Sunday, September 13, 2009

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.

12 comments:

mbp said...

The fall off in retail PC game sales has been even quicker in some countries. Here in Ireland PC games dissappeared from non-specialist retailers several years ago and the specialist game retailers have cut back their PC offerings to perhaps one shelf with a few top titles and a shelf of discount games.

I can still get any of the games I want by mail order or by digital download but I miss the prescence of PC games at retail. It re-inforces the position of PC games as non-mainstream enthusiast only products.

Andrew said...

Three months ago my local EB Games finally took the PC games off the two panels of wall shelving that they had shrunk to, and crammed them all - spines out - onto a single side of a single rack.

I get the feeling that digital download services - like Steam - have simply crushed the market for boxed copies of PC games.

This is both good and bad, I suppose - I really enjoy the ability to buy games without making a trip to the store, but I do miss the tangible browsing experience.

sam said...

I think a big part of the problem is that as the gaming audience has widened the developers still focus on the hardcore gamers who understand the hardware they buy. If the PC manufacturers would quit selling 700 dollar computers that can barely do anything beyond play dvd's that would help.

You can buy a laptop with a 17" screen and 9800 (1gb) discrete video for 1100 dollars

or a laptop with 16" screen and 9600 (1gb) for 800 dollars.

A desktop with quad core and 9800 GT and 8gb of memory for 1100.

or for the poor gamer a refurbished compaq with core 2 duo and 3 gb of memory plus your own 9800 GT video card for around 450 including shipping.

But your average user doesn't know what they are buying and all they know is their 1100 dollar laptop with integrated INTEL graphics won't play the game so they blame the gaming company. I think if PC manufacturers where a little more savy they'd make sure that any system that cost 700 dollars or more would easily play WOW, LOTR or any of the widely popular titles. At that price range a 512mb 9600 GS video or equivilant should be standard. That would help thier sales brand recognition and the PC gaming industry as a whole.

Dorgol said...

I'm sure I'm not the only one who watched stores go from PC Utility Software to PC Games to Console Games.

My first PC game back in the day was the original X-Wing. I remember going into Babbages and the clerk there giving me a FREE demo of Tie Fighter. I had never seen such a thing. Sure people had been handing out the shareware version of Doom at school, but these were other game-players.

That Babbages became an EB Games, and it was ALL PC games. Every wall, shelf, and display was for games, hardware, or game-related items.

Now, I go into that store and I'm lucky to find one shelf of PC games. And those that I do find are usually 8 - 12 months old and way overpriced.

I own one console (an original X-Box). I've less than 10 games for than console (currently only have one). And now I can't even browse titles for that system, as the 360 has taken over.

Oh well, that's life. :)

Stabs said...

My first thought is the Van Hemlock podcast. I don't know if you ever listen to it but they regularly have news stories where Jon brightly announces that PC gaming is dead and Tim groans and asks "what is it this time?"

You're right of course, pc games in shops is a declining business. I think it will get worse too as time goes on. One of my biggest turn-offs (not having a very local PC games shop) is making a 40 minute journey to a games shop that doesn't have the game I want then trekking 40 minutes home.

My last purchase was WOTLK in November last year but since then I've spent a fair amount of money on pc games that I've downloaded or subscribed to or resubscribed to or bought and downloaded expansions for.

I think I can safely say I would never go to a shop to buy a game if I could download it.

Another issue is that games don't make very good presents. If your aunt can't tell the difference between a PC and a Playstation her chances of knowing whether your machine has the 4 gig of RAM needed to buy some game that looks cool in the shop are zero. So she's better off getting you a scarf.

What's my main again? said...

Honestly what is killing retail store PC games is the internet. Look at how huge steam is and its obvious why many games are choosing to go that route then in a retail store.

It costs more money to produce the CD and packaging then it costs to put the game available for download. A few years ago the internet wasn't nearly as popular as it is now. Now nearly everyone has some form of high speed internet.

