Despite new consoles, PC games are hanging on
FORTUNE — While Microsoft and Sony elaborated on their new video game consoles earlier this month at the Electronic Entertainment Expo there was another system that showed signs of renewed life: the PC. Despite the moribund market for mainstream computers, hardcore PC gaming seems to be alive and well.
In past years the PC had been a dominant part of the show, but in recent years it has taken a backseat to consoles. While PC gaming saw a resurgence as the current generation of consoles grew long in the tooth, it was no surprise that the PC wasn’t on center stage this year. Microsoft (MSFT) and Sony (SNE) are competing not only for the sizable game market, but also for prime position in the war for the living room.
Meanwhile the PC, with its diminishing role as a streaming hub for content, still remains very much a credible game machine. Moreover, while the video game consoles have remained somewhat steady in prices — Sony’s PlayStation 4 will cost $399 when it arrives this fall, while Microsoft’s Xbox One will cost $499 — PCs continue to fall in price. Because the upcoming consoles are technically similar to PCs, it could be that traditional computers offer more value going forward. “I have been asked about the demise of PC games for over 20 years, yet they are still there. So no, I see no demise,” says video game industry consultant Mark Baldwin of Baldwin Consulting. “The PC is still has a massive user base, and it is still a solid platform to allow cheap entry for exploratory products.”
This year’s E3 proved that there is still very much of a market for some genres. Sega, a company that was once in the hardware console business and now is a cross-platform game publisher, demonstrated its upcoming Total War: Rome II, a PC-only offering that puts players in the role of a general during the era of the late Roman Republic as it transforms it into an empire. If players make the right moves they can even avoid the whole Julius Caesar assassination thing.
In addition Sega offered up the World War II-themed Company of Heroes II, which is taking the series’ tactical gameplay to the Russian Front. Moreover, while shooters and racing games — once almost solely the domain of the PC — have gone cross-platform, the strategy genre remains very much a PC exclusive. “For certain kinds of games the PC is far superior to a console but languishes because no one really markets its advantages as a platform,” says Rob Enderle, principal analyst for the Enderle Group. “It seems a shame because in many ways PCs are a better, in terms of upgradability and range of input, platform for many types of games. These just don’t get the marketing needed to make their case.”
Even in the popular action shooter category, where Microsoft and Sony are looking for exclusive titles to help launch their systems, the biggest titles — such as Electronic Arts’ (EA) Battlefield series and Activision’s (ATVI) Call of Duty — are on PC as well as the consoles. “The PC isn’t cut out of this market at all,” says independent video game analyst Billy Pidgeon. “The PC remains important for these big shooter franchises even as the games grow on the consoles.”
The PC is also getting its own share of exclusives from some smaller developers, and this fall Bohemia Interactive will introduce Arma III, the latest title in its open world tactical military shooter. The Czech-based developer is not alone in sticking with the PC. “In Eastern Europe the game developers continue to lean on the PC,” Pidgeon says. “In certain markets such as Latin America and much of Asia, the PC is going to dominate because of worries of costs of bringing a game to consoles. These are areas where the consoles aren’t likely to penetrate and the PC will remain the dominant platform.”
In other cases the PC could also be a path to the consoles for game developers. Of note is the Belarus-based Wargaming.net, which successfully launched the online free-to-play World of Tanks for the PC and this year announced that the game would soon be heading to the Xbox 360.
The openness of the PC has long appealed to the smaller publishers but this is slowly beginning to change. “One of the huge advantages that the PC had over other platforms in the past was how low the barrier to entry was,” adds Baldwin. “With PC’s there was no manufacturer taking a cut of the product or saying that a product could or could not be published. This allowed both low-budget products and for innovative products that just could not be justified on other platforms. But that is changing somewhat. The manufacturer barriers have been lowered although not eliminated on other platforms.”
The issue could be that Microsoft, which clearly has a stake in consoles with its Xbox platforms may not in the long run wish to see the PC remain a viable game platform in the long run. “Microsoft is trying to create barriers for the PC platform,” says Baldwin. “In the long run it is going to really lower the advantage of the PC platform. Not kill it, but certainly hurt it.”