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The decline in PC gaming

Yes, this seems like an old, done to death topic but I did research on this subject for university a while ago and thought I may as well post my findings online, so here you go! added in pictures to make it less like a wall of text.


Video game software sales for the PC industry have been slowly falling since 1999. This paper has looked at the evidence of the decline in the global market for PC games in the recent years and discusses the main reasons and causes as to how it has happened. It has considered how shifts in trends where consumers are now playing casual free-to-play games on their PC’s and how people deciding to buy console games over their PC counterparts have affected overall sales including how digital rights management (DRM) is not helping the publishers that are trying to protect their games, as well as how piracy has affected the market and lowered the number of developers creating games for the platform. It also explains why the PC is now an afterthought when it comes to big releases for games and why big name publishers are focussing their interest on the console market instead. It also discusses how some publishers have made successful attempts at keeping piracy at bay whilst also keeping the consumer happy, and how Valve corporations’ digital distribution portal Steam is simultaneously saving and destroying the software market for PC games.


The PC was the dominant market for games during the 90’s, boasting much more powerful graphics than the current consoles, the PC was always one step ahead and is still to this day the largest platform for games. Most, if not all the CPU and graphically demanding games would be released on the PC and gave rise to such popular genre’s as Real Time Strategy (RTS) and Massively Multiplayer Online Role-playing Game (MMORPG).

The PC’s Video game software sales peaked in 1999 and since then they have been slowly dropping ever since, whereas the figures for console games has generally been rising. Console games now rake in nearly ten billion dollars every year with PC games pulling in just under one billion, the market share for PC games has been slowly shrinking and they have a roughly %14 market share.
Piracy also started becoming an issue for the PC. More people owned PC’s than consoles and games released for the platform were easy to crack and be distributed freely around torrent sites, some games illegal downloads would exceed the number of sales of the actual game, an incredibly damaging result for the publishers, all the while consoles were relatively safe from the threat of piracy. This was something that the video game publishers found attractive and so they started developing primarily for the consoles, leaving the PC as an afterthought, thus beginning the shift of power from the PC to the console

A short History of the PC games market

The PC was considered the best for playing games in the 90’s, with its superior graphics and sound that trumped anything a console could produce at the time, as well as its online capabilities that allowed gamers to play each other over the internet. It set the standard in what could be done in games and gave birth to many genre’s including the RTS, MMORPG and the point and click adventure.
It wasn’t until the release of the 6th generation consoles, the Xbox, PS2, Gamecube and the Dreamcast in 1999 that sales in the PC market started to slump. This was because the consoles where slowly catching up to the PC in terms of graphics and power and with the release of Sega’s Dreamarena for the Dreamcast and Microsoft’s Xbox live service for the Xbox, consoles could now play online, something previously exclusive to the PC platform. This gave the consumers more incentive to purchase a console as they had everything you would want for gaming on a PC for a much lower price. People who wanted to play the latest PC games would have to shell out hundreds, sometimes thousands of pounds to build a suitable PC and the price of the console was a good alternative to those who could not afford it as those same games where now able to be released on the consoles as well.

Piracy & Digital Rights Management

Piracy has become a massive problem for the PC market and is one of the main reasons it is not doing well anymore. Piracy is illegal and it is when one consumer obtains a copy of any game and releases it free to download on the internet where anyone can get it and the PC is by far the easiest platform to do this. It is also very difficult to catch people illegally downloading software.

In 2008 game development studio Infinity Ward released their megahit First person shooter (FPS) title Call of Duty: Modern Warfare 2 for all platforms. The resulting sales from the PC version of the game were shocking. With only a 3% contribution to the overall sales of the game the PC version made 16.5 Million dollars(Anon, 2010). The figure would usually be higher, but due to piracy the sales of the game have been greatly reduced. The game was downloaded a reported 4.1 million times from torrents sites, losing the company over 245 million dollars in potential revenue, a staggering figure. When put next to the Xbox 360 the figures are essentially swapped around, making 313.5 million dollars and losing 58 million to piracy, making the console platform the better choice for releasing games for due to its significantly lower rate of piracy (Radd, D. 2009).

Due to the large amounts of piracy in the PC market developers are more reluctant to develop games for the platform (Reimer, J. 2006), and those that still do often create it for the console first and then port it to the PC months later after release. The publishers that do this sometimes do so deliberately, as to prevent piracy that would stop consumers buying the console versions. This forces the PC gamers to either wait or buy the game on a console, an effective way of preventing piracy of the PC version by giving the consumer the choice of purchasing the game on a console earlier, though this also means that the console receives more sales than the PC version, making it more redundant than it seemingly already is and any form of DRM that may be used does nothing to prevent the piracy of the game when it is finally released on the PC.

Digital Rights Management (DRM) is software the publishers put in their games to prevent piracy, it is there to protect the game, but since it has first been introduced it has only made piracy more appealing to consumers. Years ago when a PC game was bought, all you would need is a CD-Key to authenticate your copy of your game during installation, and you could install it on as many machines as you wanted. Nowadays though the person who bought the game is forced to use the publishers own software (Oxford, T) in order to authenticate that they have a legitimate copy of the game and recently some publishers have added additional restrictions to their games, such as limiting the number of times a game can be installed before it becomes un-useable and requiring the user to be connected to the publishers server at all times while playing, and if the server goes down they cannot play such was the case with Assassins Creed 2 (Anon, A. 2010). This restriction treats the consumers that purchased the game legitimately worse than those that simply pirate it, and is actually inadvertently encouraging piracy instead of preventing it, and some users will just buy the console version instead to avoid all the hassle that comes with DRM altogether (Radd, D. 2009). This is damaging for the market and is one of the main reasons for its decline, but at least some companies are trying a different route with DRM, one that does not punish the real consumers that purchased the game legitimately.

