe a couple of hours later, you’d actually be playing the game after all this work. Really, I think that a lot of customers who were PC gamers started transferring to the consoles just because the user experience on the PC was poorer at that point,” he reflects.
Digital distribution has revolutionized the PC.
According to Nix, all GameStop saw at that point was “the decline of the physical PC box sales, so they decided to focus on the console business. But fortunately, in the last few years, some of the leaders in the PC digital space have been more public about going out with their numbers. They’re seeing amazing growth. That information started to get back to GameStop, who did some extensive research and said, ‘the PC market is thriving, but it’s just shifted online. It makes sense for us to be a major player in the PC digital space’.” The company will invest $100 million in digital initiatives in 2011, according to a report in March. We’ll return to Nix and GameStop’s recent forays into the online marketplace in the second part of this feature, which focuses on the digital market.
RL vs Virtual
For many game studios, the decision to develop for the PC is revised on a project-by-project basis. Roswell, Georgia-based Tripwire Interactive – best known for Red Orchestra 2 and Killing Floor – are no different, as vice president Alan Wilson explains. “We look at it game-by-game, and review that decision on an annual strategy basis as well,” he says. “But we aren’t likely to stop developing for the PC. It’s a question of which other platforms we will add, and ‘when’, not ‘if’.”
What about the all-important question of retail versus digital? “We do both, although there is more and more debate about the point of doing retail,” Wilson replies. “In the PC world, as far as we can tell, most of the games – especially for those of us with small marketing budgets – get sold through digital. There is a vicious – and self-destructive – cycle going on: few PC games get sold at retail, so the retailers reduce the available shelf space. This means low revenue for the retailers, so they demand higher margins from the publishers, which means fewer games make it to retail. All of this means that few games get sold. And round it goes. Go look for the PC shelf-space in your local store, and compare it to five years ago.”
Doug Lombardi of Valve Software points out that the company’s roots lie in PC game development. “That’s where Valve started and exclusively spent the first eight years of the company’s 15-year history. We’ve stuck with it because we’ve found it to be a great platform for our games and our business,” he says. “I can’t really think of a time when not developing for the PC was ever discussed. It has always been central to what we’re doing.” Since launching in 2002, Valve’s games platform Steam has become an integral part of the industry for developers, publishers and gamers alike.
DOTA2 will intially be PC only.
“Reviewing when and where to take our games and Steam – or Steamworks features – to other platforms is something we always consider,” says Lombardi. “Since 2005, we’ve gone from PC-only to PC, Mac, Xbox, and PS3. For some games, such as Portal, we’ve gone multiplatform and brought Steamworks features to as many of those platforms as possible. With Dota 2, we’re initially planning PC & Mac only.” More on Steam in part two of this feature.
When asked to name a few benefits for developing for the PC gaming market, Lombardi offers: “It’s an open platform. There are billions of people using PCs around the world. And most game development is done on PCs.” He declines to name any drawbacks, and instead replies that the platform has “worked well over our 15 years of making games.”
Wargaming.net, a strategy game developer with a similar tenure in the industry, are more vocal on this topic. The company currently specialise in war-based MMORPGs such as World Of Tanks and the upcoming World Of Warplanes; they’ve been headquartered in London since 1998, and have a development centre in Belarus.
The PC’s problems
Jeremy Monroe, general manager of Wargaming.net’s North American arm, replies that “of course” there are drawbacks to developing for the PC gaming market. “Box game development is facing huge problems at the moment due to PC market specificity and growth of piracy,” he replies, using ‘box’ as a synonym for traditionally-retailed titles. “These conditions make it almost impossible for box game publishers to keep the high level of profitability. The only thing that can save you is a world-known brand or franchise. But we have the internet that forced players to move online from single-player games to a much more captivating multiplayer format. We were lucky enough to foresee that shift and switch to the MMO platform.”
World of Tanks got it very right.
Monroe comments that, “after a year of World of Tanks being on the market, we are confident that we made the right choice.” Unsurprising given that, on January 23, 2011, that title gained a Guinness World Record for ‘Most Players Online Simultaneously on One MMO Server’ when they hosted 91,311 players on World Of Tanks’ Russian server. “The main advantage of PCs is that they are not specialised machines like, for example, consoles, but very comprehensive and all-purpose instruments. Their versatility allows us to try out a bunch of innovative solutions.” Monroe cites examples such as different types of server architecture and data transferring. “PCs possess their strong points and we constantly strive on using them,” he says.
In this belief, Wargaming.net are far from alone. A profile of Valve founder Gabe Newell published in Forbes earlier this year asserted that, in 2010, “unit sales of PC games via download outstripped sales of boxed games in stores for the first time”, according to research from NPD Group. With that startling – yet probably inevitable – factoid in mind, keep an eye out for part two of this article, where we’ll take a magnifying glass to the digital distribution side of the PC gaming industry. Death rattle not included.