Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
What is causing the sales decline in PC games?
Published on July 23, 2004 By Draginol In PC Gaming

There's a great discussion on one of my favorite websites, Quarter To Three about why PC sales are in decline which I wrote about here.

Brett Todd and I are taking different approaches. He makes a good argument that basically boils down to this: It's so easy to download games illegally that increasing numbers of people are doing so and that is now showing a real impact on the bottom line.

Here's our discussion.

Brett writes:
Brad, this assumes that everyone shares your taste. Personally, I think there have been a lot of great PC games released this year already, with some blockbusters still to come. We've had UT2004, Thief III, Far Cry, Painkiller, City of Heroes, and Silent Storm. I've found this year to be better than 2003 overall. But I do admit that the year so far has lacked a big splash title to get people excited about PC gaming. That's why I'm not too worried about the numbers so far. After Doom III and Half-Life 2 hit, PC gamers will head to the stores and numbers overall will go up as these two games get people buying more.


Most of the games I mentioned as mega-games aren't ones that I personally get into. I'm talking purely in terms of gross revenue.  If we're talking about overall sales, then it's all about the numbers.  If 2003 had "Titanic" and "Phantom Menace" (for instance) and 2004 didn't have Spiderman II or Harry Pottery released yet, we might have people discussing why movies have declined too.

I like UT and think City of Heroes is a cool game and so forth. But they're not the mega sellers (well UT2004 probably sells well). Maybe when they get a couple of sequels under their belts. Wink (Though UT 2004 is obviously a sequel but it's only one game! It has a heavy load! <g>).
 
Quote:

Also, do you really think that PC gamers would be turned off the entire format because of issues like the one you mentioned with MOO3? Personally, I think MOO3 was simply a terrible game and not at all an example of what's going on industry-wide. But even if it were some hallmark of modern crap design, it couldn't push PC gamers to consoles because the game styles are dramatically different. You can't get anything like MOO3 or GalCiv on a console system. Why would someone frustrated with MOO3 turn to the PS2? This makes as much sense as someone frustrated with the cost of car repairs turning to a skateboard for the morning commute.
 

I was just using MOO3 to illustrate the point. It doesn't take too many bad experiences to turn someone off if the competition (consoles in this case) don't have those same problems to the same degree.

Let's use a different example: Knights of the Old Republic. That was a great game. Right?

And yet when it shipped, it had serious problems with ATI Radeon cards. Whereas if you both it for the XBox, no problem of course. So quite a few people who played it had to wait for a patch. This wasn't some obscure thing either, it affected a lot of people (myself included).
 
Quote:

I think that if PC gamers are getting turned off by substandard design and all the me-too stuff, they're more likely to leave gaming altogether. Which is happening to an extent. But I think a lot of these disaffected people are still gaming, only they've now decided that the games aren't worth paying for. Combine that with the number of people who take advantage of sites like Suprnova just because they can, and you have a serious piracy problem with PC gaming.
 

I think there's always been a piracy issue but I don't think it's anywhere near enough to cause the kinds of losses we're seeing.

Let me use the Object Desktop example - we sells millions of dollars of this stuff on-line. If anything is vulnerable to piracy it's that -- it's small in file size and it's in that area that people could rationalize it as "something that should be free with the OS!!!" Yet we still sells tens of thousans of copies of it per year.

Piracy only matters when it is costing sales. And the what we don't know is whether that is happening to a significant degree. I am asserting that while piracy may be high, it is not costing significant actual sales.

That's one of the oldest arguments in the books of course.

But now that PC revenue is actually declining, some are asserting that it's piracy doing it. I just don't buy that. There are so many other reasons that I think are much bigger which I and others have already described.

 
Quote:

I really don't understand what we're arguing about. I'm not saying that piracy is the only reason why PC game sales are declining, but it seems awfully obvious that it's a major factor.
 


Hence our debate. Wink I don't think it's obvious that it's a major factor. I don't think it's a significant cause of overall sales declining.

I see piracy has being a "leech" factor on PC game sales. I.e. X% of sales are lost to it. And I don't see X% having grown significantly in the past year or two.

Instead I believe:

a) Mega titles havne't been released this year.

