PC Games Face Own 'Doom'

In terms of being a video-game platform, the PC is going the way of the Atari 2600.

Once one of the most popular game machines, the PC is losing ground to consoles, handhelds and even wireless phones. Even as the rest of the industry expands, sales of PC-based games are falling like a rock, dropping 12% last year, for instance, according to research firm NPD.

But while the future is likely to be found in devices like Sony's (SNE) recently released PlayStation Portable and Microsoft's (MSFT) upcoming next-generation Xbox, the PC still represents some 15% of the video-game industry's total sales.

And its decline as a platform could have big implications for companies such as Electronic Arts (ERTS) that drive a significant amount of revenue from PC-based titles.

"It's inevitable that [PC game sales] will go down, but I wouldn't think they would go down that precipitously," said Michael Pachter, an analyst who covers the video-game software industry for Wedbush Morgan Securities. "You want to see everything up. You don't want to see anything down 12%."

Software makers sold about 45 million units of PC-based games last year, tallying $1.08 billion in retail sales, according to NPD. That was down from 2003, when they sold 52.7 million units with a retail value of $1.22 billion. And even 2003's sales totals were down 14% from the prior year, when gamemakers sold $1.4 billion worth of PC titles at retail.

That drop stands in contrast to the performance of console and handheld titles. Retail sales of such games grew 8% last year to $6.2 billion, after growing about 5% in 2003, according to NPD.

The difference is even starker when considering that many analysts had predicted that sales of console and handheld games would be flat at best last year, while the PC game results include several big hits, including Doom 3 from Activision (ATVI) and EA's The Sims 2.