Numbers Game: The PC Gaming Alliance Interview, Part Three
PC gaming's dying, PC gaming's alive and well. If you're a PC gamer, you're probably sick of hearing either. Recent punditry pegs PC gaming as an industry in decline, but the reverse is in fact true according to the PC Gaming Alliance, a group of key industry publishers doing their best to bring absent perspective to widely published but decontextualized retail sales figures.
Intel Director of Gaming Randy Stude is the PCGA's standing president. We caught up with him to clarify the PCGA's initiatives and see if we could debunk any ongoing myths.
Game On: Restricting ourselves to domestic figures, NPD Group said in January that retail PC game sales totaled around $701 million in 2008, down 14 points off 2007. You've implied repeatedly that NPD's focus on retail without online context is misleading. Isn't that actually understating the issue? For instance, according to your own research, which includes online estimates, the North American PC games market in 2007 was over half of all hardware and software gaming revenue.
Randy Stude: I think having met with NPD repeatedly, I've come out with a very strong stance against their research in the past, even within Intel where I hang my hat every day. I try to recommend that we take a good long look at what it is that we buy in terms of research, and is it meeting the objectives that we need it to.
NPD is on the whole, they're in existence to measure retail sales. That's their job. That is where they make the majority of their money. They sell that research to companies like Microsoft and Sony and Nintendo. They sell that research to electronics manufacturers and anybody else who wants their retail sales figures tracked. You can get up to the minute research from them depending on the level of investment that you make in their research tools. So it's a very, very important tool for people who are reliant on retail.
That said, they don't have a conduit for digital sales. When they go and get digital sales, if you read their research, they came out with their first PC research last year. They're relying heavily on users to come in and answer questions, which when you start to count 1,000, 2,000, 3,000 people, which is the typical approach for a research firm to undertake, that is just not going to give you the picture.
It's like the Nielsen rating report that came out the other day that said the majority of PC gamers were female. These guys have obviously never been to China, because in China, it's overwhelming how many people are gaming on PCs there, and the overwhelming majority of them are male. There's a lot more female than you might expect in China but it's still dramatically different than the picture Nielsen painted. Nielsen has their methodology that they choose to use, which is largely North America, and it's an opt in mentality. NPD takes the same approach. You can go sign up on their website today and become a feedback mechanism for things that they can't measure in their retail research reports.
That said, when NPD's data comes out, they've got a big audience for their research, because for the console video game industry, they're it. I mean that's all that the console industry needs to worry about in North America because there's nothing missing from that equation. There's some holes in some of the online stores that sell physical goods via eBay or Yahoo or other shopping destinations, but they do a pretty effective job estimating the sales through those venues based on the overall revenue picture from those sites. They're really good at carving that up and figuring that out.
They do not have relationships however with Digital River, who is the largest back end fulfillment engine for software sales online, so how can they possibly complete that picture? Valve won't talk to them. None of the Direct2Drive, RealNetworks customers will talk to them and tell them what their sales figures are, so how are they getting that research is the question. And the answer is, it's all through survey.
GO: According to a press release from NPD Group on March 10, 2009, online gaming for video game consoles and portables increased from 19 percent in 2008 to 25 percent in 2009, but PC online gaming experienced a slight decline over the same time period.
RS: At DICE, NPD presented in front of all the attendees that research and I was pulling my hair out. Where they come up with these figures is just unbelievably unfathomable to me because when you go look in markets where the console doesn't even have an audience at all, I mean, maybe in North America you could say that going from a small amount of people playing online to a large amount of people playing online on console represents big growth, okay. And while they're conceivably taking a larger percentage of the online gaming pie for console, the overall number of consoles isn't really changing, it's just that more people are playing online. It's deceiving. Where in the world did they come up with those figures? There's no tracking mechanism that exists on NPD's part to be able to substantiate that data.
GO: If the methodology's survey-based, why present it in the first place?
RS: What NPD said in that particular study was that broadband grew by six percent year-over-year in general for all of online gaming, and console during that period increased by 25 percent. What they didn't mention was the basis, you know, what are you actually basing that on. Just because the new generation of consoles are all online connected? Is there some revenue number that you want to point out? There was nothing there, no meat to it. It was just a fact that was thrown out. The best I could come up with was that they extrapolated that data based on the increases in the numbers of units sold of the Sony's, the Microsoft's, Nintendo's latest generation, and the fact that they're all potentially connected to the Internet.
At the same time, PC gaming actually went up in terms of numbers of total online gamers, and this is a U.S. study only that they published, by half a million. They didn't draw anybody's attention to that, they just said that the percent of all gamers went down for PC, even though there was a net gain in total PC gamers of half a million. There's obviously a presupposition to show and highlight the games by console, which is the underlying theme here, and the reductions by PC. I've gotten no response from them, by the way, why they would highlight it the way that they did.
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