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: Turning to piracy, the Business Software Alliance estimates North American software piracy rates overall, including games, at around 21 percent. That clashes with occasional anecdotal claims from developers — the most recent from THQ — that PC game piracy rates in the U.S. are upwards of 80 percent. Of course no one's got clear data on this, leading to lots of half-baked punditry and speculative echo-chambering. What's your research saying?
Randy Stude: PC game piracy is bad. That said, it's not 80 percent. We don't know exactly where it's at yet. We've formed a committee to get in and try and provide some better estimates about how deep an issue piracy is on the PC.
I can appreciate someone from THQ who understands how many sales of a particular product he made, and how many requests he gets for the patches, and whether those outstrip the number of sold units by that wide of a margin, then there's some significance to their position on that. But I've looked at their titles and they're not in that deep, at least judging from the utility that we've been able to subscribe to. We have a tool that's showing us some information about installed games and the effective piracy rates of those games. It's not something that's necessarily scientific, it's just a utility that's giving us some insight on version numbers of games that are running on PCs throughout the world.
Looking into BitTorrent and other downloads is not an effective measure either, because how many of those downloads are start-stop vs. completed downloads? There's really no way to tell. So we're trying to dig in and understand the effective amount of piracy that's occurring, and then trying to extrapolate that, and figuring out somehow what the overall impact is. You can't say that every time someone downloads a game, you know...for example StarCraft, one of the most popular games ever, right? You go to China, and every single PC has StarCraft on it. There's no way Blizzard sold a copy to all those gamers. Does Blizzard care? Of course they care. They want to be able to monetize. But at the same time their franchise is being promoted and if they took the approach of just going and shutting it all down and cutting them all off, those gamers would go to another game and they'd care about another brand, and then when World of StarCraft, if there is such a thing, and I don't know if there is, I'm not speaking from any knowledge, I don't call on Blizzard, I don't have a dialogue with them, but let's assume there's a World of StarCraft or a World of Diablo or something like that coming at some point in the future. They wouldn't have as much success monetizing that audience if they went and tried to get the government to pull every copy off. So I don't think that's the right approach. I don't think it's the right approach to say that every single person who pirates a game is a potential sale that's lost.
That said, it's a huge problem. It's being chaired by Microsoft within our team. Microsoft understands better than anybody else the issue of piracy and its impact on their business as the world's leading software company. They definitely want to be a part of the solution. They're working together with other members of the subcommittee. We recently added Sony as a member and the SecuROM folks want to be a part of the solution, at the same time not being draconian in the effort. They want to be able to provide a solution that starts to ingest the feedback from the consumers, the gamers, and maybe one key thing that we can do as an industry group is come up with a best practices way to approach anti-piracy measures while not alienating those who are legitimate customers. That's probably what we'll have as an outcome from our group, hopefully, that has the biggest impact for your audience. Then for the industry, it'll be having some sense of how big the issue is and what approaches work and what don't and having some way to measure that on a month-in, month-out basis. That's sort of what we're looking at.
GO: With the economic downturn, is there danger of a crash? With all the PC MMOs popping up and the huge growth of casual online games, is there a risk of eventual alienation and collapse here?
RS: In what sense? Crash in the $50 game business, $60 game business, that the retail world relies on? If that's your question, then I'd say, I'm not in that business, but I'd say what the publishers are doing to cut back expenses might be a good sign or prediction that they see a considerable impact to their bottom line. If not already, then soon. In that sense, I'm going to defer to the actions of the publishers themselves, who are adjusting their bottom line. You know, can they sustain their projected growth with the head count that they've had, while they've obviously had to cut back their growth estimates. Because they're pulling staff.
You've got, of the big publishers, how many of them are truly successful right now? You've got a lot that are on the sales block, you've got ones that are filing bankruptcy and in a state of disarray. If the retail games industry's doing well, why are there so many companies that are rejiggering their bottom line? I don't think the retail games industry is recession-proof. That's my general answer, though I don't have a speculative forecast to give you.
On the casual side, and on the online side, I think it actually is recession-proof. I think that maybe some subscription games might be impacted as the amount of disposable income shrinks. But at the same time, the free-to-play business models that are coming in from the East that really don't rely on a ton of disposable income, those models are going to thrive, regardless of what's going on with the economy. And people are still going to buy a PC, because it's a valuable asset across the board for a household.
Will they continue to justify a very expensive console and continue to buy a game every other month or every month like the console industry sales attach rates require in order to be a successful and healthy marketplace? I don't know. I don't know if that equation works in a downturning economy. It also depends on how deep and long-lasting the downturn is, of course. But in the case of the PC market, I think it's going to be more healthy than its console brethren in the sense that it has these other economic models to rely on.
You can try casual games all day and all night and never buy one. Maybe you do buy one, but when you do, it's only $10, or $19, and that publisher still made money. Or maybe you go play through an advertising portal or play some of the games in Facebook that don't require a purchase relationship with the publisher, and, you know, you can play forever.
So I think the PC has more immunity to the downturn than the console industry, and in particular the casual space. I don't see how the casual space will slow down anytime soon.
GO: If your target audience is, as you put it, "mainstream," but most dedicated games media sites are predominantly targeting "enthusiasts," how are you getting the word out? Do you focus on converting enthusiasts? Or do you simply pursue mainstream media outlets?
RS: That's a marketing challenge for the group, and I can't say that we've got that one completely licked yet. We're definitely spending a lot of time trying to get our message out with the enthusiast press. But I get your point. When do we get to the point where we're talking to The Times and CNN and the Fox networks and all their related entities worldwide. Yeah, we're not there yet, and that's a challenge for us. As a trade group we've got to get to that point.
I think at CES next year we may get to that point. I don't want to pre-announce our plans there, but we've got a much broader mainstream press that shows up at that event. I think we'll have a great footprint hopefully to showcase the PC gaming industry at that event, and we should get a much bigger share of the broader press taking a look at what is PC gaming.
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