The End of Retail PC Gaming?

A Tour of the Retail Scene
My local Best Buy has five shelf blocks (something like 4-5 display rows per block) devoted to PC gaming. One entire block is reserved entirely for Blizzard - WoW, Starcraft 1 and Diablo II. They didn't even have enough copies of these 5-10 year old games and their expansions in stock to fill an entire shelving block, even with the box art facing out, so they used some Blizzard artwork to fill the remaining space. Half of a block is devoted to a face-out display for The Sims (2 and 3 with various expansions). About a block and a half are devoted to the Bejeweled and Solitaire games of the world. This leaves two shelving blocks, a mere 40% of the space, for the entire rest of what we might consider serious PC gaming, MMORPG, FPS, or offline. This stuff has to be crammed in on its side such that you have to scan the box spines for titles, while there was literally empty, unused space in the Blizzard and Sims areas.

The local EB Games does not even appear to be willing to use any shelf space for PC games when it could be occupied with used PS2 games instead. They did, however, have the Brady guide to Wrath of the Lich King on display in their magazine and strategy guide rack. (A brief caveat: Gamestop's primary business these days involves collecting a 100% markup on used console games, and PC games are using increasing DRM or online-only features that make them effectively impossible to trade in.)

The local Target is more in line with what what Best Buy had, and approximately the same proportions - maybe 25% for WoW and The Sims (displayed with box art facing out), 50% for casual games, and 25% for everything else (mostly crammed into shelves spine-out, though there were a few new titles that got the coveted box art out treatment).

Maybe you could convince me that ONE of these establishments had a WoW fanboi of a manager who wanted to screw Warhammer et al and no else in the store knew enough to complain. Once we're talking about three companies who want to make money, it's less of a coincidence. In fact, if they were going to be biased, you'd think they'd bias their space AGAINST WoW and towards games that WoW players like myself don't already own. Instead, they're allocating their limited shelf space to products that they are selling. We've known that WoW and The Sims have been on top of the NPD charts for some time now, but it's striking to see those statistics reflected in actual floorspace allocation.

Implications on PC gaming
It would be hyperbole to say that PC gaming is dead, but it looks fair to say that the retail PC gaming scene is in for a bit of an overhaul. The second class treatment that everyone not named WoW or The Sims is getting doesn't even come for free - many developers (but notably NOT Blizzard) are now offering exclusive retailer-specific pre-order bonuses to the very stores that will be burying their products in a few months.

The Hardware Niche
The hardware problem is certainly part of the issue. Console developers are prepared to live with the fact that the specs of the latest Playstation or whatever are going to be fixed for the next decade. If you own a Playstation, you can buy every Playstation game until whenever the PS4 comes out, so it's up to the devs to work harder to make their games look prettier on the same console that everyone else has.

By contrast, PC developers are all-too-willing to drive up the system specs and not worry about the fact that the majority of PC's sold can't play the games they're producing. Sure, gamers are probably savvy enough to get the appropriate hardware, but that means you've already conceded the mainstream market to the Bejeweled clones of the world.

The Growing Role of Word of Mouth
That problem aside, the big issue that we're going to see as retail space for PC gaming slowly wastes away is publicity. Studios are willing to let stores take such a large chunk of the box profits because they believe that they will make it up in volume by attracting walk-up impulse buyers. This is a taller order when your impulse buyer had to be sufficiently well-informed to have the appropriate hardware, but not so well-informed that they've read reviews and made up their minds about your product before they walked in the door.

Certain games - the FFXI/FFXIV's and Champions Online's of the genre - are going to try and straddle the line between consoles and PC's in the hopes of getting some retail shelf space that way. This choice means that the game needs to be playable using a controller.

For everyone else who isn't named Blizzard, the alternative is online advertising - either covering the WoW Wiki with ads for some other game (happens pretty regularly these days), hoping to make it big via Facebook and twitter, or even sending company reps to personally visit the blogs. The investment/payoff ratio on this strategy is huge - the company keeps all of the revenue, and does not have to spend very much - but word of mouth is suddenly the lifeblood of the game. Then again, Warhammer had a relatively big AAA retail launch and that didn't seem to help them when the game wasn't quite ready to go and word of mouth went bad in a hurry anyway.

Follow the Money
There's more economics than I actually understand at work here, but it doesn't hurt to follow the money. More and more games are struggling to find ways to offer downloadable content, microtransactions, or paid account services. Though Turbine will never say, I wouldn't be at all surprised if they made more money on their $20 download-only mini-expansion than on last year's $40 retail expansion after you consider manufacturing costs and markup for both distributors and retailers.

This part of the business model will be the big thing for gamers to watch in the coming years, because the age of retail PC gaming does not appear to be coming back anytime soon.