More and more PC gaming time is spent playing MMORPGs which is taking away from # of games purchased.

c) The PC gamer demographic has gotten somewhat older and lacks the patience to mess around with obnoxious copy protection, buggy games, unrealistic hardware requirements, and incompatibilities. Alienated, these potential buyers become much more picky.

I would assert that fewer PC games are pirated OR purchased right now.

I'll even provide an example: Supernova's Alexa ranking is stale or declining. I suspect eventhe warez people are being alienated too! Wink
 
Quote:

It has never been easier to download a PC game. That alone should indicate that piracy is up, because if you give people a chance to steal anonymously and without consequences, they'll take it nine times out of ten.


I'm not so sure about that. But let's say for the sake of argument that you're right.

How would you solve it?

Here's what I would do:

1) Make it even easier to purchase/download games.

2) Provide additional updates to the software after release that add features based on player feedback that can only be obtained first/early by verified customers.

3) Make sure the games work right out of the box/download/whatever. Make updates available of course but make sure they're not required just to get the game to work right.

4) Price it competitively so that the person sees the value in it.

That doesn't seem like it would be that hard.   

Comments (Page 2)
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on Oct 07, 2004
Excellent article you wrote here. I wish you were a member of my website I would love to have this article. I am having trouble finding people who can write good material like this. Good job.
on Oct 07, 2004
If you want it, and there are no weird legal issues with StarDock or TotalGaming, you can post it if you want, just put my name on it (MetMan), and I'd appreciate it if you could give me a link, for *ahem* "referals" to my freinds. Also, you might like the other post I made that is in the PC/Console comparison thread I made. But maybe that one sucks, heh.
on Oct 07, 2004
I am an affiliate of Stardocks I have permission to post things from their website and use their logos. I am going to run a series of news stories on piracy. I will include this when we do it will be in our upcoming newsletter as well.

NeoTech Gaming Network is my website sci-fi themed supporting all of Stardocks products especially Galciv & political Machine. (Limitied to gaming right now soon our store opens and will link to all of their products)

I still own an Atari ST computer that no longer works. I am a older gamer.
on Nov 17, 2004
I admit that I have downloaded games in a way that some would consider piracy. However it was only to try the actual games and not some crap demo that is meant to make the game look good when it's really crap and not worth wasting "Hard Earned" cash on. I do "not" keep the games after I have tried them and "IF" I liked them I do go and buy them. I have said this for a reason, because most people I know who download games, do it exclusively for that reason alone and are more than willing to pay for games they like. That was to address the piracy issue. ( Piracy is not always as extreme as you think and whether you believe it or not, most people "do" have morals and will usually feel guilty flat out stealing software.)

My other two major pet peeves about pc games today is 1:) When am I going to see something new and original come out of the wood works. I've seen about as many FPS's and RTS's as I can almost bear. Don't get me wrong I absolutely love RTS's and occasionally like a FPS, but FPS's come out in such frequency and have nothing new or really original from one to another that they very boring very quickly.
Now I can say that I love RTS's (such Pax Imperia Eminent Domain, homeworld 1and 2, hegemonia, master of orion, etc), but lately I've noticed the quality of new RTS's going down hill ( like their being rushed out the door ) with lack of creativity, originality, "story", fun factor,etc. 2:) Now for my biggest pet peeve of all. " EXCLUSIVELY ONLINE GAMES " I recently had a huge anger management problem with squaresoft (now square enix) with the release of Final Fantasy XI. $50 or £39 for the game itself plus $15.99 or the britsh equivelent a month "A MONTH" just to play a game. Same thing goes for Star Wars Galaxies. Now this is a crackpot idea if I ever saw one. I am a major Final Fantasy fan and was dissappointed that I was not going to get to play the next installment of the series because I am a "Working Man" "ON A BUDGET". This is another reason why I think PC games sales are going down in sales. It feels like their trying to see just how much money they suck out of me. And I know the first month is quote unquote free , It still doesn't cut it. And as everyone has probably figured out by now. When the service goes, so does the game. Sounds like a rip off to me.

