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Console games are winning the sales race with PC games
Steve Alexander
Star Tribune
Published Dec. 11, 2002 GAME11
There is a war being fought for the hearts of consumers who love games. On one side is the venerable PC, on the other side the video-game console.
The consoles are winning.
The NPD Group of Port Washington, N.Y., is expected to announce today that unit sales of PC games fell 6.2 percent through the first 10 months of this year, marking the first such decline ever.
Meanwhile, NPD projects that console video-game sales will break all sales records this year, with hardware and software sales totaling more than $10 billion, up from $9.4 billion in 2001. Of that, about $5 billion represents video-game sales. PC game sales are projected to reach only $1.4 billion, or flat with 2001, said Steve Koenig, an analyst at NPD's PC software tracking division.
"The shift to buying video games is definitely the main reason behind flagging sales of PC games," Koenig said.
Game consoles now rival PCs in the quality of game play, graphics and sound, and recently have entered online gaming, formerly available only on PCs, he said.
Consumers whose primary interest is gaming can more economically buy a $150 Nintendo GameCube or a $200 Microsoft Xbox or Sony PlayStation 2 than a PC, which costs a minimum of $500 and typically is closer to $1,000.
Video games also have benefited from the growth in the game-playing population, which is due to the aging crowd of players who cut their teeth on PC games, before the advent of improved console machines, such as Sony's first PlayStation.
Studies have shown that people of all ages play some computer games, but the bulk of the audience for both video games and PC games now is 34 and younger, said Richard Ow, another NPD analyst.
Advertising
The shift to video games has been evident in TV advertising this season. Two of the most-advertised titles -- "Tom Clancy's Splinter Cell," about a stealthy spy, and "007 Nightfire," about the glitzy adventures of James Bond -- have been advertised for use on a console, not a PC.
The shift to the video-game console as the chief game-playing machine began with the fall 2000 introduction of the Sony PlayStation 2 and accelerated last fall with the availability of the Microsoft Xbox, Koenig said. Until the introduction of the PlayStation 2, PC games always were a little more sophisticated and capable, while console games generally were regarded as being for younger children, he said.
"PlayStation 2 changed things, likely forever. It began a shift over to the console form of gaming," Koenig said. "For game players, there may be some surprise that this has happened so quickly. I think maybe they expected it over a three-to four-year period."
Game developers appear to have seen the trend coming. From January through October this year, they produced 9.6 percent fewer new PC titles than they did a year ago, or 750 titles in 2002 vs. 830 in 2001, Koenig said.
"The game-console market is very hot, and so marketers of gaming software are putting their development dollars into that," he said.
Revenue from PC game sales are projected to remain virtually flat for the full year, despite the unit sales decline, because prices have increased. Some top-selling PC games sell for more than $50, a price once viewed as impregnable, according to NPD, which produces widely followed market research that is based on actual retail sales.
Consumers won't see the apparent decline of the PC game reflected at their local electronics store yet. And in the short term, the greatest impact will be felt by the console makers -- Sony, Microsoft and Nintendo.
"The real winners are the console companies, because they will be getting more and more licensing fees," Koenig said. Game developers pay licensing fees to the game-console makers for the rights to produce games for a particular console. There are no comparable fees for developing PC games, he said.
PC games still here
But no one is predicting the demise of PC game-playing just yet. Koenig believes PCs are likely to hold on to their core audience of sophisticated game enthusiasts and are likely to continue their lead in online gaming because PCs are more suited to it. Meanwhile, the broader audience is likely to continue to migrate toward the video-game consoles.
"There is a generally held belief that PC games will continue to be under sales pressure from console games in 2003 and likely beyond," Koenig said. "It is painfully evident that PC developers will have to do something to attract game buyers to the PC."
Failure to do so could have a sweeping effect, Koenig said. Games long have been one of the reasons people upgraded to newer PCs, because the games often required faster chips, add-on memory, disk drives and graphics boards in order to function properly. But the absence of such reasons for consumers to upgrade their PCs could be bad news for an industry already hit by slack sales. Consumers already have found that older PCs handle most other computing tasks as well as newer, faster models.
But the future of PCs as game machines is clouded by uncertainty over what next-generation game consoles may look like, Koenig said. He believes consoles may begin to resemble PCs that are in the living room instead of in a home office.
While today's PlayStation 2 and Xbox consoles can play games, DVD movies and audio CDs, future consoles also may incorporate TV accessories, such as DVD recorders and personal video recorders, which seek out and record programs by automatically browsing TV listings, he said.
"The Xbox already is half a step toward being a PC in the living room," Koenig said. "The next-generation game consoles might look more like PCs and are likely to offer a great deal of utility."
