Who are you calling dead?
(Credit: GameSpot)We're really having this discussion again? Should we just refresh this article every year to correct for the misguided interpretation of NPD's U.S. retail sales figures?
The "death of PC gaming" has become reliable column and blog fodder for tech journalists. Perhaps it stems from lingering bitterness over time wasted editing Warcraft batch files in DOS 6.0. Regardless, you shouldn't take the idea seriously.
To prove it, we won't even lean on that most tempting pillar of PC gaming, the 12 million-strong World of Warcraft monthly subscription-paying player base. Instead we'll point to a report by Rock, Paper, Shotgun's Kieron Gillen from Britain's Develop 09 conference, specifically from a presentation on digital distribution.
We take a step to the world stage. 13 Billion dollars is the entire PC games market in 2008. In terms of the split, Chart Track [a UK-based market research firm] believes 24% is retail, 46% online revenue services (i.e. Subscriptions, micro-transactions), 22% is digital distribution and 8% is ad-revenue...All this compares to 32 billion dollars from all console sales.
Yes, according to Chart Track, PC games have a smaller share of the global gaming market than consoles. But if we apply those figures to some very rough estimates, we can't help but draw the conclusion that PC gaming will grow in 2009, and the outlook for 2010 is even more promising.
Consider further down in Mr. Gillen's article, where he points to Chart Track's projections for North American sales for Valve Software's Steam online distribution service. By the end of 2009, Chart Track has Steam sales up from $600 million to $1.07 billion, an increase of 78 percent.
Chart Track also estimated that digital distribution makes up 22 percent of the $13 billion global PC market, which boils down to $2.86 billion. If global digital distribution sales follow the same growth pattern that Chart Track projects for Steam for 2009, worldwide digital game sales will climb by $2.23 billion. That brings the global digital from from $2.86 billion in 2008 to almost $5.1 billion for 2009.
Now let's look at retail, in this case we'll use NPD's $701 million in U.S retail sales. Globally, Chart Track says PC retail sales represent 24 percent of the $13 billion pie, or $3.12 billion. That means NPD's $701 million figure represents approximately 23 percent of the worldwide retail market in 2008.
We don't have U.S. retail projections for 2009, but we do have data from NPD's 2007 report, when U.S. PC retail sales pulled down $911 million. According to NPD, then, from 2007 to 2008, U.S. retail sales declined by 24 percent. The global economic downturn could predicate a much larger decline for 2009, but with PC games plummeting in general year-over-year at retail, we're also not sure how much further they have left to fall. For the sake of simplicity, if we take that same rate of decline from US retail sales between 2007 to 2008 and apply them to Chart Track's global sales for 2008, we can expect 2009's global retail numbers to drop $750 million, from $3.12 billion in 2008 to $2.37 billion in 2009.
For in-game ads, IDC projected in August of 2008 that U.S. in-game PC ad sales would increase by 26.8 percent per year until 2012, from a starting point of $712 million in 2007. That would take us to $902 million in the U.S. alone for 2008. We're skeptical that the U.S. in-game PC ad market represents 86 percent of the Chart Track's 2008 global total, and you'd also be right to question a report from August of 2008 given that the global economy almost collapsed in the month following. But for fun, let's apply IDC's 26.8-percent growth to Chart Track's $1.04 billion for 2008, which brings us up $280 million to $1.32 billion for 2009 in-game PC ad sales.
That leaves us with subscriptions and microtransactions. A report from Screen Digest pegged MMO subscription growth for 2008 at around 22-percent, although it acknowledges increasing interest in the microtransaction business model. Microtransaction research is harder to come by, especially since we don't know how Chart Track defines it. We wouldn't count Second Life or other social software-based sales, but the lines are fairly blurry. We've been loose with our other projections, but we have to draw a line somewhere, and we're already showing an increase of $1.78 billion overall. Let's say simply that we expect both subscription- and microtransaction-based PC sales will increase in 2009.
To recap our estimates for 2009:
- Global retail PC game sales: $2.37 billion (23% decrease)
- Global digital PC game sales: $5.09 billion (78% increase)
- Global in-game PC ad sales: $1.32 billion (26.8% increase)
- Global subscription and microtransactions: >$5.98 billion (unknown % increase)
- Total 2009 global PC game sales: $14.76 billion-plus (minimum 13.5% increase)
We'll repeat that those numbers are very rough, so big grain of salt here. Piracy, console motion technology, and other factors will also ensure that PC gaming perception stays complicated. But remember that we still haven't counted subscription and microtransaction sales into our figures. Even if growth from those segments is slow this year, by 2010 we'll be that much closer to AAA MMO titles like the next World of Warcraft expansion, Bioware's highly anticipated Star Wars: The Old Republic, and DC Universe Online from Sony Online Entertainment. We also have Starcraft II coming out at the end of 2009, along with Diablo III on the horizon after that. Both of those games are PC exclusives almost guaranteed to sell in the millions.
As game and tech writers sharpen their focus on those titles, and (knock wood) presuming the launch of Windows 7 goes smoothly, our second prediction for this post is that in the beginning of 2010, the "death of PC gaming" crowd will be scrambling to see who can proclaim first that PC gaming is healthier than it's ever been.