I'm sorry about rambling a bit, my point is; I don't think piracy is the major issue. I instead think it is the lack of effort on the industries part and the downright "greedy" business tactics some companies are using as explained above. The industry "can" do "much" better.
on Jul 17, 2007
This thread has way too much merit to be left at the bottom of the sea of forgetfullness, especially since the trends here predicted now are visible for all to see.
on Jul 17, 2007

Ironic day to resurrect this, BP OMowe, given the announcement that Peter Moore was leaving Microsoft for EA (http://biz.gamedaily.com/industry/feature/?id=16826 and http://www.microsoft.com/presspass/exec/pmoore/default.mspx).

Unmentioned in any of the articles I read today (though I read 3-4) was that as the VP of IEB, he was not only responsible for the Xbox group, but for Games for Windows as well...  

on Jul 19, 2007
EA Sports the strongest of the labels?!?!

Really, just how many icehockey, football and american football games does one need or have use for?!?
on Jul 19, 2007
indeed, this is an exceptionally interesting topic and i'm glad you brought it back.

like others, i've pirated games in the past, and i'd buy the game if it actually seemed worth it. demos, honestly, never give me enough of a taste of the game. i don't buy many games each year. before GC2, the last game i'd spent more than $10 on was the Civ3 box set.

criminologically speaking, the ease of a crime isn't the biggest determining factor in its frequency. the biggest determining factor is the economy. crimes of economic gain will go up when the economy slumps. software piracy is probably a bit different, since you first need a computer capable of running the thing you steal. that's why audio piracy will always be the worst, since mp3s are relatively small files that can be played on the barest of systems (hell, cell phones).

running a video game requires a PC with a bit more muscle, and the people likely to have them are also likely to be able to afford $50 for a new game. i'd say the biggest exception, and the biggest source of game piracy, are students. college students especially are more likely to be armed with newer computers and broadband internet connections, but also pretty likely to be broke, bored, and technologically savvy (or friends with someone who is).

but in general, people don't spend money solely for a product. they also presume a certain kind of support and preferential treatment. the number of flaming "game does not work!!!1" posts each week should attest to that. when people are giving you money, they can sometimes act like it means you're supposed to treat them like royalty.

on the other side of things, PC games are in a bit of a rut. i'd say GC2 has been the best 1-player game of its type, ever, specifically because of all of Brad's work on the AI. but as a strategy game in general, it's very simplistic. i'm fine with it it being the trade off for having better AI. but in terms of the rules of the game itself, there's nothing all that radically new.

its the same across game genres. games lately have lacked inspiration. most games seem to be only incrementally better than predecessors in their genres, if better at all. there have been some pretty new concepts in games in recent years, like Black & White or The Sims. but these aren't my kind of games; see, i'm a big of a megalomaniac. i dream of ruling whole planets and galaxies. IMHO, these games work best on the PC platform.

i also love RPGs, and even though Elder Scrolls IX has received outstanding reviews, the game's story seems rather dull and conventional to me. the scenario builder in Neverwinter Nights 2 is truly appealing to me, but other aspects of the game's performance sound medocre. i'm not exceptionally excited about either of these games.

on the other hand, my former roommate had a PS2. i played FFX and FFXII both through to almost the end, but in both cases the final disc became too scratched to play before i could finish (ex roomie's fault). i didn't even feel like renting the games so i could finish; i just looked up the plot spoilers on wikipedia. this is part of why i'm not strongly motivated to buy consoles and their games. the same is true to a lesser extent with PC games that require the disc to play, but these discs at least don't tend to be left in a high-usage device i share with others.

i never need to worry with SD's products. i'm basically set for life with them, as long as i have an internet connection. and now that i reflect on it, i think GC2 has been the best value for my money out of any form of electronic entertainment i've ever purchased. i'm also looking forward to Sins of a Solar Empire. i'll definately also buy StarCraft II when it comes out, regardless of the copy protection methods they employ (to an extent) - but if i could vote, i'd ask them to use something akin to SD's system.

just my two cents, anwyay.
on Jul 22, 2007
I'm not in the business, yet, but here is something to consider:

A market needs to be lucrative if you're going to draw talent into the back end. If games don't generate sales enough because people are pirating, that makes the game market highly unstable, employment wise.

