GameSpy story: ‘The Health of the PC Gaming Industry’, October 2011

A story for GameSpy.com; my first for them. It’s a feature split into two parts: one to discuss the retail side of PC gaming, and one for digital.

Excerpts from both halves included below.

The Health of the PC Gaming Industry Part 1: Retail
Dying or developing – just how is the PC doing?

If you want to make a hardcore gamer roll their eyes in exasperation, tell them that the PC gaming industry is dead and/or dying. Variations on this well-worn statement have been circulating for years, and it’s never been particularly true. In 2011, it’s less true than ever: thanks to digital distribution, more people are buying and playing PC games, so it’s no surprise that developers and publishers continue to invest heavily in the space. Their efforts don’t necessarily have the goal of extracting gamers’ wallets from pockets, either: the burgeoning ‘free to play’ model is being taken seriously by publishers like EA and Activision. And though the hardcore among you might be loath to admit it, those who choose to while away their hours playing Facebook games are technically PC gamers, too.

All told, PC game sales accounted for $16 billion in revenue worldwide last year, according to research conducted by DFC Intelligence on behalf of Nvidia. If DFC’s forecasts are to be believed, PC games will eclipse console game sales in 2014, and incur a sense of deja vu among those gamers old enough to remember a pre-console period where the PC ruled the emerging market for home video games.

In this two-part feature, GameSpy will examine the health of the PC gaming industry across two fronts – retail and digital – in an effort to dispel those pesky death rumours once and for all.

Bricks and Mortar
When compared to the reams of laudatory material that have been dedicated to praising the virtues of digital distribution platforms, it’s easy to overlook the roots of PC gaming: the humble bricks-and-mortar retailer, a place where chunky, colourful cardboard boxes containing CD-ROMs once received pride of place on shelves a few short years ago. Though the cardboard boxes have been downsized and the CD-ROM technologically superseded, Steve Nix counters that there’s still a significant market for over-the-counter sales of PC titles.

As general manager of digital distribution at GameStop, the world’s largest video game retailer – who employ some 17,000 full-time staff, and whose annual earnings in 2010 were $9.47 billion – Nix is well-placed to survey the PC gaming landscape. It also helps that he spent four and a half years at id Software, as director of business development and later, director of digital platforms. He’s been with GameStop since February 2011. “Many years ago, PC games were the largest category for GameStop,” he says. “But PC retail sales didn’t look good over the last ten years. There’s been a steady decline. As a PC gamer first and foremost, that always was very concerning. In the early 2000s, I was wondering, ‘What’s going to happen to the PC? Is it going to become completely extinct at some point, as a gaming platform?’”

We now know that the answer to this question is a firm ‘no’. At the time, Nix reflects, “my strong belief was that we were seeing a user experience problem with PC games in a retail box, versus console games. Really, if you think about the fastest, easiest way for people to get a game and start enjoying it, it’s the consoles. They offer a really nice experience: you get your game disc, you pop it in, and you’re playing in under a minute. Whereas, by the mid-2000s, for PC gamers, games had gotten quite a bit larger. Before the DVD, you’d have nine CDs for some games. And then you might have to search the web for the latest patches. If you’d done everything correctly, maybe a couple of hours later, you’d actually be playing the game after all this work. Really, I think that a lot of customers who were PC gamers started transferring to the consoles just because the user experience on the PC was poorer at that point,” he reflects.

According to Nix, all GameStop saw at that point was “the decline of the physical PC box sales, so they decided to focus on the console business. But fortunately, in the last few years, some of the leaders in the PC digital space have been more public about going out with their numbers. They’re seeing amazing growth. That information started to get back to GameStop, who did some extensive research and said, ‘the PC market is thriving, but it’s just shifted online. It makes sense for us to be a major player in the PC digital space’.” The company will invest $100 million in digital initiatives in 2011, according to a report in March. We’ll return to Nix and GameStop’s recent forays into the online marketplace in the second part of this feature, which focuses on the digital market.

To read the rest of part 1, visit GameSpy. An excerpt from part 2 follows.

The Health Of The PC Gaming Industry Part 2: Digital
There’s money to be made in them thar online hills.

In part one of this feature, we examined the boxed-retail past that many gamers have abandoned. Now we take a microscope to the digital-driven future of PC game distribution, which many gamers have already embraced. Like downloading music, downloading games for your PC makes a shitload of sense: it’s fast, convenient, better for the environment, and you can do it in your underwear and no-one will ever know. Sneaky and classy.

Where did all the money go?
Half to 70% of the $4 billion market for downloaded PC games are purchased through a platform named Steam [pictured below right], according to an article published by Forbes earlier in 2011. (Steam operator Valve refused to comment on the accuracy of this claim.) Though Steam was a right royal pain in the ass when it launched in 2002 during the beta period of Counter-Strike 1.6 – any gamer who recalls that frustrating time will no doubt concur – using the software is now as akin to the average PC gamer as breathing and circle-strafing. It’s the gaming equivalent of iTunes. Both are clear market leaders; both maintain an enormous brand loyalty worldwide.

