So this is not a direct continuation of my ideas over the general video game industry, but I still feel its is extremely important, and as such decided to write it now then later:
All over the internet … and blogs … and this … and that … the same message seems to be resonating. PC Gaming is dying, consoles are the new wave of the future. Sadly, I was one of those very same people whom were openly bashing the lack of success for PC Games in the past few years. But some time back, I decided to take a deeper look and try to really figure out why PC Gaming was dying. (OK the reason for this is because, I got tired of always defending PC Gaming … even today)
So my research began with the usual … NPD charts, graphs, and data. The conclusion, well simply put, “PC Gaming” has seen a plateau in sales for the past few years, ~$1 Billion worth of sales and unchanging. So only $1 Billion in sales for each of the previous years, and console sales are growing at double digits? It seems obvious to anyone who looked at this same data set, “PC Gaming” is dying.
I decided to look deeper into the numbers to figure out what part of the PC Gaming market is dying and what part is expanding. Thats when the light struck. NPD only reports on retail PC sales, because those are the only sales that are “trackable”. The following items are excluded from NPD sales reports:
1. Digital Downloads (Steam)
2. Micro Transactions (The Sims)
3. Advertising (Yahoo Games and other Flash Games)
4. MMO & Subscription based gaming (World of Warcraft)
PC Gaming is far from dying, it is thriving and growing, just in ways the market was unable to measure.
- Digital Downloads are set to surpass retail sales numbers for games sold (link).
- MMO & other subscription based gaming have become extremely profitable and still growing in leaps and bounds. World of Warcraft is leading this charge. Q1 2008 revenue alone was above $250 Million (link). (Note: Blizzard’s main revenue source 80-90% is World of Warcraft).
- Advertising is becoming the business model for many small flash game websites. According to this older website (link), there were over 217 Million unique users. That number should have grown by now.
- Micro Transactions are booming. The Sims and other games require small incremental purchases of items or other things to continue.
This is what the PC Gaming industry has evolved into. It has expanded into several new markets of advertising, downloads, micro transactions and subscriptions. But industry market research and metrics do not fully account for these new revenue streams. But these new streams of revenue cannot be ignored, Digital Downloads, Subscription based gaming, and advertising have proven to be multi-billion industries. Once the older retail sales are finally eclipsed, then the true nature of the industry will come to the forefront.
