By Kieron Gillen on July 20th, 2009 at 11:59 pm.
Yes! Next panel.
It was a panel whose title (“Is Digital Distribution The Saviour Of The PC Game?” non-shortened version fans) didn’t exactly promise much which anyone who hadn’t been following the PC recently didn’t already know – but in actual fact, it proved to be the most relevant and interesting session of the entire of Develop for me. High information bandwidth, basically, with Charlie Barrett (Kalypso Media), Dorian Bloch (Chart Track), Richard Keen (Direct2Drive), Mark Morris (Introversion) and David Nottingham (Lucasarts) chewing over the issues and revealing a lot of sexy speculation, anecdotes and numbers.
It was Dorian Bloch who provided the majority of the latter in an opening ten minutes where Chart Track voluminous selection of sexy graphs were thrown in all direction. Getting the Chart Track numbers is a real joy. People inside the industry get them, and pay for them. Even a non-statistician’s glance down their end of year numbers gives enough information to add real weight to a half-dozen articles.
The position is that Chart Track basically want to bring as much digital distribution information into the actual charts as possible. They already do it with music, so this is logical – and, for the PC, probably necessary to give an idea of what the real information is. The majority of what Dorian showed was their best analysis of what they think markets are – so, yes, these aren’t hard and sure. But these are people who are good at this, and I think it’s worth rolling with them.
We started by looking at European sales figures, between 2005 and 2008, where the total videogame software market moved from 5.5 to 8.6 billion euros. And – Christ – seeing the rise and fall fascinates
(PS2 going from 2.522 to 0.885 billion, for example. As is how actual rise of new consoles. Later on, we see the rise and fall of new consoles arriving and old ones leaving – and from the 90s onwards, there’s always a year in the UK sales where PC is comfortably higher than either the departing system or the new comers… which makes the actual tactical decision of when to launch a next gen console game – or abandon an older one – all the more interesting. Also, apply that to making a PC-version alongside it to mitigate the chance that new console market hasn’t developed enough yet… but I’m really wandering)
The PC market across the years went from 1.262 to 1.265 to 1.326 to 1.125 – which is a fifteen percent decline from its 2006. That’s enormously held up by the German market, which now makes up 41.3% of all PC sales, and has declined by 5%. While UK is second and France is third, it’s actually clear that in terms of retail, Germany is singlehandedly holding up the PC market. It’s the last year which has seen the biggest decline, which is where Bloch argues Digital Distribution really kicked off.
We take a step to the world stage. 13 Billion dollars is the entire PC games market in 2008. In terms of the split, Chart Track believes 24% is retail, 46% online revenue services (i.e. Subscriptions, micro-transactins), 22% is digital distribution and 8% is ad-revenue. Of course, this is world-wide, and individual territories tell a different story. Asia, for example, where only 4% of the revenue is from boxed sales. All this compares to 32 billion dollars from all console sales.
Chart Track believes there’s 250 million PCs which are “gaming PCs” – which leads to the question what an actual gaming PC is anyway – which is about equal to the total generation of consoles. And, in a real way, with digital distribution, broadband penetration equals the market. In which case, 450million broadband accounts is hefty. The market is being powered by three things – the growth of digital distribution clients (i.e. Steam and friends), the growth of virtual item games (i.e.Battlefield Heroes, Travian, any of the free to play stuff) and – the one of the three which I suspect most people reading this site overlooks – the growth of game-cards sold in non-game retailers. This is primarily kids without credit-cards.
How big is digital distribution? In terms of the core-market – that is, gamers like us buying on clients like Steam -they estimate 600 million dollars for the NA market. They believe it’ll break the billion – 1068 – in this year. The real question is why aren’t these in the charts. The problem is that while some retailers are interested in it – especially certain individual companies – others are more reticent. Since most of the individual publishers have their own direct download solution, you need more than a few token ones to avoid skewing the chart. I approach Bloch after the panel to ask when he thinks people will move this way – Valve’s reluctance to release actual hard data is something that regularly frustrates me – he believes it’ll work similarly to how digital sales worked in the music industry. That is, a gradual uptake, with a give and take of information – a little at first, and when nothing terrible happens – a little more. Soon we’ll reach the point where it becomes clear that not giving up numbers leads to less publicity compared to those that do. In other words, it’s a slow natural process and we have to wait for it to work out.
Then we went into the panel generally, where opinions came thick and fast. Monkey Island deluxe being a debut game for Lucasarts was – in David Nottingham’s words – a no brainer. Perhaps generally speaking, the most characteristic comment was from long term industry veteran Charlie Barrett who stated simply: “I wouldn’t do it if it wasn’t a viable business”
Mark Morris, the indie-man-out on the panel, had a selection of classic Introversion stories. You’ve heard the one about them deliberately padding the Uplink file size with an enormous file of Chris Delay playing Guitar. Back in the pre-broadband days? Making it take a couple of hours to download was their only copyright protection. Chris was also somewhat wry over their initial worry about taking Darwinia to Steam. Since they received the full price from their website, and less after Valve’s fees were taken from Steam, they were worried they were going to canalise their sales. “Thank fuck we didn’t make that decision”, he says bluntly, after they sold more Darwinia in the launch weekend than they had in all the time up to that point.
Perhaps a key point was the difference between just selling off your own site and selling off a portal. What you’re actually giving up for that slice of the profit is an actual footfall and visibility. When people go to Introversion’s site, they’re not actually looking to buy the game – they’re looking to find out about it. Rich Keen thinks this is key. People come to sites with purposes in mind. If you’re at Direct2Drive, you’re there to buy. It’s a sales environment. Shops get people browsing, and create a synergy between products. Since all users sales are tracked, Direct2Drive know they’ve sold 1000s of units to people who have never bought an indie game before. A portal is about presenting a game to a new audience which may have not previously considered it before.
