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Analyst predicts 20M people will abandon gaming PCs for *checks notes* 'TV gaming platforms'

Pixabay via RPF70. Click for original.

(Image credit: Pixabay)

Don't look up, PC gamers, because the sky is falling (again). Right on cue, a new report by Jon Peddie Research (JPR) notes that the "PC market continues to decline," and though gaming has traditionally bucked this trend, powered by the best gaming PCs, the research firm forecasts that as many as 20 million PC gamers could defect to "TV gaming platforms," otherwise known as game consoles, within the next three years.

Excuse me while I avoid pressing the panic button. Before I mash the escape key, though, I'd like to talk about the report. There are some interesting nuggets contained within it, such as the prediction that the bulk of those defectors will come from low-end builds—ones that cost less than a grand. Why? JPR points to improvements in TV displays and console semiconductors, and console exclusive games.

This will also affect the ranks of the mid-range and high-end PC gaming populations, just to a lesser degree, according to the report.

"The PC market continues to decline because the innovation that took place in the past providing speed ups and clever new things has all but stopped, plus the product introduction times are stretching out to four years. This is not a panic situation and the GPU market still generates incredible volume. However, there are forces at work that we predict will drive some of this business toward TV displays and associated gaming services," Jon Peddie said in a statement.

Of course, this analysis ignores the fact that a PC can be connected to a TV. It's why Steam has a Big Picture mode, and let's not forget that Nvidia and its hardware partners are embracing—and not running from—the living room with BFGDs (big format gaming displays).

Those are expensive though, which brings up another counter point. If display technology is the driving force, it seems to me that a high resolution monitor with a fast refresh rate and other bells and whistles is a more attractive proposition than a 4K television, many of which are still cruising along at 60Hz (there are exceptions, though you'll inevitably pay more for a true 120Hz TV). And for those who are willing to pay big bucks for a display, there is no shortage of high-end gaming monitors to choose from

I don't want to get stuck on that point, though—there's more to digest. According to the report, Moore's Law is all but dead.

"No longer can the processor builders count on shrinking transistors every 24 months and either doubling performance or reducing costs. Product cycles will stretch to four years or more. The high-margin high-end segment will feel the pain the most," JPR says.

This is somewhat true, but with important caveats. For one, today's processors offer developers untapped potential in the form of additional cores and threads. AMD deserves credit for pushing 8-core/16-thread chips into the mainstream, to which Intel has responded. I'd counter that doubling the number of transistors every two years is not critical to PC gaming, or as critical as it might have been in years past.

Perhaps more critically, the same issues affect console gaming as well. Today's consoles are more PC-like than ever, and that's not changing. We already know that Sony's PlayStation 5 will feature an 8-core Ryzen processor with Navi graphics. That's going to give the console a big boost in performance over the PS4 (along with other key upgrades, like SSD storage), but by the time it comes out, we could very well see 12-core and 16-core processors pushed down into the mainstream.

Nevertheless, JPR is convinced that PC gamers are on the cusp of an exodus of sorts. In addition to consoles like the ones offered by Sony and Microsoft, JPR sees cloud gaming devices (eg, Google's Stadia) pulling PC gamers into the fold.

"We are observing a higher percentage of low/mid-range PC products sold because of the consumer’s intent to use with games. This, unfortunately, does not generate more volume but does guide research and design as well as marketing investments for hardware providers and foreshadows the ultimate use model of the PC, a desktop ergonomic gaming/computing environment that embraces user choice and customization. Gaming services used with TV displays, whether local or cloud-based, will absorb PC defectors and likely flourish with new entrants. In the next five years, we will see potential customers with access to TV gaming swell by hundreds of millions," said Ted Pollak, senior analyst, gaming industry at JPR.

Take the guidance with a grain of salt, though. From our vantage point, PC gaming is growing, not shrinking, with increased interest from the industry at large. Microsoft, now a trillion dollar company, has made gaming a point of focus in Windows 10. But it's not just Microsoft.

WePC has some interesting figures on the subject, which show the value of the PC gaming market steadily increasing since 2011. And according to a January 2018 survey by the Game Developers Conference, 53 percent of the 4,500 game developers who participated said they were, at the time, making games for the PC or Mac, versus 27 percent for the PS4, 22 percent for the Xbox One, and 3 percent for the Switch (which at the time had not yet been released).

I also reached to some boutique builders to see what kinds of trends they may have noticed, and if they share the same outlook as JPR. Not surprisingly, they don't. Xidax founder and chief marketing officer Zack Shutt is of the opinion that "PC boutiques are positioned perfectly to grow with the expanding streamer and content creator audience."

"Just as gaming in general is expanding to a much broader demographic, the enthusiast niche is expanding as well. We’ve felt that growth at Xidax as we continue to expand and post impressive year-over-year growth numbers. It’s been fascinating to witness that growth here at Xidax as we look forward into the future of PC gaming," Shutt said.

Maingear CEO Wallas Santos shared a similar sentiment. He said this kind of reaction by market analysts "always happens every time a new console gets announced."

"Consoles always get a big boost on launch and historically always tend to flatten out after a while. Gaming PCs will always have the bleeding edge technology, providing a superior gaming experience. Companies like Maingear who cater to the higher-end part of the market should be OK. Companies catering to entry level gaming PC buyers away get hurt a little during a new console launch. And let’s not forget we have some heavy-weight contenders (Intel) coming into the GPU space which will help drive innovation for PC gaming," Santos said.

None of this is to say there won't be considerable excitement when the PS5 and the next Xbox come out, as Santos alludes to. But just as tablets didn't kill off PCs, as some analysts anticipated, I don't think we're going to see tens of millions of PC gamers flock to consoles in the next few years. It's also important to remember that it's not necessarily one over the other—20 million PS5 sales does not equate to 20 million defections. Just as likely is that most of the initial buyers will be coming from the current generation PS4 and Xbox One.