It is also easier for companies to impose DRM with downloaded games in comparison to putting a game out on CD. Also a lot of the games are getting too big to put on even a single DVD so downloading is just easier.

PC gaming is still going strong it just doesn't focus on physical media as much as console gaming does.

Thallian said...

I still like the pc more but I am surprised at the lack in so many titles for it. I can only play so much Zoo Tycoon and Sims honestly. Where are my Deeper games? Sure there's Plants vs. Zombies (which I love) and other fun games on steam, but there needs to be competition to steam and that other download service or else we'll have a price fixed monopoly that will serve only them.

You really hit the nail on the head in a number of p[laces in this post, especially about how they always want to drive up system specs which is a huge mistake IMO. They should instead aim for where the mass market has their pc's at most of the time. Nothing is more annoying than a game you want coming out and you can't play it well because its a chop fest.

Green Armadillo said...

@sam: I don't disagree on principle, but the card you're talking about is probably going to cost the OEM something in the vicinity of $30. That's a non-trivial chunk of a $700 MSRP, which has to include the distributor and retail markups. You could simply pass the cost along to the consumer, but some people legitimately will never need the thing, while more serious gamers may end up buying the box, tossing the card that came with it, and putting a better one in (since that's sometimes the only thing between some of those $700 machines and being a legitimately good gaming box).

In fairness, the OEM's also tend not to want to sell that kind of bare bones gaming system, perhaps for fear that no one will buy a $1500 system when they could buy a $700 one that will get by today and replace it in two years with a $700 one that's better than the current $1500 machine. So it's not like I'm crying for them or anything. It does, however, make things a bit harder in terms of spec standards.

Anonymous said...

well you can now play xbox360 games and ps3 games with microsoft or sony now.

http://www.vg247.com/2009/09/14/spawn-labs-launches-console-games-streaming-box/#comment-101067

So in the end why even boy a console

Stratagerm said...

I've noticed too the retail PC game falloff at Best Buy and Target. One thing about shelf space though -- the retailers essentially sell shelf space to the game publishers. The reason that The Sims and Blizzard have so much floor and shelf space to themselves is that they paid for it, which obviously favors market leaders. Apparently even on the normal shelves full face placement is paid for, other wise it's spine out.

Anonymous said...

why buy a console when you can now play console games on the pc. You can now play ps3 and xbox360 games.

sam said...

@ green armadillo. I understand all that you are saying but what I'm saying is that the PC industry has been shooting themselves in the foot for 15 years. The price point should have some bearing on what software and games the machine should run. But instead they come up with all these screwy ways to rate them and desktops aren't any better. They are hurting the gaming market and by proxy themselves by not being clear about what a particular machine can and can't do.

My point wasn't that OEM's should sell barebones Gaming systems my point was there should be a bare minimum level of graphics sold. Say ATI HD 3200 or Nvidia 8400 with 256 mb for a laptop. maybe the same with 512 mb for desktops and have the graphics get better as the price point gets higher. It's insane as far as hardware has come to sell a computer with a 1 or 2 pixel pipeline video card. (ANd you can spend 1500 dollars on a laptop with that kind of lousy video) And when they do they just convince people to go to console's for thier games.

And if the system is tweaked for battery life and business apps and won't even play hello kitty it should be clearly marketed to the appropriate group. I've been in the hardware side of the PC industry for 20 years and consumers on the middle to low end have been taught gaming means upgrading your system because nothing you buy will every work right. Thus consoles and WOW have taken off and the rest of the PC gaming industry is suffering.

You can still walk into best buy and spend 129 dollars on a geforce 9500 video card. Then go to your friends house and watch his 129 dollar 9800 play his games flawlessly. Thats the problem. The entire PC hardware industry needs to clean up the clutter and the junk and set some minimum standards that have an easy to understand price to value ratio, so that most people at the medium price range can play most software and games without upgrades.