Particularly interesting is Rich’s talk about directed mail-out to gamers. There’s a weekly ebb and flow of sales, which a mail-outcan play to. As the weekend approach, people start to think “I’m going to game” and an e-mail with an exciting sounding option has a great effect. With a bank holiday, it’s even more pronounced. Keen also notes that while there’s much in Digital Download which is similar to trad retail – placement, etc – there’s also other opportunities. For example, pre-ordering in shops normally means putting down a fiver. In games, it’s often paying the whole price, which gives you Beta Access or similar. This can lead to enormous first week sales.
How digital distribution helps retail – as in, they’re not actually environments which entirely replace one another – is another key point. Barrett talks about how Bejewelled was the casual-game king, and such a digital distribution champion that you wouldn’t think they’d be a market. However when focus took it and marketed it at retail at a fiver a shot, they cleared up. He also noted that the online discounting feeds retail sales. When Steam does a 50% sale, retail goes up. Fundamentally, gamers talk to each other. When they find something good, other people will know – and buy at a venue they feel comfortable with.
There’s also the simple fact that people just want the box. In introversion’s case, twenty-five percent of the people who buy want it. It costs a lot to do it, but they’d still want that. There’s also places for direct sales with a hardcore fanbase to make some unusual merchandise money. Introversion have these foam Darwinians they use to throw into crowds. They started selling it from shops. Eventually, since there were three colours, people started asking if they could buy a specific colour. With an evil cackle, Mark said no. The biggest problem with Direct sales for a retailer, however, is actual basic credit-card fraudsters. This isn’t a sign that they’re big gaming fans – it’s that they use sites to check whether a card is still active. And it’s the developers who suffer – they have to refund the money and actually pay a fine. Not having to do this when you go through a portal is another advantage – though Mark argues that for a relatively low amount of sales, it’s worth the hassle. On that first day of sales, when the reviews all hit, getting all the money rather than a proportion of the money is worth all the hassle. In Introversion’s case, their financial director does the retail stuff in his spare time.
One final note which stood out. Obviously, conversation turned to piracy, with talk of how members try to prevent it. Introversion’s tactics – multiplayer codes being used to try and make sure the actual real buyers get a better service than the illicit ones – are well discussed, but there’s a number which stood out. Introversion believe they have a 100:1 pirate versus purchased ratio, which they estimate via their number of patch downloads. Which is a number that’s easy to attack, with some individuals downloading more than one patch. Conversely, it’s a number you could raise for those people who simply don’t download a patch. I suspect you’ll have to do some serous massaging to get it even to the 9:1 ratio which is a regular sight when an indie developer makes an estimate of the amount of piracy they experience.
21/07/2009 at 00:35 hydra9 says:
Fascinating – and quite heartening – stuff. Thanks!
21/07/2009 at 00:46 Tei says:
Well… is the damn problem with the digital world. Is damn imposible to know WTF is going, because there are like a infinite number of isolated miniworlds. If the people like Steam don’t want, you can’t.
What music like people? we don’t know. What movies are watching people? we don’t know.
You have stuff like XFire, but is biased. Next thing you know theres a game that play everybody and my dog (Planet Penguin) and you know nothing about it, because no one has talked to you about it, and it show nowhere on the data. Is insisible to sales, so patch downloads and other means. The digital culture is impenetrable.
Is that really bad?
Popularity contest are stupid. Now that people are unable to buy a game because everyon has buy the game, people will be forced to buy the games that like.
21/07/2009 at 00:54 solipsistnation says:
“When Steam does a 50% sale, retail goes up.”
That’s fascinating.
21/07/2009 at 00:56 UK_John says:
If the post above had been negative, posters would have asked “prove it” – but when it’s positive everyone just says ‘good to hear’ because PC gamers, more than any other consumer just want to hear what they want to hear.
21/07/2009 at 01:00 frymaster says:
“When Steam does a 50% sale, retail goes up.”
when steam does a tf2 free weekend – which needs the user to download steam, create an account, and then download the ENTIRE game over the internet… retail sales go up. Not sure if this is the under-18-no-credit-card market or the games-are-always-cheaper-at-retail effect. But it’s real.
Steam’s “effect of sales on revenue” figures from a while back were interesting too. I wonder if the reason Valve don’t release figures is:
a) Their retail publishers don’t want it for Valve games
b) Some third parties with content on Steam don’t want info released for whatever reason
c) Valve have some wierd reason they don’t want info released
I’d hope it’s just option b – in which case, couldn’t valve release figures for games sold on an opt-in basis?
21/07/2009 at 01:05 LionsPhil says:
Oh Gods—unscientific piracy statistics again.
AWOOGA! AWOOGA! EVACUATE THE COMMENTS! SEVERE RISK OF UNINFORMED FLAMEWARS! THIS IS NOT A DRILL!
21/07/2009 at 01:10 Hentzau says:
That’s very nice and all, but what I would like to know is how much of that 22% is represented by weekend deals and the like. I have a hard time believing that people will buy Generic-O-Game for its DD price of £35 when Amazon and Play are selling it for a tenner off RRP.
Digital distribution is doing some truly great things: opening up otherwise niche titles to the mainstream and reintroducing old classics to modern audiences, among others. However, it won’t be the saviour of PC gaming or whatever the hell it’s being touted as until it offers a definitive advantage over buying retail, and right now it does not. All it’s doing at the moment is filling a gap in the market that had hitherto been relatively unserviced.
21/07/2009 at 01:11 Alex says:
I wonder how elaborate Steam’s stat tracking is. If the service can tell your buddies whenever you’re watching one of the hosted trailers, what kind of numbers can developers get their hands on?
21/07/2009 at 01:28 Smurfy says:
I am deeply interested in digital distribution (and the fact that there are still games being released that aren’t on Steam, WTF publishers) so this is intriguing to me.
21/07/2009 at 01:29 jalf says:
Ouch, so Introversion is seeing 99% piracy rate? That’s a big number. (Not going to argue with it though, it seems a valid estimate based on available data.)
Anyway, very interesting stuff. Thanks for posting. :D
21/07/2009 at 01:37 solipsistnation says:
@UK_John: That’s because when you go off on digital distribution and the death of PC gaming, you’re incredibly vague and don’t back up your numbers with anything. What we have here is backed up with research and, although clearly it can’t be as complete as we’d like because Steam is so secretive, it’s being talked about by people who know what they’re doing, not just some dude spamming a bunch of forums.