That same Forbes article quotes North American market research firm NPD Group as stating that, in 2010, “sales of PC games via download outstripped sales of boxed games in stores for the first time”. When I question Valve VP of marketing Doug Lombardi on the significance of this outcome – was this always a goal on the agenda, or happy coincidence? – he cryptically replies, “Our goal has always been to deliver a higher quality of service to the customer, regardless of where or how they purchase the product.” Perhaps enormous consumer uptake and financial success was always going to be a consequence of aiming to develop the market’s best digital distribution platform.

Lombardi makes it clear that Valve still values traditional retail and healthy competition in the digital distribution market. “We don’t advise folks to skip retail, or other digital outlets,” he says. “Every publisher and developer should consider the widest possible distribution possible.” I’m curious as to how he pitches the service to prospective Steam clients – from indie developers, to the world’s biggest publishers. “We start with the 30 million-plus gamers connected to the service, the instant access to data on their Steam sales, and the increasing number of Steamworks features we offer free of charge such as matchmaking, anti-piracy, support for in-game DLC, and more.” Also of note is Lombardi’s eyebrow-raising claim that “Steam has grown over 100% year-over-year for the past six years.” A userbase of 30 million is a fairly compelling reasoning for both developers and publishers to do a deal with Steam, I’d imagine.

Game developers such as Tripwire Interactive are among the legions of Steam supporters. The Roswell, Georgia-based studio – creators of Red Orchestra 2 and Killing Floor – have been fans since they signed up in 2005. “And we still are”, says vice president Alan Wilson. “They still have that Valve sense for what the people buying the games actually want, will give it to them at a good price, good customer service – and they treat the developers/publishers right as well. They’re always easy to work with. There are other good services out there – D2D, GamersGate and so on. But until Steam either starts getting it all wrong, or the others find some miracle formula, Steam will stay king of the pile.”

To read the rest of part 2, visit GameSpy.

Know, II

I just re-read this post, ‘Know‘, that I wrote nearly a year ago.

I don’t know much. But I’m not comfortable with that. Which is why I endeavour to know more every day.

There’s nothing wrong with not knowing if you’re honest with yourself and others. Not knowing should not cause embarrassment. Not knowing should be reframed as an opportunity to learn a new skill or new information.

I’m thinking about what’s occurred since that entry; the new information that I’ve taken on board and the progress I’ve made.

At the time, I was a couple of months into my first office job. I threw myself into that opportunity with fervent passion for several months. I was focussed on the idea of the career, of being the person I believed I should be. And I think about how that belief has changed since that post.

It’s also interesting to step back and realise how singularly influenced I was by Ryan Holiday. I still treasure his writing, for sure, but now I’ve a wider base of influences with which to assure myself in times of doubt.

And these times occur, much as it pains me to admit it, both to myself and my audience. I wonder when the seed of that desire to hide perceived weakness was planted.

Sometimes I feel the weight of so many people – and, as a writer, words – that’ve come before me, and I wonder what I’m doing. I’m occasionally struck by the arrogance attached to the desire to tell stories. And I wonder if that desire is artificial within me, since it tends to come and go.

What’s changed since ‘Know‘? A new home, many new friends, a mentor, and several interrelated opportunities upon which to build a platform for myself, as a writer. This time last year, I wrote for Rave Magazine and FasterLouder.com.au. Now, scratch FL, and add Mess+Noise, FourThousand, and The Music Network.

Add to that ongoing work for Nick‘s Native Digital, and attempting to manage the affairs of one of my favourite musical artists. And last week I met and interviewed one of my favourite writers. Yes, the interview will appear on here eventually.

See, listing my current interests – which largely, happily combine the dual-cliché of business and pleasure – it’s a wonder that I’m ever at a loose end. And in reality, I’m not. So why aren’t I researching the next great Mess+Noise feature? Why aren’t I further forging Native’s name as a media innovation partner? Why aren’t I putting into practice the modern marketing and promotion tactics that I read about every day?

I wish I had some pithy, smart-ass sentence here to answer my own questions. But the reality is that I’m crippled by inertia far too often for my own good, and it sucks. It sucks the most when I’m feel like I’m letting myself down due to my inactivity.

This would be the part where I’d publicly state my goals, but right now, I’m struggling to figure out where to begin.

Thanks for reading. I’m out-of-sorts with this entry, I know. I might owe that to recent dental surgery, but maybe I was just looking for a way to tell you what I’ve been up to since my last entry.

Hold me accountable, won’t you?