There is no doubt that PC Gaming is experiencing a resurgence in popularity since the days of console-dominated gaming, but Valve’s new strategy will single-handedly propel PC gaming into a new age.
In the world of gaming there has been an ongoing battle between console vs. PC for quite some time. The last four or five years have been primarily dominated by console gaming, with many successful console games having origins from PC franchises such as Call of Duty, Grand Theft Auto, Tom Clancy and many more. During this time period, there has been quite a lot of talk about the death of PC gaming and only up until recently, has that talk started to die down.
Part of the reason why PC gaming is not going anywhere can be attributed to games from Blizzard like World of Warcraft, Diablo 3, Starcraft, and Starcraft II, which cannot be played successfully on every platform. These games have millions of players and recurring subscribers which alone demonstrates that there is simply too large of a market for PC gaming to disappear. However, these games lack the graphical output and detail that would put them in a class above and beyond what consoles can provide, a feature that would help them entice a broader audience.
Now, when we talk about Valve, we are talking about a private company, unlike Activision-Blizzard, which is a publicly traded company and has to answer to investors’ concerns. Vale’s private status enables them to take risks and to explore things that they believe are fundamentally necessary to the future of gaming and possibly even the future of mankind (yes, I know a bit hyperbolic). The free-to-play model is becoming one of the most popular models for PC gaming which eliminates piracy of games and increases the possibility of profit through in-game transactions.
Games like League of Legends, Lord of The Rings Online, Heroes of Newerth and Team Fortress 2 are great examples of free-to-play games that enable users to buy items in-game. These in-game items are generally significantly less expensive than game in general, but with more and more transactions, those micro transactions inevitably end up paying for the game itself. The case of Team Fortress 2 is an interesting one because TF2 was not originally a free game, but rather sold as part of the Orange Box or purchased separately. Nevertheless, the game became free-to-play four years after its original release which caused a dramatic surge of interest, and suddenly the game began to make money for Valve at little additional cost.
Valve’s experiment with free-to-play began last year with TF2 and continues this year with two big announcements. The first announcement was that DOTA 2 (Defense of the Ancients) would be a completely free-to-play game. Like many PC games, this game is actually born from a mod of another game called Warcraft 3, a very popular game released by Blizzard in 2002. In addition to DOTA 2 being entirely free, Valve announced a new division of the company that had been quietly in the works for years, Valve Economics. By bringing in Yanis Varoufakis, Gabe Newell and team have shown their desire to focus heavily on the economics of in-game transactions and how they not only affect the overall revenue the game accrues but how they affect the gameplay as well. Because of Valve’s global influence, they had to address complex issues of how to value online currencies differently in different countries and how the transactions would be converted from ‘real’ money. Steam enables users to trade freely with each other, which effectively creates a barter economy of substantial size numbering in the thousands of in-game items.
Building upon Valve’s free exchange model, we see that online users may, in fact, be participating in the purest form of exchange and fundamentally changing the way we exchange goods <http://blogs.valvesoftware.com/economics/to-truck-barter-and-exchange-on-the-nature-of-valves-social-economies/>. As more and more goods become digitally exchanged, there is a possibility that users could start to exchange music and movies for other goods in an online forum of exchange. With money becoming increasingly digital, there is no doubt that we may see a fundamental change in the way that we exchange our goods for money and people interact with others when it comes to transactions. All-digital currencies like BitCoins have shown that this model is viable, and prove that the shift to all-digital money has already begun.
In addition to their digital economies, Valve also announced that their newest installment of their well known Counter-Strike series, Counter-Strike: Global Offensive (CS:GO), would be sold for $15 across all platforms and would enable cross platform play. What this does is essentially undercut the most similar competition (Call of Duty, Medal of Honor, Battlefield, etc.) by selling it for about 25% of the price of those games. Most of today’s current first person shooters sell for $59.99 which I have maintained is absolutely ludicrous. In the Counter-Strike family, the games are all multiplayer with no single player. Single player is something that console gaming made nearly ubiquitous in FPS games. What does all of this mean for PC gaming?
This means that Valve’s business model does not rely upon the game sales alone in order to be successful. Valve cannot and will not hide behind a claim of being a victim of piracy, but rather innovate around it. By decreasing the price of CS:GO to $15 and the price of DOTA 2 to free, they have effectively de-incentivized piracy and at the same time have significantly increased their legitimate audience. By decreasing the price, Valve made CS:GO and DOTA 2 affordable to almost everyone, and as a result of pure economics, their market is expanded. What does this mean? More people are going to buy these games and whenever more people buy a game, computer hardware sales go up, bringing the entire PC gaming industry with it.
There is no doubt that people with old and underpowered computers will buy these two games and likely be happy with the playability they get. However, there is a large audience that will either buy the games for a cheap PC or console, and yearn for the full quality experience, knowing that it is available for a slight increase in investment of their hardware. I cannot tell you how many people I know got into PC gaming at the very bottom of the cost and performance tiers, but eventually got interested enough to start spending more whenever possible to improve their experiences. There is no doubt that these games will be very playable on laptops, even laptops with integrated graphics, but those gaming scenarios will always leave gamers wanting better performance and quality, and that desire will drive PC sales and the PC gaming industry up. This, in addition to the fact that there will not be any new consoles coming out this year or likely during the first half of next year (the Wii U notwithstanding, as it runs on outdated hardware), increases the likelihood that people will start (and continue) to gravitate back to the PC for gaming.
Another aspect of the PC gaming world that most people have long forgotten about is the world of competitive gaming. During the recession, 2008-2010, many advertisers and sponsors of these online gaming leagues discontinued their sponsorship, causing many of them, like CPL, to disappear completely. Since then, the professional world of PC gaming has begun a revival with games like Starcraft 2 and League of Legends. These two games have jump-started the professional gaming circuit in MLG, and with the introduction of CS:GO and millions of new gamers, there will be an even greater audience involved in this digitally powered economy. Counter-Strike was one of the original games that sparked pro gaming circuits, and there is no doubt that its successor will introduce many new gamers to the professional gaming world. We foresee Counter-Strike: Global Offensive potentially driving Counter-Strike franchise sales well into the 40 million to 50 million unit category, if not more, when one considers that CS:GO will be launching simultaneously on ALL platforms.
If people begin to buy games like CS:GO and DOTA2 purely due to the competitive aspects to the game in the hopes of going pro, there is unlimited potential for growth of both Valve and the PC gaming industry. I believe that we are on the verge of a PC gaming renaissance and we are only just starting to see the changes now.