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All PC game developers stop making PC games because everybody is addicted to Warcraft 4, Starcraft 2, Diablo 3, WoW, and Blizzard's next MMO.
I can see a RAGE of FIRE and BRIMSTONE falling from the SKY... oh wait you wanted gaming predictions... um... let's discuss this as if we won't be living in a Mad Max/Fallout type of world in ten years...
1.[consoles] Nintendo corner the casual market, introducing a higher spec Wii2. MS release the xbox540 and steal the majority of the "hardcore" market, Sony wait too long to release a new console after the PS3 and go the way of SEGA.
2. [PC] Less "AAA" titles are released on PC - and those that are released arrive 6 months to a year later than on consoles. Due to the "dumbing down" of AAA releases, PC gamers don't care.
3. [Piracy] Piracy is still rife, on all systems, and the movement of new consoles to a PC-lite approach only increases the problem for console developers. The PC is no longer the realm of crazy DRM schemes, the consoles are.
4. [MS] Microsoft actually make a decent operating system with Win7, and gain some credibility back. The backwards compatibility makes the PC continue as a viable gaming platform for anyone who appreciates older titles.
5. [development] For a variety of reasons, graphical advances slow down to a trickle, helping rid the PC of it's "upgrade every 6 months" image issues. This also allows smaller developers to compete with the big players on a more level playing field. Developers have to start advertising more than just good graphics to sell games, pushing some to make masterpieces, while others make gimmicks.
What? Someone said anything, ever? What are computer games? Who am I? Where am I? What am I doing here? Where's Weclock, not doing THIS?
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michaelleung: So... you can FEEL a change? I do too, when I'm on the shrooms.
I see PC gaming on the street, asking for change and homeless in ten years.
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captfitz: i'm not sure whether that's a more evil picture than your last one... it's hard to beat cheney

I don't think you can beat Cheney... he's almost the embodiment of evil... aside from Satan himself of course.
5 years from now...
Stardock and Valve merge.
Impulse and Steam merge into Impulsive-Steam.
Will use Impulse's GOO.
Half-Life 2: Episode Three still NOT released.
Left 4 Dead 2 announced -- and will be twice as short.
Duke Nukem Five to be developed by Remedy Games for Take Two.
Alan Wake still NOT released.
Apple-EA-Bioware announce Mass Effect 3.
CD Projekt announces The Witcher 3.
GOG is still DRM-free.
Richard Garriott buys rights to Ultima series and releases them all on GOG.
Atari announces that Obsidian will develop Baldur's Gate 3.
Current format for all games will be Sony's Red-Ray.
Fable 3 for X720 and Black & White 3 PC announced by Lionhead.
Post edited May 11, 2009 by MysterD
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MysterD: 5 years from now...
Stardock and Valve merge.
Impulse and Steam merge into Impulsive-Steam.
Will use Impulse's GOO.
Half-Life 2: Episode Three still NOT released.
Left 4 Dead 2 announced -- and will be twice as short.
Duke Nukem Five to be developed by Remedy Games for Take Two.
Alan Wake still NOT released.
Apple-EA-Bioware announce Mass Effect 3.
CD Projekt announces The Witcher 3.
GOG is still DRM-free.
Richard Garriott buys rights to Ultima series and releases them all on GOG.
Atari announces that Obsidian will develop Baldur's Gate 3.
Current format for all games will be Sony's Red-Ray.
Fable 3 for X720 and Black & White 3 PC announced by Lionhead.

Bethesda announces Fallout 5, shortly after releasing TES V's second "retail" expansion. classic Fallout fans everywhere groan AGAIN. Self proclaimed "real" Fallout fans (I.E. Fallout 3 and beyond) rejoice, as do Bethesda fanbois.
Blizzard releases the expansion for Diablo III, and announce their next two titles: Starcraft III and The Lost Vikings Ride Again. Blizzard fanbois everywhere have to replace their shorts.
while Valve has not yet released Halflife 2, episode 3. They HAVE released Portal 2, Team Fortress 3, and announced 4, and are rumored to be working on the HalfLife RPG. This rumor is actually part of an elaborate April fools prank.
By popular demand, with large amounts of funding, the guys from Troika get back together and produce a sequel to Arcanum (due to the ever increasing popularity of Steampunk). Sadly, they succumb to the industry pressure to make it a Western RPG, the game sells incredibly, fans of Arcanum decry it as horrible, while the modern schmuck gamers proclaim it as pure awesome ungodly superb. the truth lies somewhere in between. (like Fallout 3)
This leads Troika too rise as another power player in the industry, something like Blizzard. In about 5 more years they have 3 more titles, including Arcanum Online.
Derek Smart dies of heart failure. World rejoices.
Tricky to see, the future is...
Considering the BIG fall in sales of desktop PCs, the recent fall in sales of laptop PCs, and the fact that many people aren't upgrading to new operating systems, its possible things might get kind of stuck.
That said, netbooks are going great right now. They aren't that powerful, but they'll probably soon catch up with other PCs. But even with increasing tech, i think the pace might be slower... with CPU and GPU power increases leveling off.
In which case i'd say the big advances are gonna come on the server/internet side. If it works (and thats a big if) something like OnLive would totally change the way we play.
You could play any game, on any PC, pause it at any time, start it again on another PC, and be fully linked in to a LIVE/Steam/Facebook style system with all your friends.
If OnLive actually works i see everything going towards a rental/subscription type service.
Even if onlive doesn't work, i think networks, social gaming and shifting as much of the processing into the cloud is likely to be the big advance.
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Other possible advances include proper 3D (using tech like in recent digital 3d movies, already coming to the PS3) and interface enhancements. (Wiimote style, image recognition, touchscreen).
I guess the other way it could go is with settop boxes or digital tvs including web browsing, webcam, video games (via onlive, or built in PS4/720 chipsets), etc.. and rendering home PCs rather irrelevant.
The other possible wildcard is Linux, whose popularity seems to be increasing, meaning an increasingly fragmented pc userbase between win95, 98, XP, Vista, 7, OSX, Linux, etc..
Tricky to predict the effects of that.