@Hentzau: DD DOES offer a significant advantage over retail– not having to go to retail stores! I’d pay an extra ten bucks not to have to go to Best Buy to pick up a game. They have an awful car stereo section that gives me a headache. And the Gamestop is in the mall, which I also am not fond of. Plus then I have a CD kicking around that I have to store. AND, as it turns out, if I want to buy a game and it’s after 9pm or so when the stores close, I can buy it online and not have to wait. Or, ha, if I’m at home and have had a couple of beers and suddenly some game looks totally fascinating, well, I couldn’t drive drunkenly to the store, but as long as I can still type my CC number or PayPal password I can still buy the game.
In short, don’t underestimate the power of convenience and impulse purchases.
21/07/2009 at 01:42 invisiblejesus says:
Or, ha, if I’m at home and have had a couple of beers and suddenly some game looks totally fascinating, well, I couldn’t drive drunkenly to the store, but as long as I can still type my CC number or PayPal password I can still buy the game.
“That’s not always a good thing,” invisiblejesus grumbled, eyeballing the Bloodrayne 2 listing on his Steam account….
21/07/2009 at 01:46 solipsistnation says:
@invisiblejesus: Oh goodness. I’m so, so sorry. I didn’t realize it could be that bad. :(
21/07/2009 at 01:50 invisiblejesus says:
Yeah, it’s disturbingly like having sex and regretting it later, only everyone on my Steam friends list can’t look at my profile and see who I’ve hooked up with. But they can see Bloodrayne 2. The horror.
21/07/2009 at 01:54 The_B says:
Have to agree with solipsistnation here, sorry Henz but indeed convenience is a MASSIVE factor for many people. If you want evidence, it’s all around in the games industry not least the whole thing with casual games. If people are unwilling to master several hundred controls to play a game, what makes you think they want to leave the house, drive to the nearest game retailer, find somewhere to park, check if it’s even in stock (I mean, digital distribution copies won’t get ‘sold out’ if it’s popular.) before getting the cash and the like and paying for it.
Agreed, you do have to jump through some hoops when you first sign up to a digital download service, but people would rather do it once to make their subsequent trips swifter than jump through them every time.
21/07/2009 at 02:18 Rich_P says:
Based on their estimates, the global videogame market is worth $45 billion. That means PC gaming accounts for 29% of the total. So anyone claiming that PC gaming is dead is totally off base. (If your issue is with a subset of PC gaming — lack of olde-fashioned RPGs, for example — then don’t generalize to the point of idiocy. OMG NO MORE BALDURS GATE PC GAMING IS DEAD!)
@Alex: Steam’s stat tracking is a major asset to publishers. They (presumably) can find out when someone buys a game, how often it’s played, how many of their Steam friends have it, etc. Just check the stats page for all the ridiculous data Valve collects on its games (the TF2 death density charts are fun).
21/07/2009 at 02:24 subedii says:
@ UK_John: If I might ask, what exactly are you disagreeing with in the article itself? Which points do you believe are fallacious?
21/07/2009 at 02:51 catska says:
Its really not news that the PC gaming market is now made up mostly of microtransaction based asian games like mmos and free2play games. PC gaming evangelists usually cite completely inaccurate statistics like the RPS poll with basically the worst sample group ever that stated that 50% of all PC sales were digital, and they use this to try and prop up the PC when its clear its sales have been slumping (retail and overall). Ever wonder why valve never releases steam sales statistics? Its because they aren’t good, period. If they even held a candle to retail numbers (which have been dropping steadily over the past few years), Valve would be shouting them from the mountaintops for the free publicity that would get. The number of people paying for and downloading games is miniscule compared to the average joe consumer who still goes into wal-mart and walks out with the Sims 3.
Oh and Introversion’s piracy stats aren’t surprising either. Just look at 2dBoy’s 90% piracy rate on World of Goo to see that PC pirates don’t care about indie developers and just want games for free regardless if its killing the very industry they enjoy.
21/07/2009 at 03:32 JKjoker says:
its easy to pad their numbers when you have South American and Asian countries where the game is NOT released officially (and unofficial versions cost 3 or 4 times more when the average salary is 20% or less the one in us or europe and are as easy to find as flying mutated midgets) but have a pretty big gaming community that have found themselves with the choice of either pirating games or not playing at all, they include them in the “pirates” number but they were never part of their potential customers, they never gave them a chance
21/07/2009 at 03:32 TeeJay says:
@ catska
1. Noone “cites” the RPS poll. How would it ‘prop up’ anything anyway?
2. Where is your evidence that overall PC sales have slumped?
3. Where is your evidence for the proportion of download sales versus boxed copies?
4. Private companies often have an interest in keeping their numbers to themselves for strategic reasons, although they *have* actually released a load of figures for their own games: link: http://www.gamasutra.com/php-bin/news_index.php?story=21319
21/07/2009 at 04:12 TeeJay says:
Just to compare and contrast these numbers with those in the recent PCGA report:
http://www.pcgamingalliance.org/RESOURCES/Articles/tabid/397/Default.aspx
Chart-track; Europe; PC retail:
2005 € 1.262 bn = $ 1.794 bn
2006 € 1.265 bn = $ 1.799 bn
2007 € 1.326 bn = $ 1.885 bn
2008 € 1.125 bn = $ 1.600 bn
PCGA: Europe/MiddleEast/Africa; PC; 2007
Retail – $ 1.898 bn
Subs – $ 0.860 bn
Downloads – $ 0.569 bn
Ads – $ 0.170 bn
Total – $ 3.497 bn
Chart-track, Global, PC, 2008
Total – $ 13 bn
Boxed 24% = $ 3.12 bn
Subs 46% = $ 5.98 bn
Download 22% = $ 2.86 bn
Ads 8% = $1.04 bn
PCGA, PC, Global, 2007
Total – $ 10.750 bn = 100%
Boxed – $ 3.267 bn = 30%
Subs – $ 4.769 bn = 44%
Download – $ 1.922 bn = 18%
Ads – $ 0.792 bn = 7%
Chart-Track: North America, PC, downloads
2008 $600m
2009 $1068m
PCGA: North America and Latin America, PC, 2007
Total – $ 2.679 bn = 100%
Boxed – $ 1.213 bn = 45%
Subs – $ 0.776 bn = 29%
Download – $ 0.450 bn = 17%
Ads – $ 0.222 bn = 8%
Re. North America & downloads: if you combine PCGA and Chart-track figures/estimates:
2007 $ 450 m
2008 $ 600 m
2009 $1068 m
Assuming a static $3bn marketplace, you might expect ‘boxed retail’ to be falling, ie …
NPD figures (US, boxed retail):
2006 $ 970m
2007 $ 911m
2008 $ 701m
So for 2009, does this mean the NPD boxed retail figure will fall to something like $300m ?
