Cord Blomquist

PC Game Software Sales Actually Growing

I hate to burst a theory, but Adam is wrong to say that PC gaming is on the decline. But I understand how appearances can be deceiving. Walk into your average GameStop or Best Buy and you’ll see row after row of console games placed front and center. You’ll usually find the PC games stuck in a corner with routers and external hard discs.

Retail numbers also support the theory that PC games are on the decline. NPD Group says that while North Americans spent $18.8 billion on game software in retail stores last year, just $910 million went to PC games, down from $970 million the year before. So, PC games are roughly 5% of retail sales. It sounds a lot like a death nil.

But retails isn’t the only place games are sold these days. Just like iTunes and its online component—the cleverly named iTunes Store—have revolutionized the way music is sold, so too have PC game makers revolutionized software sales in recent years.

My most recent gaming experience has been barreling through Half-Life 2 and Portal as I make my way through the Orange Box. When I installed the Orange Box, a package of 5 games by Valve Software, I wasn’t just installing games, but also a game-buying service. I’m now a proud registered user of Steam, one of the largest online game buying services. The Boston Globe recently published a story covering the rise of Steam:

Today Steam sells more than 250 games by Valve and other PC game publishers. The service has 15 million registered users, and posted 2007 sales growth of 158 percent. Valve cofounder Gabe Newell recently said he expects Steam sales will soon surpass Valve’s retail store revenues.

Even with services like Steam around, aren’t the consoles swimming in dough after the release of mega-hits like Grand Theft Auto IV? Not when you factor in the subscription fees being forked over on a monthly basis by those who have given over countless hours of their lives to massive multi-player online games (MMOs).

GTA IV sold 8 million copies in its first month, but that’s nothing compared to the 10 million people who pay $15 to Blizzard Entertainment each month to player World of Warcraft. Blizzard has been enjoying GTA-level sales every month for years. Last year Blizzard made a very cool $1.2 billion—with a “B.”

The Boston Globe piece also points out another source of income for the PC gaming industry, cubicle escapism:

Then there are the easy-to-play “casual games” like Scrabble or Bejeweled. Distributed on the Internet, such games turn up on the computers of bored office workers around the world. Casual gaming on personal computers generated $1.7 billion in revenue last year, up 20 percent from 2006, according to the Casual Games Association. Despite the games’ simplicity, players find them irresistible, with many playing for seven or more hours per week.

The piece goes on to quote Kristen Salvatore, editor in chief at PC Gamer magazine, who says “Casual gamers are people that don’t know yet that they’re hardcore gamers.”

Between retail, online distribution, subscriptions, and casual gaming the PC game software industry grew to $11.3 billion in total sales—21.5% more than $9.3 billion in 2006. Consoles grew as well and they grew more, from $9.4 billion to $14.1 billion, a jump of %50. So, while it’s true that consoles are pulling ahead of PCs, but both markets are healthy and growing. Pirates be damned!

July 15, 2008 | Comments |

Viewing 3 Comments

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    I should also note that personal experience shows that pirated games are often impossible (or at least very difficult) to use in online play, which is a large part of the fun of nearly any real-time strategy or first-person shooter game. I don't pirate games because I like playing them online. I've also discovered that a full-time job (even for a non-profit) allows me to buy a lot of games at $40 a crack. This is especially true since I've found ways to not spend money on things like music.
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    I think you're precisely right. Don't cry because PC games are moving into the 21st century. If you're having a tough time measuring the success of video games themselves, check out the sale of computer hardware such as high-end video cards (which is more likely to be bought retail and are ultimately fairly specialized in use), another booming industry.

    As for piracy? The PC Game industry has been struggling with this since the 80s. Their solution? Well for one, don't piss off the consumer. Back in the early 90s they basically had an ad campaign saying 'hey, if you rip off our games, we'll stop making them' and, for the most part, it seemed to work. Kids liked the games, but felt they had a responsibility to fork over the cash. Tie that in with how PC games began considering how to better protect their software without creating security holes on the consumers' computers, and you have a winning strategy. Civ IV, which was a hugely expensive and hugely anticipated game with little internet play still broke records on sales through a mix of simple piracy protections and just the expectation that people will be honest.

    Contrast this with the RIAA - they openly admit their artists get around 5-10% per sale, they dug their heels in trying to resist technology and then made their product a pain to use, plus they sued little old ladies. The result? People actively take PRIDE in ripping off the RIAA. iTunes is a huge blessing to the RIAA, and it took them a year to realize it, but they're still swimming upstream.

    No, the video game industry is doing well. As was pointed out, MMORPGs are breaking records all over the place. Games like GTA IV (which is also PC, and based off of a PC-only line) are also breaking records for sales, and both customers and producers are happy.
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    Even the hardcore pirates buy stuff like the Orange Box. Quality games that you get immediately and easily, effectively are always backed up, and very moderately priced? Hell, there is more effort in pirating it.

    If I am ever tempted to pirate games, it is when the publishers feel the need to make them more difficult to get and play - offer them only in stores, bundle them with highly invasive DRM schemes, and offer no support after purchase in the form of patches.

    Short answer: If pirates are offering a more convenient, secure, and friendly buying experience than you are, the problem isn't pirates, it is your business model.

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