Alternate History: What happens to gaming if the internet never existed?

[The_Liquid_Laser]

You covered all of the main points.  Here is my take on some of them.

The first thing that the internet impacted was gaming magazines.  You could now lookup a walkthrough online, and walkthroughs and hints were the biggest reason people bought gaming magazines.  Also the internet had a very immediate impact upon Adventure games as a genre, because online walkthroughs destroyed Adventure games.  This may have had a bigger impact than you might think.  In the 90's the games with the best stories were Adventure games (although RPGs were somewhat competitive on this.)  Before the internet, when a developer wanted to make a story oriented game, they would make an Adventure game.  It was kind of a way to be an interactive novel, but it very much relied on the puzzles taking some time in order to be solved.  After Adventure games died off as a genre, you start seeing narratives in almost every type of game.  I would argue that a heavy narrative works a lot better in an Adventure game than it does an action game, since when a person is playing an action game they just want to kick some ass and the story is kind of a distraction to that.  But, because Adventure games died off, we get narratives in most of our action games now.

I agree that the internet had no impact on American arcades, since they were killed mostly by consoles.  Specifically most developers decided to focus on console games, because it was much easier to make money on the NES and SNES than on an arcade machine.  The lack of developers lead to a lack of arcade games and it inevitably declined and died out.

On the PC side, there were a lot of changes going on in the 90's and early 21st century.  Some of these were impacted by the internet and some were not.  One thing impacting PC's were that a lot of action games that started on PC's were moving to consoles.  This sort of thing actually happened with EA first, when they moved most of their titles to the Genesis.  When Sony came around it happened more, with franchises like Tomb Raider and GTA moving from the PC to a console.  How much impact did this have on the PC?  In my opinion, not much.  Action games tend to be a better fit on a console.  When I look at the best selling PC games in the 90s they tend to be things like Myst, Civilization, Rollercoaster Tycoon, and several games made by Blizzard.  Add in The Sims from early 2000 and you see what kinds of games were popular on the PC: Adventure, Strategy, Simulation, and (to a lesser extent) RPG.  None of these are action games.  So I think the PC would have still been fine even with action games going to console, because the best selling PC games were not action games at the time.  Without the internet, the PC would have been the main place to go for Adventure, Strategy and Simulation games and to a lesser extent RPGs.

So, two PC genres that were affected hugely by the internet were MMOs and FPS games.  MMOs would simply never exist.  FPS, on the other hand, is probably the only type of action game that actually is important to the PC, and I think its safe to say that FPS multiplayer is the main draw for this type of game.  In the late 90's, laptops were not nearly as ubiquitous as they are today.  I tend to think that as laptops became more popular, then LAN parties would have become more popular as well.  In the absence of the internet, this may have made PC gaming a solid home for FPS games.  After all, the PS2 had FPS games, but the FPS genre never really had serious sales numbers until generation 7 when online gaming came into play.  So, in the absence of the internet, I think LAN parties become the norm for FPS games and the genre tends to remain dominant on the PC.

All of this means that the PC would not undergo radical changes.  PC gaming would continue largely as it had before and it would continue to have a retail presence.  This is both good and bad.  For places like the US and the UK, PC gaming would continue as strong as it always had.  But one advantage Steam has had is that it has made PC gaming accessible to places where gaming doesn't have a strong retail presence.  I suspect there are a lot of places in the world like Russia, India, etc... that would not have much access to gaming if it had not been for Steam and online PC gaming.

Lastly, there are consoles.  I actually think digital distribution has had an even bigger impact on consoles than even online gaming.  First of all, there would be no smart phones without the internet.  Handheld systems have probably lost some sales to smartphones, so without the internet, the handheld market would be at least as strong as the home console market.  On top of that the "indie renaissance"would have happened on handheld devices, since that would be the medium where game development would have been the cheapest.  I also think that games would be less likely to ship early in the absence of the internet.  There would be a bigger effort to get it right before the game ships out the door once and for all.  I also think Gamestop and similar stores would be in much better shape without the internet.

Tying it all together, I tend to think today's gaming scene would resemble the 90's gaming scene a lot more without the internet.  Gaming magazines would still be ubiquitous.  PC gaming would still focus on non action genres like Adventure, Strategy and Simulation.  PC gaming would continue to have a retail presence and gaming stores would continue to be thriving.  In the absence of the internet, LAN gaming and handheld gaming would take the place of internet multiplayer and smartphone games respectively.  In general, gaming would continue much closer to the trajectory set during the 90's before the internet came in and changed the gaming landscape.