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Analyze This: The Current State of the PC Game Business [On the state of the PC game biz]: "Retail spending on packaged PC games will decline to 2010 for a host of factors which have combined to erode the appeal of PC gaming to consumers: PC gaming has relatively complex compatibility and configuration issues; subscription-based games [are] absorbing spending power as well as time to play non-subscription based games. "These factors have encouraged PC gamers to shift towards console gaming and have also led to a decline in the quality and exposure of packaged PC games in the retail sales channel. Increasing levels of digital distribution of PC games is of significant interest to developers: Revenue from online distribution can be up to five times that of retail, often more than 50% of sales revenues generated. The challenge is to identify appropriate digital distribution platforms.
[On piracy]: "There are few digital delivery channels which have scale and penetration comparable to retail, especially those targeting hardcore (as opposed to casual) gamers. Steam and Xbox Live (although currently only compatible with Xbox and Xbox 360 consoles, Microsoft have confirmed that Vista users will also be able to use Live) are prominent exceptions. Both have demonstrated the viability of supplying in-game content via micro-transactions, and the episodic gaming model. "A natural evolution of [this business] model, popular with Asian game makers, is to rely completely on micro-transactions for revenue. In Asia where PC software piracy rates are historically very high, client software is often distributed at nil cost with revenues generated by payments for game time or in-game objects. "Greg Costikyan's Manifesto Games initiative is interesting for its championing of the independent developer game download model. Its progress will certainly be one which we watch closely. [On Windows Vista]: "I do not believe this is a cynical ploy by Microsoft. Increasingly sophisticated games drive demand for more powerful PCs, and the PC hardware upgrade cycle is an essential component of Microsoft's business model. It is commercially sensible for Microsoft to encourage this process, which it is doing through a number of interesting initiatives: the functionality of Xbox Live from a Vista-enabled PC, which will ship with Live Anywhere pre-installed; XNA offering developer tools intended to reduce complexity and cost in PC and Xbox game development; attempting to standardize the end-user experience of PC gaming through the 'Games for Windows' initiative. "The reward for developing games with these qualities is Microsoft's support in marketing the accredited titles, as another console platform in the retail channel, including in-store kiosks and 'Games for Windows' branded retail display units. Given the long-time reputation PC gaming has endured as the poor cousin of its console counterparts, this is potentially a hugely positive move for PC gaming.
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