21/07/2009 at 04:48 Aphotique says:
Great stuff KG, thanks for writing it up.
Wish I could have been there, I eat this stuff up.
21/07/2009 at 05:01 Frank says:
Thanks for the details, Tee-Jay.
21/07/2009 at 05:38 Fumarole says:
Don’t mind UK_John everyone, no amount of evidence will chance his mind. I gave the guy the benefit of the doubt until I read the mind-numbing thread over at GoG he started.
Excellent article, by the way.
21/07/2009 at 07:12 j c says:
Positive articles, negative articles, digital the “savior”, “savior isn’t needed” – whatever the argument, there’s only one thing gamers need:
games.
That’s really all it comes it, isn’t it? Are there games to play? Are there games coming out in the future?
And to those questions, I don’t see how anyone could be foolish enough to claim the negative:
http://adrianwerner.wordpress.com/games-of-2009/
To the jaded folks out there proclaiming death at every opportunity – keep it up. I’ll be off digging into my ridiculous backlog and fearing/hyping the phenomenal-looking rest of 2009 and upcoming 2010.
21/07/2009 at 07:30 Vinraith says:
@j c
Amen. I’ve got more games in my backlog (damn Gamersgate and Steam deals) than I’m liable to find time to play this year, and there are at least a dozen more interesting titles on the horizon before Christmas.
21/07/2009 at 07:37 Bob says:
“When Steam does a 50% sale, retail goes up.”
Is that because its still cheaper at retail most of the time? Steam is a rip off on prices, “most” of the time!
21/07/2009 at 07:40 bansama says:
I wonder how elaborate Steam’s stat tracking is. If the service can tell your buddies whenever you’re watching one of the hosted trailers, what kind of numbers can developers get their hands on?
According to one developer I spoke to, they basically get told when and where a purchase is made, so they know how many copies of a game sold in the UK vs that sold in the US for a given day. Although whether that data is tracked and archived, he never said. But they can at least see the units sold on the day they are checking the stats.
21/07/2009 at 08:02 Kommissar Nicko says:
@catska: Just because I went to Wal-Mart and bought Sims 3 doesn’t mean I’m average.
…
Does it?
21/07/2009 at 08:16 solipsistnation says:
As a side note: @catska said: “pirates don’t care about indie developers and just want games for free regardless if its killing the very industry they enjoy.”
Massive piracy leading developers to stop supporting the Amiga (because they’d sell a handful of copies and then their games would be heavily pirated and sales would plummet) is much of what ended up killing off the platform.
So, yeah.
21/07/2009 at 08:25 Über Nerd says:
No Kommissar Nicko, it means you are special.
21/07/2009 at 08:28 j c says:
I like how the World of Goo “90% piracy” number is still thrown around in support of PC gaming’s death, conveniently ignoring the fact that they were still enormously successful, with roughly 40% of their sales coming from the PC version.
40% of the sales from the PC version, despite a $5 higher price point on the PC version. Yeah…..I think you guys care a bit more about piracy here than they do – note that they’ve never actually complained about sales numbers due to piracy here.
So yeah…..once again, why do people spend so much effort proclaiming death in the face of continued releases? Why are you so adamant to “prove” that point when the games – THE GAMES, man – continually demonstrate the obvious?
21/07/2009 at 08:33 -Spooky- says:
The whole market is a farce. Global marketing and merchandise? *pff* Digital distribution will be going nice, without borders and local settings.
Example (living in EU):
“Hey, wow! Prototype 50 bucks via Impulse. *klick* Wth ?! Available only in NA. *click* D2D US got the worldwide licence .. ”
I got no idea about this deal, but as a potential customer – you know who got my cash..
The next point is – Do i must pay the same price? Digital vs Boxversion. Come on. Where is the point? No pressroom, no distributor etc. etc. etc.
Few things to fix and the digital way will be great.
PS: Need a SWToR ubr 1337 CE Box .. *chrchr*
21/07/2009 at 09:09 Tei says:
* puts his comunist hat *
Here goes Capitalist again. Digital Download is a more effective distribution method. If DD goes one, lots of people will lost if jobs (manually distributing bytes as a physical thing). Mass hysteria, cats and dogs living together.
* removes his comunist hat *
21/07/2009 at 09:43 Hmm-Hmm. says:
I’ve always had this desire to have a material component of the game. It doesn’t need to be a box, just a dvd will do.
21/07/2009 at 10:22 Hermit says:
I’ve always liked Telltale’s approach of offering me a box at the end of each of their seasons. I also jumped at the chance to get the Demigod box as well as the digital download, even if it was slightly more expensive. Never underestimate the power of extras :p
That said I’ve got no problem with backing up some installers to a hard drive. I reckon the majority of my PC games this year have been digital download purchases.
What’ll be really interesting is to see the extent to which the consoles follow suit. Microsoft are already preparing a range of 360 games for online distribution through the LIVE marketplace, and the hard drive sizes in the consoles is certainly enough to support DD. If it takes off in a big way, I wonder if we’ll be seeing similar falls in boxed console game sales in a couple of years time.