Steve Alexander
Star Tribune
Published Dec. 11, 2002 GAME11
There is a war being fought for the hearts of consumers who love games. On one side is the venerable PC, on the other side the video-game console.
The consoles are winning.
The NPD Group of Port Washington, N.Y., is expected to announce today that unit sales of PC games fell 6.2 percent through the first 10 months of this year, marking the first such decline ever.
Meanwhile, NPD projects that console video-game sales will break all sales records this year, with hardware and software sales totaling more than $10 billion, up from $9.4 billion in 2001. Of that, about $5 billion represents video-game sales. PC game sales are projected to reach only $1.4 billion, or flat with 2001, said Steve Koenig, an analyst at NPD's PC software tracking division.
"The shift to buying video games is definitely the main reason behind flagging sales of PC games," Koenig said.
Game consoles now rival PCs in the quality of game play, graphics and sound, and recently have entered online gaming, formerly available only on PCs, he said.
Consumers whose primary interest is gaming can more economically buy a $150 Nintendo GameCube or a $200 Microsoft Xbox or Sony PlayStation 2 than a PC, which costs a minimum of $500 and typically is closer to $1,000.
Video games also have benefited from the growth in the game-playing population, which is due to the aging crowd of players who cut their teeth on PC games, before the advent of improved console machines, such as Sony's first PlayStation.
Studies have shown that people of all ages play some computer games, but the bulk of the audience for both video games and PC games now is 34 and younger, said Richard Ow, another NPD analyst.
Advertising
The shift to video games has been evident in TV advertising this season. Two of the most-advertised titles -- "Tom Clancy's Splinter Cell," about a stealthy spy, and "007 Nightfire," about the glitzy adventures of James Bond -- have been advertised for use on a console, not a PC.
The shift to the video-game console as the chief game-playing machine began with the fall 2000 introduction of the Sony PlayStation 2 and accelerated last fall with the availability of the Microsoft Xbox, Koenig said. Until the introduction of the PlayStation 2, PC games always were a little more sophisticated and capable, while console games generally were regarded as being for younger children, he said.
"PlayStation 2 changed things, likely forever. It began a shift over to the console form of gaming," Koenig said. "For game players, there may be some surprise that this has happened so quickly. I think maybe they expected it over a three-to four-year period."
Game developers appear to have seen the trend coming. From January through October this year, they produced 9.6 percent fewer new PC titles than they did a year ago, or 750 titles in 2002 vs. 830 in 2001, Koenig said.
"The game-console market is very hot, and so marketers of gaming software are putting their development dollars into that," he said.
Revenue from PC game sales are projected to remain virtually flat for the full year, despite the unit sales decline, because prices have increased. Some top-selling PC games sell for more than $50, a price once viewed as impregnable, according to NPD, which produces widely followed market research that is based on actual retail sales.
Consumers won't see the apparent decline of the PC game reflected at their local electronics store yet. And in the short term, the greatest impact will be felt by the console makers -- Sony, Microsoft and Nintendo.
"The real winners are the console companies, because they will be getting more and more licensing fees," Koenig said. Game developers pay licensing fees to the game-console makers for the rights to produce games for a particular console. There are no comparable fees for developing PC games, he said.
PC games still here
But no one is predicting the demise of PC game-playing just yet. Koenig believes PCs are likely to hold on to their core audience of sophisticated game enthusiasts and are likely to continue their lead in online gaming because PCs are more suited to it. Meanwhile, the broader audience is likely to continue to migrate toward the video-game consoles.
"There is a generally held belief that PC games will continue to be under sales pressure from console games in 2003 and likely beyond," Koenig said. "It is painfully evident that PC developers will have to do something to attract game buyers to the PC."
Failure to do so could have a sweeping effect, Koenig said. Games long have been one of the reasons people upgraded to newer PCs, because the games often required faster chips, add-on memory, disk drives and graphics boards in order to function properly. But the absence of such reasons for consumers to upgrade their PCs could be bad news for an industry already hit by slack sales. Consumers already have found that older PCs handle most other computing tasks as well as newer, faster models.
But the future of PCs as game machines is clouded by uncertainty over what next-generation game consoles may look like, Koenig said. He believes consoles may begin to resemble PCs that are in the living room instead of in a home office.
While today's PlayStation 2 and Xbox consoles can play games, DVD movies and audio CDs, future consoles also may incorporate TV accessories, such as DVD recorders and personal video recorders, which seek out and record programs by automatically browsing TV listings, he said.
"The Xbox already is half a step toward being a PC in the living room," Koenig said. "The next-generation game consoles might look more like PCs and are likely to offer a great deal of utility."
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!
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