The PC Gaming Industry’s Incredible Comeback?

Jon Peddie research has just capped off a five year study of the sales, profits and strength of the PC gaming hardware market. According to the research firm, which specializes in graphics and multimedia studies, the PC gaming industry is looking stronger than the console gaming industry, despite the current recession. Over at Macworld they’ve taken the study at face value, but some might find it a bit hard to take seriously.

It is widely advertised that the videogame industry seems to be recession-proof. While most people have cut back their spending on indulgences like vacations and eating out, the desire to satisfy the videogame indulgence is almost as strong as ever. Overall sales of videogames and videogame systems have only seen a relatively small drop compared to the significant hit that other industries have taken.

The strength of the videogame industry is not news to most people, but Jon Peddie research has thrown a bit of a curveball regarding this trend. According to their latest study, PC gaming hardware sales are holding up better than console sales.

This may come as a surprise to some people. While PC gaming will always be a strong industry, the release of next-gen consoles like the Xbox 360 has put a serious dent in PC gaming’s chunk of the market. Gone are the days when the PC had an exclusive claim to the best graphics, online play, and genres like the first-person shooter. Nowadays the console provides just as impressive HD graphics, online play, and much more affordable prices than the PC. If anything, many people would find reasonable the claim that the PC gaming industry has been losing steam compared to the booming sales of the console market.

So what exactly did this study find that has so defied our expectations? According to its own site, The Jon Peddie study is a:

unique analysis that does a bottom-up forecast of systems based on GPU and PC shipments, and a macro-economic top-down forecast based on the eco-demographics which covers 36 countries.

Oh. Okay.

There are at least a few hard numbers given by the study firm. According to the site, PC hardware sales only dropped from $20.07 billion to $18.65 billion in 2008, and the study’s forecast for 2009 predicts only a $1.4 billion drop, which is less than the forecast for the console market. According to Jon Peddie research, this shows the value customers place on the product.

Fair enough. But how did they come up with the numbers for this study? This is where things get a bit muddy. According to the study’s site, console sales include money spent on consoles, accessories, and a factor for HDTVs to play the consoles on. Likewise, PC sales include money spent on PCs, accessories, after-market add-ons, and a percentage for a monitor, since the same monitor might be kept through the life of more than one PC.

Right off the bat a couple of things about the study’s use of factors and percentages demand looking into. How much is the factor for an HDTV compared to a monitor? How many accessories are presumed to have been purchased for an avergae gaming PC compared to a console? How much after-market modification do they assume someone does to their PC? If the percentages for a PC monitor are higher than for and HDTV without good reason, for example, then the numbers could be heavily skewed; a small percentage multiplied over millions and millions of sales will add up to a very significant difference.

The study’s unexpected findings are made even more incredible with a forecast that predicts that PC gaming sales will reach $30 billion in 3 years. Despite the current recession. And despite the fact that PC gaming hardware has caught up to the demands of most games and most PC gamers don’t need or want enough super-cutting-edge hardware to warrant such a massive boost in sales. At least some people might think this, without having a look any real hard numbers related to the PC and console gaming industry.

Unfortunately, there are no readily-available hard numbers, and also no answers to our questions, because the specific details of the study are not open to the public. All we are given is a somewhat half-hearted attempt at an explanation for PC gaming’s supposed market strength. Jon Peddie Research states that:

The conclusion the researcher at JPR have come to is that people are staying home more, less movies, less dinners out, postponed vacations, and turning to other forms of entertainment. PC Gaming is a very economical form of entertainment, a $50 game can provide hundreds of hours of play, and it’s not uncommon for players to replay a game. Also, purchases of a PC for gaming can be shared since the machine can be used for watching (and creating) videos, as well as office work and web browsing, something consoles can’t offer.

But this is a bit of a non-answer. A $50 dollar console game can also give hundreds of hours of play and replay. Further, consoles can and are used for watching movies. My household has all but written off the DVD player, opting instead to watch movies through the Xbox 360. Finally, gaming PCs being used for office work and web browsing does not account for sales of things like gaming accessories and high-end graphics and memory sales; any PC can be used for such things, and PC gamers are not going to spend more on gaming-related hardware as a result of their computer being able to do word-processing.

Overall, this study seems to hit us with some counter-intuitive conclusions. The signs are out there for anyone to see: console games are more popular, affordable, and powerful than ever, whereas PC gaming has fallen from its former days of gaming supremacy. Yet JPR’s study apparently found otherwise.

Is JPR’s study skewed towards giving the PC gaming industry a favourable look? Were more accessories and costs figured in for PC gaming than console gaming, and was there justification for such a choice? It would be nice to see the details of the study and find out, but unfortunately a copy of it costs $5000.

If consumers are willing to pay a price like that for a JPR study, then apparently the PC gaming industry isn’t the only one doing unexpectedly well.