Though retail isn’t ever going to die off, given that broadband access is never going to be universal and some people will no doubt remain wary of online purchases.
21/07/2009 at 11:36 Hentzau says:
Solipsistnation & The_B: Did I mention brick and mortar retail stores? No, I didn’t. Those things are dinosaurs with all the disadvantages you mention, plus they also charge RRP for new games. Also their PC game sections are maybe one shelf in the entire store. I’m talking about the ease and convenience of using a site like Amazon to get a game for £10 off the RRP with next-day delivery – it’s basically everything digital distribution offers, but cheaper.
I don’t disagree with you that impulse buys are a significant factor of digital distribution’s appeal – they’re the entire reason the weekend deals even work – but there’s a difference in me paying £6 for Invisible War over Steam because it’s only a pound more than I could buy it off Play, and in paying a ten pound markup on Anno 1404 because I just couldn’t wait the twenty-four hours it’d take for a hard copy to arrive through the post.
(And that’s not even touching on the fact that not everyone has incredi-broadband connections. A lot of people are stuck with fairly basic ones because BT won’t upgrade their exchanges, and so downloading even a few gigabytes takes the best part of a day.)
21/07/2009 at 12:02 dsmart says:
@ catska
That is pure.utter.bollocks
The reason that Valve does not release those numbers is because they are not their’s to release. The closest that they can get to doing that is list the top sellers in any period.
Digital distribution numbers are the property of the individual publishers of the product. And Valve would need the permission of each and every publisher in order to reveal those numbers. Unlike retail those numbers belong to the retailers and so they are available via NPD, ChartTrak etc. If Activision called up Best Buy and says, don’t reveal sales numbers for my products, Best Buy will oblige. Its not like they gain or lose anything by refusing.
Fact is, Steam *now* controls about 40% or more of the digital distribution market. According to some data that I have access to, it breaks down like this:
I have developer and publisher (!) friends who are making a killing on Steam just by showing up.
Also, never estimate the power of those *crazy* Steam sales. You have NO idea what those numbers are and if you knew, you’d just keel over and die. They’re significant.
Steam is the ultimate “impulse buy” platform. The biggest edge that it has against the competitors is the community aspects of it. From the store to the game to the forum, its all seamlessly integrated and has no sense of discontinuity at all. Of course, there’s Valve. ’nuff said.
Even I doubted that Steam would ever get this big, given that it came after ALL the other portals (apart from Stardock’s original failed attempt, Totalgaming and their new Impulse – which has no chance of making a dent, ever).
Folks releasing games on ANY other platform other than Steam, are just doing so for residual income reasons only because the truth is that the other portals don’t even make a dent when you’re looking to recoup large amounts of money. And because Valve are very selective on the titles they pick (they won’t pick up a title if they think it won’t sell) up, it is highly unlikely that it will get to be the bloated mess that the other sites are.
Fact is, retail is dominated by console games. Digital distribution is dominated – for the most part – by ESD. Before long, ESD will be the ONLY place to get titles – apart from the casual $9.99 or less games that you still see in boxes and jewel cases at retail.
Because casual titles are an impulse buy, you are likely to see tons of them than higher priced PC games. The reason being that a) they move b) they have zero return rates – because at that price, why bother even trying to return (as if you could, hah!) it?
PC gaming is healthy. The BIGGEST problem that we as developers are faced with is in reaching our core audience. Gamers – especially PC games are a finicky, fanatical (I make NO excuses for the ArmaA fanbase, they’re like, from space or something) bunch who will turn on you in a heartbeat if you make one false move. Its like walking through a minefield – knowing that there is a 90/10 chance you’re gonna trip up and get a leg blown clean off.
When you go and spend $150K developing a game, you don’t have much of a climb to recoup it. But go spend $500K or higher, the game changes and you’ll be up nights wondering when that huge dent in your bank account is going to be fixed.
And retail publishers – the leeching bastards – already know that the game is up for them, so now they’ve started putting the squeeze on portals and console platform holders to make that space like it is with retail.
e.g. look no further than XBLA, where – contrary to the corporate bullshit that is coming out of Redmond – MS is stealthily pushing premium XBLA developers towards publishers, while relegating the chaff (no offense) to XBLCG. And we who are approved XB360 developers and have to deal with MS at some level, have known this either personally or through our friends for some time now. And as if by clockwork, this appeared last week.
What MS doesn’t realize is that NDA aside, we ALL know one another and we ALL talk to one another. So no matter what, word gets around – and eventually it gets out.
At the end of the day, the same way it is nigh impossible to get into retail these days – even with a publisher – it will be the same thing to get on XBLA or PSN. Once console games become “day and date”, in that they appear in stores and online on the same day, apart from GameStop’s shares continuing to tank, it is game over for retailers in the gaming space.
Do you think that MS putting full back catalog games on XBL is a co-incidence? No, it is not. Plus Sony has been hosting full new and old games for sometime now and the only stumbling (they’re so incompetent with the PS3 strategy that it should be illegal) block for them is that they charge publishers for the download bandwidth – which MS does not. So, in a sense, MS is playing catch up with Sony – and beating them at their own game.
The publishers KNOW that eventually console games will go the way of the PC, be dominated by ESD and put the developers in a better position via XBLA/PSN. The end result is that once retail takes a backseat – it is game over.
Publishers also know that the genie in a bottle that is PC game development is out and cannot be put back. So their survival instinct is to control what they can: console gaming, both at retail and online.
There is nothing wrong with PC gaming. All you have to do is find your audience and ignore the noise.
21/07/2009 at 12:39 Vandelay says:
I find it hard to believe that many people buy new games on Steam. Rarely are big name games released at anything less than £35, which anyone capable of using the internet would know is a heavy price tag for a PC game. But, obviously people do as that is always the price.
Even though we never see the sales figures for Steam, we know they must be good, as the other companies selling on Steam do see the figures and they wouldn’t use it unless it was beneficial.
@dsmart – For the sake of not having the likes of UK_John jumping up and down with excitement, you are probably going to have to give a bit more than “According to some data I have access to.” It is pretty much what I expected though.