You can outsource some aspects (artwork, object modeling, etc), but someone is going to be employed by the company, maybe a programmer/software engineer, a demographic researcher, etc. However, some things just don't fit a generic mold. Some one or more people will have to call the game company home.

So, games need to deliver to compete, but games need to generate a profit to make it a worthwhile employment base. If the games are getting pirated (popular games get pirated like the king's gold shipment), they won't generate the revenue and profits and nobody wants to sign onto a losing business.

Money makes the world go round. It always has. Pirates fully recognize this. That's why they steal it, rather than spend the money. They want the money in their pockets and not going to someone who's product they are stealing and using. We'd be fooling ourselves if we got to thinking it's not about the money.

Now, these one more more game company employees above get married, want to make babies. Now their living expenses have shot up. Once they were able to get by in a effeciancy or a one bedroom apartment, now the wife wants a home w/ a backyard for the kids, but game development doesn't make the money, so that ultra talented artist or programmer goes to work for Big Business or even medium business who's product sells more than it is stolen.

I'm working on my first title. I intend to have a model by which a 1v1 version is free. A campaign version will be paid for, but there will also be a premium MMO. I expect the campaign to be pirated (all software gets pirated, the popular stuff more so than the crap), so the MMO will hopefully make up for that loss.

I think it's also imporatant that a company produce playable demos of their games. Nobody wants to shell out $30 or more for crap. Once you get burned enough, you start pirating and forgetting to pay once you have it in hand.

There is crap being produced, but it's not in the developer's interest to produce demos because then it exposes their title's weaknesses before it sells. People need to listen to reviews, listen to people who share similar interests in games. Don't settle for "It totally f*cking rawks" reviews, unless it's being spoken by someone who shares the same ideas in games.

No matter what market you're in or purchasing from, "buyer beware" is the golden rule. Always.

There's a correlation between hollywood and the game industry, apt because they are both part of the entertainment industry. Games and movies are becoming these massive production projects, costing a huge expense, requiring big hype to get people to buy into it (actuually, movies have been that way since "Jaws").

Anyone remember the movie "The Chronicles of Riddick"? Perfect example of why hollywood hypes almost everything. Huge expense, huge hype, big star (at the time), big flop. But!!! The people who worked on it got paid, regardless.

But I don't think it's the same for game companies. The key developers probably are dependant solely on the profits. If the production company (Sierra, EA, etc) are taking the biggest chunk, that leaves little to share among the people who did the work in developing the game.
on Jul 23, 2007
If games don't generate sales enough because people are pirating


while your arguments are well thought-out, that's still a big 'if'. what makes you think games aren't making money despite piracy? do you have hard numbers? don't get me wrong; i'm not claiming i do. it's just, this whole debate is kind of flowery without hard statistical analysis to back it up (on either side).
on Jul 23, 2007
If games don't generate sales enough because people are pirating


while your arguments are well thought-out, that's still a big 'if'. what makes you think games aren't making money despite piracy? do you have hard numbers? don't get me wrong; i'm not claiming i do. it's just, this whole debate is kind of flowery without hard statistical analysis to back it up (on either side).



No, I don't have any statistics, other than Cavedog. They made a game called "Total Annihilation." It's still talked about and played to this day. True, their offerings after TA were not as great, but the initial game was still being picked up by new RTS players, but it was not being purchased by them. Cavedog didn't copy protect thier game and they got pirated to death.

Pirates will always find a way to steal. Pirate == thief.

Now, let's consider the opportunity thief. The one that steals because it presents an opportunity. Human behavior is to take the path of least resistance. If they can copy it rather than losing the money for it, yeah. It's getting pirated bigtime, if it's popular.

I think what's needed is a different business model.

I'll also say, I'm not in the business of tracking other businesses. That's like celebrity watching. All spectator, no participation. So I don't have statistics on how much is pirated, but it really wouldn't take much to find out a decent estimate as to how much is lost yearly to pirated software. One figure I read said $29 billion for software in general, in 2003. That's a lot of money.

Here's the IIPA's chart. Look at the column for entertainment software.

http://www.iipa.com/pdf/IIPA2007RECOMMENDATIONS.pdf

$1.9 billion worldwide and that's only the countries they are able to get stats on. Most countries are N/A.