American video game developer and publisher Blizzard Entertainment have released many games over the years, and have been a victim of piracy themselves, but their recent releases have done very well to combat its effects. The MMORPG World of Warcraft has over 11 million subscribers, none of which have a pirated copy of the game (Reimer, J. 2006). This is because blizzard requires its customers to open an account for the game and pay a monthly fee to access it. Without paying there is no way to play the game. While this is an extremely effective model to combat piracy it can only be applied to MMORPG’s as consumers expect to have to pay for these types of games because of the amount of content and hours a player can spend within the game makes it worth the money, whereas in any other genre of game the user expects to be able to play online for free and no company has yet ran the risk of trying to charge consumers to play for their FPS or RTS games.

Blizzard has not only been successful in combating piracy with its MMORPG but its free to play online RTS game Starcraft 2 is also doing well with low piracy rates. This is because the DRM that blizzard uses with this game is more beneficial to the user than other DRM’s (Martin, J. 2010). The game requires an online activation and once this is done the player can play single player as much as he or she likes, the user has the option of remaining connected to the internet which is not only used to authenticate the game every time they log in, it also offers the player community features and achievements that encourage them to stay online while they play, resulting in a much more successful and well designed type of DRM.

All this evidence shows that piracy is in fact one of the reasons for the decline in the market for the PC gaming industry, its effects on the sales of PC games are crippling and devastating and until effective measures are used to combat it that don’t frustrate and aggravate the consumer are widely adopted, such as Starcraft 2’s activation method, the PC market may never have the impact on games as it used to and its market share will keep on shrinking.

Steam & The retail market

Valve Corporation has a digital distribution service for the PC called Steam (Anon, A. 2010) that releases games for consumers, giving them the option of downloading titles directly to their PC instead of having to go to a local computer shop to purchase it. This is coincidental as when valve was first released the physical space that the PC games market occupied in retail stores had been slowly shrinking for years(Hook, R.B. 2009), sometimes disappearing completely, and the Steam service offered the alternative of buying any major PC game release from the comfort of home. This helped raise the sales of PC games as Steam offered competitive prices and friendly DRM, and with 25 million users they have made a big impact in software sales. These two things combined have actually reduced piracy rates slightly because users can download the games quickly and the prices for them are reasonable, it seems Steam has singlehandedly saved the software market for PC games just as it almost disappeared completely from physical retail space.

What you'll see on most PC game shelves now

Valve however, is also the one of the main reasons for the disappearance of the physical retail space PC games used to occupy. This is because many publishers now release their games directly onto steam, and the physical copies that are made come with the steam software. First time purchasers of a physical copy of a PC game with steam will subsequently install the software and any future game purchases will be likely made with steam. As a result of this stores would receive fewer sales from steam released PC games and would choose to not stock them for fear of losing their customers, damaging the industry further.

The evidence here shows that Steam is a great innovation for the PC games market and doing well to increase sales with its market dominance and has even expanded its services to the MAC (Foresman, C. 2010), but its success is also meaning the failure of physical retail copies of PC games as most of those customers are now with steam.

Casual games

One thing that many people forget to account for when discussing the PC gaming industry is the increase to the number of browser based, free to play games on the internet (Han et al 2008). These games come in many forms such as flash games or with the usage of cloud computing-based (streaming games) solutions. Games like the hugely successful Facebook game FarmVille have massive player bases that make their money through micro transactions (Steinberg, S. 2010). That is, the game is free to play but if the player wants to have an edge in the game they can pay for it with real money. Many games like this exist in the internet and it is a hugely profitable business. Their success is because of the low barrier for entry they have and how cleverly they have been monetized, no piracy means no loss in sales and users only pay if they want to, which they will if the game is good and they get into it. The rise of laptops (Radd, D. 2009) also has a part in this, as these free-to-play games do not demand much from the computer, almost anyone can play them. The PC market is seeing a large focus shift from hardcore games to these hugely popular casual free-to-play games. While they are not the reason the industry is failing, they are the reason the industry isn’t going to disappear anytime soon.

in conclusion

In conclusion the primary reason for the slowly decaying PC games industry is due to piracy, it’s impact on the industry is devastating and is causing game developers to prioritize their time on the consoles rather than the PC. The use of DRM is also an issue that is affecting the market, and until it is used correctly by publishers it will continue to disrupt the market. The failure of the physical software from retail stores has Steam partly to blame, but this is a natural shift as digital distribution services are on the rise and was only a matter of time until it was going to happen. PC gaming is not going to disappear; the structure of the market is just changing. With a high increase in browser based games and with services like steam, it is changing to a more digitized casual market for games. Analysts even predict that the PC market will reach $13 billion by 2012 (Geddes, R. 2007)

Ethical issues

A few ethical issues were encountered while collating data for the project. The first is that all the retailers that stocked PC games were angry at Steam as it was taking away their customers, while on the other hand this was market steam was aiming for, and as such they could not do much to assist in the absence of retail purchases as it was their aim to have people buy their games digitally. The second is that the because of the shift from hardcore games to casual games in the PC market the original


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Anon, A. 2010 “ Is the Steam service from Valve the future of PC gaming?” protectyourbubble.com [Online] Available: http://www.protectyourbubble.com/gadget-blog/2010/05/is-the-steam-service-from-valve-the-future-of-pc-gaming/ [25 Nov 2010]
Chronis, Cole, Dreunen, Zelfden, Zarate. 2008 ‘’The PCGA Presents: The PC Gaming Industry in 2008’’
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About goinglopsidedone of us since 4:26 PM on 12.20.2009