21/07/2009 at 12:42 Markoff Chaney says:
Excellent read. I won’t believe PC dying is dead when I can see it’s growing faster and further than before. We have more games, more developers and more product than ever coming out, and back catalogs are finally being exploited (I don’t mean that in a bad way) properly.
I’ve said it before, and I’ll keep saying it. PC Gaming (as defined by brick and mortar sales of boxed product) is DEAD! Long LIVE (as defined by more efficient electronic distribution and creation methods) PC Gaming!
21/07/2009 at 12:59 Nafe says:
Anyone miss the smell of boxed games? I don’t mean those crappy DVD cases, but the good old fashioned boxes that had the jewel case and manual inside.
No?
Just me then?
Ok :\.
21/07/2009 at 14:03 kadayi says:
Its interesting to hear that the UK is also a big on the retail front, because as quite a few of have been discussing in the forum:-
http://www.rockpapershotgun.com/forum/pc/uk-pc-retail-dead/
more and more it seems that PC gaming is being marginalised in the traditional retail outlets in favour of console games, by retailers. Perhaps this is due to the impact of the recession and the necessity to run stocks down, but there quite clearly is less and less shelf space (certainly in the UK at least) being set aside to the PC as a platform Vs the 360, PS3, Wii & DS.
21/07/2009 at 14:05 kadayi says:
Damn it lack of stupid edit button…
I meant to add that this high street marginalisation could be quite detrimental in a few years time.
21/07/2009 at 14:56 solipsistnation says:
@Hentzau: Out of curiosity, how expensive is next-day in the UK? Here in the US it’s expensive enough that it would cancel out that £10 you saved and then some.
21/07/2009 at 15:13 SwiftRanger says:
@Nafe, you’re not alone.
For big titles the people who want a boxed product are still in the majority on PC it seems. Good to see I am not alone as well, even though retailers are evil yes. It’s all about ease-of-use…
21/07/2009 at 15:22 ceolstan says:
I’m interested in seeing the charts for console sales. It’s clear that pc game sales went down for 2008, but I’d like to see if console sales went up a corresponding amount.
2008 saw a large crash in the world economy. Fourth quarter could not have been good for a lot of gaming companies.
21/07/2009 at 15:26 Dave says:
@kadayi: the same is happening in the US. Go to a typical GameStop in a mall, and there will be one tiny rack of PC games vs. an entire wall of any of the consoles or handhelds.
Wal-Mart is actually a better place to buy PC games than a game retailer.
I don’t think it’s a “PC gaming is dead” thing so much as optimization of space. If you have a tiny store, 3 consoles and 2 handhelds to sell for, plus big space-consuming displays for Rock Band and Guitar Hero stuff, whatever brings you the least cash is going to go away… even if it’s only 5% less.
21/07/2009 at 15:43 jackflash says:
Excellent article. Three things :
1) Thank god someone is actually looking at digital sales and subscription numbers. It’s now clear that NPD’s FUD over the death of PC gaming was based on 25% of the actual market. Incredible.
2) We need the Germans. If Germany’s ban on “violent” video games passes into law, PC game studios are going to feel that very, very hard in their bottom line.
3) It is frustrating that Valve won’t release any sales number. I suspect they don’t do it because they don’t want people to know just how powerful they really are. Which makes sense. They are very quickly becoming the Google of digital PC sales.
21/07/2009 at 16:00 dsmart says:
@ Dave
Nothing to do with space optimization. Its all about filling the space with products that sell. Console games
i) traditionally sell more than PC games
2) have more marketing, and thus exposure
3) have been margins
4) have near-zero tech support issues (only disc recalls are the issue when that happens)
5) console games cannot be pirated as easily or even as widespread as PC games. For console games, you have to jump through hoops. And thats assuming you have a modded HW, tech skills, and know where to get the ISO etc. With PC, you’re just a browser search and mouse click away from downloading and playing a full cracked game.
6) console games have a re-sale value for the retailer. Which is why they’re ALL jumping on that bandwagon now
PC games are relegated to the ranks of those of us who actually owned (and still do) joysticks and loved them with all our hearts. Ask a console kiddie what a joystick is and chances are he’ll give you a blank stare. Unless of course he bought Ace Combat 6 limited edition which came with a stick+throttle. But I digress
These days to get a PC retail game on the shelf is nigh impossible. You literally have to beg – and then give – the retailer such a deal that he simply can’t so no. Then you have to pray that it actually sells. This is why the larger publishers are only selling their own multi-platform titles and not bothering with third-party as much as they used to.
Also the smaller publishers (I won’t name names) are all strugggling to the extent that if you give one of these guys your game – without an advance or MG (Minimum Guarantee) – it is the same as not having gone into retail at all because 99% of the time you won’t get paid.
There was a time when a 100K initial print run of a PC game was the norm. These days, you’re nuts if you even think of doing anything higher than a 10K print run initially, unless you’ve already got those units allocated and on Pro Forma from the retailers.
The bottomline is that on the PC side, the sales are just residual income for those with multi-platform titles. Sad but true.
The reason why territories like Germany – apart from its size – is so huge for PC games is because consoles don’t have as much penetration. Even so, sales in both Germany and France are on the decline year on year. In the case of Germany, according to one source, they are down close to 24%.
Then there’s
this.
I used to. But now I’m stuck with over 10K boxed games that I’m considering getting rid of and have no idea how to do that; short of selling them in consignment packages on eBay.
21/07/2009 at 16:02 dsmart says:
@ Jackflash
No, thats not it. Read my previous post.
21/07/2009 at 16:04 Paul Moloney says:
“The reason why territories like Germany – apart from its size – is so huge for PC games is because consoles don’t have as much penetration.”
I suppose the question is – why don’t consoles have much penetration there? Is it _because_ people prefer PC gaming or is there another reason?
P.
21/07/2009 at 16:06 Rich_P says:
NPD never claimed that PC gaming was “dying.” They release useful retail sales numbers that clueless bloggers then use as proof that PC gaming is in trouble. The problem is not with the data — it is in fact a good representation of U.S. retail sales — but the misuse of it.
