Games/Interactive

Virtual reality (VR) and eSports are among the key trends driving growth in the PC game market. But it’s still early on for both sectors and most content providers haven’t found a way to achieve success with them yet. That’s according to comments made by David Cole, CEO of game research company DFC Intelligence, in an Aug. 10 webinar on the global PC game market.

There’s been huge growth for eSports especially in Asia, he said. But the main challenge facing game makers participating in the eGames sector is that games “need to be successful already before you can start having a big eSports component around them,” he said, adding: “eSports is definitely growing, but it’s really unfortunately limited to a handful of the bigger games that are going to have the most success in this area.”

VR, meanwhile, is “really lifting the whole game space on the PC side because what it helps drive is people buying … high-end PC hardware that can play the virtual reality content,” he said.

But “right now we’re just in round one” for VR, he said. “We think there’s going to be some type of disappointments, especially among content providers, about how much money they’re making off of their titles. But really it’s just getting started,” he said.

Niantic’s “Pokemon Go” has found a great deal of success with its use of augmented reality. But that game is “definitely not the type of game that’s well-suited for the PC platform because it’s very much a mobile platform” title, Cole said.

But he went on to say “Pokemon Go” is the type of content that “kind of helps prove the overall excitement in the space and hopefully it will lift all boats and not just the mobile augmented reality ‘Pokemon Go’ knockoffs that we think are going to come.”

The global PC game market is expected to grow from about $30 billion in 2015 to more than $40 billion by 2020, according to DFC. That growth is expected to be “across the board in all major markets,” Cole said. DFC said in a news release that it expects the largest growth will be in Asia and emerging markets, but said the established markets in Europe and North America are also seeing “strong growth driven by high-end games, virtual reality systems and the emergence of eSports.”

The Asia-Pacific region is “far and away the leader in PC games, driven by China,” Cole said. But there is also “healthy growth” being seen in all major markets, including North America and Europe, along with emerging markets including the Middle East, he said. The PC is the main “large-screen platform” for gamers outside of North America and Western Europe, where consoles still dominate, he said.

There are an estimated 1.5 billion consumers who play games globally and about 1.1 billion of them play games on PCs, Cole said. But “there’s a great deal of overlap” across platforms and the “core user base” is made up of about 300 million consumers who tend to be people who play games across multiple platforms, he said.

Games in general are a key driver of the growth being seen in PC hardware spending now, he said. And there’s tremendous “diversity” being seen in the type of consumers playing PC games, the type of game content being played on PCs, and the business models used for them, he said.

The freemium business model in which consumers subscribe to play a game online at no cost but pay for extra features has been a “major growth area” for the past 10 years, he said. That model emerged in Asia, but has expanded globally, he said. Digital distribution in which consumers pay to download a game is not as popular globally as subscription online usage, although digital downloading is still the most common model in North America and Europe, he said.

“A lot of the focus” when it comes to interactive games now seems to be on the console and mobile platforms, but “what we’re seeing is really the PC is kind of the core gaming platform for much of the world,” he said.

There is a “major gap” between large games with “huge budgets” and much smaller games with limited budgets, he said, adding distribution is the “key to success” for game makers. Valve’s Steam digital distribution platform has been a “huge driver” of growth for pay-to-play PC games, he said. But it’s “becoming more and more of a challenge” to get good distribution for a game, especially for independent developers, he said, calling it a “major challenge” for companies to get noticed even if they get distribution via Steam.

Adult consumers today grew up owning PCs as a kid and now they are growing up and buying high-end PCs to play games on, he said, adding these new consumers are willing to spend money on high-end hardware.

Microsoft had a huge influence on the PC game industry starting with the early Windows operating system, but the company shifted its attention to console gaming with the Xbox, Cole said. Windows 10 represents an effort by Microsoft to focus more on PC games again and titles are now being released that can be played on both Windows 10 and Xbox consoles, he said. There is some “concern” that Microsoft is going to try and “take control of the ecosystem” around PC games, he said, but added those fears are likely “unfounded because we think the market is fairly mature now and Microsoft is fairly late to the party, and we don’t see PC games as a major focus for the company.”