$1.9 billion is a lot of people's salaries.
on Jul 23, 2007

 

I think what's needed is a different business model.

Like what Stardock is offering?

1) Make it even easier to purchase/download games.

2) Provide additional updates to the software after release that add features based on player feedback that can only be obtained first/early by verified customers.

3) Make sure the games work right out of the box/download/whatever. Make updates available of course but make sure they're not required just to get the game to work right.

4) Price it competitively so that the person sees the value in it.

I must say that the item 2/ is pretty disturbing for people that are used to buy used copies since it means for GC2 that only the first owner can get the additionnal updates

on Jul 23, 2007

 

I think what's needed is a different business model.


Like what Stardock is offering?




Stardock still requires a key to prevent opportunity pirates. Acceptable. They don't require the CD to be in the drive, that's awesome as I'm constantly changing disks in my drive.

However, from #2, it looks like it's a one owner game. Even if someone likes turn based, they like space games, they like strategy game, if they don't like GCII, they are stuck, unless they allow you to reinstall the game.

I have no idea how SD works that. I installed the game and left it in place.

I also want to add a thought I put above.

The company I currently work for is an industry leader and global. $1.9 billion is like 1/2 their revenue.

If you were to assume a $50,000 start up cost for a small business, that $1.9 billion would fuel 38,000 small business start ups. Make it $100,000 and that's still 19,000 game company start ups. $50,000 is a pretty good salary in my region of the country, so that could equate to 38,000 living wage jobs.

Oh, and when a company loses money, especially the big ones, the first thing they look at cutting is jobs, because people cost the most money. That $3,000 computer used for art work and 3D modeling can last five or more years making it a $600/yr or less cost, that you can deduct the depreciated value from your taxes as a business expense for five years.
on Jul 23, 2007
I am right there with Desert Fox. I had an Atari 800XL, and bought a lot of software for it. But then I ran into some people who had pirated games, and then there was a program called Chipmunk that would let you crack and copy games. A friend of mine had a Commodore 64, and we ran into some people at college who had hundreds, if not thousands of cracked games. Needless to say my friend didn't need to buy games for a long time.

I actively buy games that I like. I will download demos or use demo disks to weed out junk I don't want, or to get enough of a taste of a game to satisfy my curiousity. I love gaming on my PC, and hope it does not go away. I love games on my consoles too, but they are totally different games. I hope people will do the right thing and support games they like. I would also wish games would be released with better quality control, and at better prices. To pay $40-50 for a game, you expect it to work out of the box.

Steve



Wow, I'm a glad I'm not the only one that remembers the Atari 400s and C-64s and the other 6502 CPU lines (apple IIs, etc).

I didn't pirate, even back then when I was a youngin'. However, my friend at the time, a C-64 user, pirated bigtime. I think he bought 10 titles in his life, everything else, hundreds of titles, were pirated.

I have used shareware long after the grace period ended, and in fact, I just purchased Winzip for the first time even though I've used it for years. It finally amounted to a moral issue, since I could deal with the annoyance screen indefinately. I found it useful, for years, so I needed to buy it.

It comes down to this: back in the Atari days, I wanted to make games. I learned ASM, how to manipulate the display list (if you programmed graphics on an Atari, you BETTER know what the display list was), made a hex board map, learned to scroll the screen, etc, etc, etc. However, I also know, I wanted to make money making games, so I had to practice what I preached. I couldn't morally justify piracy at all if I planned on selling my wares.

It's amazing the stretches people will make to justify stealing. I never said I wasn't hurting anyone, I would say, yeah, I'm going to buy it, when I get the extra spendable. Well, after this years tax return, buying a new computer, I had the extra and then some. It was finally time to balance the books.

However, I hail from the glory days of shareware, when demos abounded. I remember getting Doom on a playable demo. Those were the days, when you could try it before you bought it and discard the crap.
on Jul 23, 2007

However, from #2, it looks like it's a one owner game.

True. But it has a bright side. Once your serial is registred with your e-mail, you can even lost your serial id. You can get it sent back to your e-mail and download the whole game. In short, your house can burn, you will still own the game and be able to play it once you got a computer and an internet connexion

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