21/07/2009 at 16:08 jackflash says:
Derek, the original Red Baron box!! That made me smile.
21/07/2009 at 16:10 cord66 says:
Hi, I’m from the US, and I’m a little shocked by some of the comments here. Very short sighted, especially the console lovers trying to prove PC’s are dead, or the retail/amazon lovers. :)
Personally, I’ll take Steam over ever other method. Valve games auto patch, and preload new games and patches. I hope other games auto patch, but since I’ve been mainly playing MMO’s of late, I haven’t paid enough attention to notice yet. I know that I bought FallOut 3 for $25 a month or so ago, just by checking Steam for a couple weeks waiting for a sale weekend. Got L4D for $25 when they did a sale on that last year, got Bioshock for $10 on D2D as well. And I don’t mind D2D, but Steam is much better when you would like to reload a game.
And, if I have the option, I will always take steam over retail. one simple reason. No disc to loose/damage. For example, I had 2 copies of Diablo2 and at least one of the expansion back in the day. Last year, my wife was playing the Mythos beta before Flagship went under, and I wanted to load up D2 for her. Couldn’t find the darn discs. 2 copies! no discs! ugh. Ended up trying to get a “pirate” version since I’d already paid my money twice. Got a nice virus for my efforts. Had D2 been a Steam purchase, you know how hard it would have been to reload?? Open Steam, click D2, select install, play. THAT’s why I love Steam. Sure there are limitations, but for most purposes, between Steam and D2D I get what I need, any time, no need to trek to Best Buy, Gamestop, WalMart etc., find it not in stock, or has a bad disc (had that happen a few times over the years). I can uninstall when i want and reinstall, anywhere I am, no need to have discs handy if I get an urge to play an old game.
Go to a lan party, decide to play CS:S which I haven’t played in a long time, let it download, and join in. Simple and easy. And to say digital isn’t taking a lot away from retail, you must live in the 80′s still. At all the stores I can get to, just outside of Washington DC (large metro area, millions of people, tons of stores), I might get 2 shelves of PC games and 20 of console games. So there isn’t any selection on PC. Go online, I can get most anything.
And as for saving $10 on amazon, and getting it the next day, you ignored the $6.95 shipping fee, so you saved $3 to wait a day rather than have it in 30 minutes (free shipping takes 3-7 days, not overnight). I can understand doing that if you don’t have a 20MB pipe like I do, but unless it’s a 4 hour + download, what was the point in saving $3??
Steam et al is about convenience and options. Retail is dieing for the PC game, not the market for the games. Tower Records is gone. Waxie Maxies is gone. Just about every record store from the 80′s is gone. Yet music isn’t. IPod’s and digital distro of music is everywhere. That market didn’t vanish, just the brick and mortar sellers did. Gaming is following the same general path.
If you really want a measure of PC gaming health, just look at sales of 3d cards and cpu’s, and usage numbers for MMO’s. And remember, plenty of MMO players get tired and need a break, and go play something else for a bit then come back when the next WoW expansion comes out. When Crysis came out, plenty of gamers were upgrading just so they could play it well. that’s the history of PC gamers. I’ve been doing that since 1993 when playing Wing Commander I-V and the X-wing games, etc. There’s a reason nVidia and ATI put out new GPU’s every year, they are making money :) … off gamers, not basic pc sales, but us crazy gamer types ;)
The PC is still alive and well, just adjusting to a changing world.
21/07/2009 at 16:11 Paul Moloney says:
(On a tangent, to me, will consolization have an ironic knock-on affect of less games programmers in the future? As a kid with a Sinclair Spectrum, I picked up Basic by osmosis. As a comparison, my nephew knows how to switch a console on and off.)
P.
21/07/2009 at 16:12 jackflash says:
@Derek – I am not talking about individual sales numbers, I am talking about gross revenue. And valve does own that number.
Also, unless you can point to a contract clause covenanting valve not to release individual product numbers, I bet they could do that if they wanted to. You would know, though, you’ve experience with such, to say the least. The real issue here is that valve’s contracts are all private so nobody really knows.
21/07/2009 at 16:20 Nalano says:
Best Buy has better shelf space devoted to PC games than Gamestop, but we all know that.
I think what they’re saying with the reticence against releasing numbers what with Steam/D2D and other broadband DL services is that there are a lot of squirrely naysayers ready to declare the death of the medium without letting it get off the ground.
The turn-around time from Wright Brothers to scheduled airliner has become practically nothing in comparison, but that isn’t quick enough for the “just the bottom line” short-term investors (not to mention chicken littles like UK_John here) so they’re withholding the numbers so that every week’s little bump and jolt doesn’t make them bolt and run.
After all, this is a new medium and we are in a recession.
I have faith in Valve; nothing they’ve done makes me worry about their motives, their planning ability or their common sense for the PC gaming market. M$, Sony et al, on the other hand…
21/07/2009 at 17:21 The_B says:
Henatzu: It’s a good point, but even the hassle of having to wait three days for the game as opposed to downloading it and having it by the end of the day can be even more appealing than waiting even one day.
Solip – I have no idea about Amazon, but it can be anywhere between £3 to almost negating the saving again. Most places like Amazon & Play have a three day one for free though.
21/07/2009 at 17:53 Magnus says:
@Derek Smart:
I’d happily take about 30-40 of those games off your hands, seeing the likes of Crusader, Dungeon Keeper, Delta Force, System Shock, Deus Ex, Mechwarrior etc. etc.
What a fantastic collection!
21/07/2009 at 17:55 Magnus says:
@DSmart:
Of course by “take those off your hands” I do mean pay for them!
21/07/2009 at 18:09 Kadayi says:
@Derke
Kudos for all of the useful infos about retail and PC games. It does very much seem to be a case of deliberate marginalisation in order to concentrate on sure fire profitable ventures.
Do you think the lack of high street retail presence for non multi-platform titles is going to detrimentally impact upon future PC titles, or do you feel that the PC buying public are sufficiently digitally inclined these days (both through portals and etailers such as Amazon & play) that the market is really just transitioning?
