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Sales of Games for PCs Take Hit

Weakness is attributed to a surge in purchases of GameCube, Xbox and PlayStation 2 consoles.

January 27, 2003|Alex Pham | Times Staff Writer

Even as the video game industry broke sales records in 2002, the popularity of computer-based games fell sharply.

The number of computer games sold last year in the United States slipped 10% to 58.9 million copies, and retail sales totaled $1.35 billion, down 5% from 2001, according to a report set to be released today by market research firm NPD Techworld.

By contrast, sales of console-based games surged 21% to $5.5 billion. That doesn't count the $3.7 billion consumers paid last year to buy the consoles themselves, including Sony Corp.'s PlayStation 2, Microsoft Corp.'s Xbox and Nintendo Co.'s GameCube.

Part of the blame for weakness in PC games lies with the success of the console market, which has siphoned off consumers and snagged much of the media and marketing attention in the last two years.

"PC games have felt a good deal of competitive pressure from the console side of the business," said Steve Koenig, senior analyst for NPD in Reston, Va. "Consoles today have many of the same features that only PCs used to have, in terms of graphical quality and the ability to go online."

Last year, for example, Microsoft and Sony launched online networks for their consoles and published a number of games with online features.

For David Tseng, a 25-year-old computer programmer and avid gamer, consoles are a no-brainer.

"There's no need to upgrade drivers or download patches," Tseng said. "Plus, it's more fun to be in front of a TV environment."

PC games tend to be solitary pursuits, with the social elements coming primarily from online play. But consoles, generally installed atop the living room television set, invite multiple players.

That's something Tseng took advantage of recently when he invited three friends to his Culver City apartment to play Xbox games "Halo" and "Dead or Alive 3."

Still, Tseng, who has played video games since he was 8, is unwilling to abandon PC games. "There are some games that just play better on the PC," he said.

Those tend to be shooters, role-playing and strategy games that require either complex menus or accurate aim.

"While consoles will nibble at the PC market, they won't take over the PC market," said P.J. McNealy, analyst with Gartner Inc. in San Jose. "The PC gaming experience is fundamentally different. There are still games where you will need a keyboard and mouse."

Top PC sellers last year included "Warcraft III: Reign of Chaos," "Medal of Honor: Allied Assault," "Age of Mythology" and "Neverwinter Nights" -- all elaborate, in-depth games that require a high level of control.

At the other end of the spectrum, simple games such as "Rollercoaster Tycoon 2" and "The Sims" also sold well last year. This suggests that the PC games market is splitting into hard-core, predominantly male gamers on the one end and extremely casual, young players on the other.

"The middle of the market for PC games has disappeared," said Ariella Lehrer, chief executive of Legacy Interactive, a Los Angeles PC games developer that's now expanding into console games.

PC game sales, analysts note, tend to decline in the years following the introduction of new consoles; both Xbox and GameCube were launched in late 2001. As the consoles lose their status as the hot new product, PC games typically pick up again.

That's why game publishers aren't writing off their PC business despite the sales slump.

"We think solid market share on the PC will provide good insulation against ebbing console revenue, and we expect this to happen in late 2005 or early 2006," said Jeff Brown, spokesman for Redwood City, Calif.-based Electronic Arts Inc., which publishes "The Sims" and has 25% to 30% of the PC games market. "There has always been a good business there and always will be," he added.

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