21/07/2009 at 18:46 solipsistnation says:
Oh, another bonus fact about video game retail– publishers must pay “slotting fees” to get games placed on shelves in stores. That’s right, in addition to actually manufacturing the game and advertising and so on, in order to get games in stores, they pay tens or hundreds of thousands of dollars to get games into stores.
No wonder retail is being eaten by digital distribution… (Although I bet Steam also charges slotting fees too, publishers don’t have to duplicate media, print manuals, ship boxes, and so on.)
21/07/2009 at 18:55 solipsistnation says:
Following up myself– I asked somebody who has more of a handle on the business than I do, and he says no, they don’t charge a slotting fee, since that would just put up more of a barrier to smaller developers adopting the platform. That makes sense.
21/07/2009 at 20:50 ComVlad says:
I must say that while I love having an actual box and cd for the games I buy digital distribution does appear to me to be the “saviour” of the pc (in as much as it needs saving which is debatable) for the reasons j c’s posts mentioned-games. When I finally bit the bullet and after much resistence to steam, d2d etc. and popped over to gamers gate the first time (sots complete edition finally broke my bullheadedness) seeing things like their vast 1c catalogue (A.I.M. and starwolves 1 in particular) when previously I had all but given up ever legally getting some of these games was a huge revelation, to say nothing of GoG selection (ever try to find Hostile Waters before gog came online?). In my opinion selection contributes just as much to DD popularity as convinience and that trend will probably continue to increase since its a lot easier to maintain a back-order list when you don’t actually have to spend money on warehouse space for older titles.
21/07/2009 at 20:50 AdrianWerner says:
@Kadayi
I think PCgamers are generally self reliant. I mean plenty of games sell well and yet when was the last time we saw a big advertising campaign for any PC game? PCgames also get shunned by mainstream gaming sites. And somehow we manage. Heck… even casual gamers are like this, those games sell like crazy despite close to zero advertising or any info/reviews/previews at major gaming sites.
21/07/2009 at 21:05 Kadayi says:
@Adrian
For now. But my point is will that self reliance continue to hold up over the next 5 – 10 years against a retail environment that seems determined to erase it? I don’t think one can naturally assume that people who aren’t presently active PC gamers are going to find themselves clued up or clued into a market place that we are presently aware of.
Everyone reading this thread/site is undoubtedly familiar with Steam & impulse & D2D, but there are plenty of PCgamers out there who either eschew anything but boxed goods, or are blissfully ignorant of these distribution portals (bizarre as that thought may seem).
21/07/2009 at 21:28 AdrianWerner says:
@Kadayi
Do they get clued by retail today? I doubt that. if housewives could find their way to bigfishgames or popcap, then I think we have nothing to fear in the future.
Somehow the knowledge will always get through, be it through friends, websites or even banner adds
22/07/2009 at 00:01 Smurfy says:
As we can see, World of Goo’s digital distribution dwarfed its retail sales.
22/07/2009 at 00:09 Kadayi says:
@Adrian
Advertising and presence is king, don’t think otherwise.
22/07/2009 at 00:24 Rich B says:
Hey Kieron,
Just wanted to say thanks for reporting back on this. Put the numbers you reported to some work myself.
http://news.cnet.com/8301-17938_105-10291692-1.html?tag=TOCmoreStories.0
- Rich
22/07/2009 at 00:26 DSX says:
One distro, in the darkness, to bind them…
What will save games is when games are made by developers again not marketing company’s.
22/07/2009 at 02:19 dsmart says:
@ Magnus
uhm, hmm, but thats not even going to make a dent. Its just going to leave a gaping hole in my shelf that I’m going to be tempted to fill up – with something.
Anyway, send email to me at dsmart at 3000ad dot com and we’ll see. My mail is protected by ChoiceMail One. So as soon as you send me email, give it five mins and check your email or spam folder for the challenge/response question. If you don’t respond – to prove that you’re not a bot or something – I’ll never see your email.
Give me a list of what you want – even if you don’t see it, I probably have it. e.g. I have ALL the Infocom games. Every last one.
@ kadiya
I don’t think ANYTHING – other than a dearth of good games – is going to affect PC gaming; neither at retail nor online. Heck, even retro games, back catalogs etc are making a comeback. What does that you? It tells me that we’re doing just fine.
22/07/2009 at 14:43 AdrianWerner says:
@Kadayi
Advertising and presence are kings, just not retail shelves advertising and presence when it comes to PC games.
22/07/2009 at 20:54 Kadayi says:
@Adrian
Advertising at gaming websites only captures the attention of existing PC gamers, it doesn’t bring non PC gamers into the fold (my concern). PC gaming is a hobby, and like all hobbies people set them aside when the times demand it (kids turn up, more responsibility at the office, yadda, yadda). There is a constant flow of people who come into PC gaming, and those who move onto other things. Quite a few of the people I knew when I was younger and were avid PC gamers, have either crossed over to consoles (because they are less hassle) or just don’t have the time for gaming any more, or just don’t have the inclination to buy back in (state of the art PC). When these people were playing games on the PC, the platform was king in terms of public presence. PC games were widely available and everyone took it for granted that they’d need to configure this and that to get things to run ok. Sure right now, new people get into PC gaming everyday, but as the wider public presence disappears (as magazines disappear off our shelves, and PC shelf space diminishes) the take up will invariably lessen. Certainly I’m not predicting a massive drop off any time soon (unlike some rabid doom mongers I could mention), but 10 – 15 years and a couple of console generations in things might be significantly different in terms of market.
I think one of the interesting things to consider is, whether the present monopolising of the retail gaming space by the console manufacturers would of have occurred if DD hadn’t happened. What if Sierra had won that court case against Valve and Steam had never seen the light of day? Would we be seeing the PC still being squeezed on the high street, or would the retail market still be healthy, and how would it be faring against the monoliths of the 360 and PS3?
02/08/2009 at 22:27 GamerIAm says:
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02/08/2009 at 22:57 Swuave says:
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