It sounds scary, to think that PC gaming, gaming on the thing you're reading this from (unless you're on a phone... but I digress) is dying. But is it really?
Around this time last year, a group of companies formed the PC Gaming Alliance, a consortium that was tasked with saving our beloved PC gaming industry. But it's not something that can be saved like that. There's no silver bullet that's going to "save" the PC gaming industry. But what if the industry doesn't need saving? What if it just looks like it's dying, but it's not? What if it was always this bad?
Obviously developers and publishers have forgotten about PC gaming. The golden age of PC gaming was back in the 90s, with games like Grim Fandango, Wing Commander, X-COM, and many other games that many regard as the pinnacle of gaming, and it best describes gaming as a passion, and something we enjoy. But ever since consoles were considered the best way to sneak gaming into the living room and to make a ton of cash from peddling games, PC gaming is seen as an afterthought. Anyone who plays Madden, NHL, etc. on PCs will find they are the PS2 ports. Why is that? We probably have a better system than any of the consoles. Why should we get shafted and be forced to play the watered-down version of a game, while 360/PS3 players are enjoying their fully-fledged version of the same game?
Obviously, this isn't the game plan for everyone. There are still many companies that deal exclusively with just PCs, but this is slowly diminishing. But the companies that still deal with PC games, we are loaded with tons of DRM. We're being treated like second-class citizens. Street Fighter IV still hasn't arrived for the PC, and it took months until Mirror's Edge finally came out for the PC. And don't even get me started about GTA 4.
PC gaming just isn't what it used to be. Every person who wants to be a "gamer" just buys a console to twitch and trash-talk. So please, developers and publishers, PC gaming isn't dead. But it's dying very slowly, and you guys are really good at making it sound like it is.

Maybe it has to die in order for it to live again?
The state of PC gaming is in a shambles. You have publishers jumping ship to consoles because they see consoles as an easy way to avoid piracy. Developers are going to console because I bet they are sick and tired of worrying about which piece of obscure hardware they are going to have to support. Consoles are most likely easier to develop because an XBox 360 is always going to have the same parts whether it is an XBox in the UK or in Japan.
PC gaming used to be king in the gaming world. The games were not dumbed down for the masses. The hardware was far, far superior to the consoles. Now, the consoles are catching up and surpassing some base-line PCs. PC gaming is dying but it is a slow and lingering death as the indies are desperately trying to keep it alive.
Thanks consoles for lobotomizing our hobby. At least we have GOG for the better games to wait for the flatline.

no.

PC gaming is certainly not dead, not even close.
In my opinion, nothing can emulate a mouse and keyboard. The Wii is the closest thing that comes to mind, but it still is not close to how precise a mouse is.
RTS, MMORPG and FPS are still best played on a PC and will be for a long time coming.

Plus, thanks to digital distribution - indie gaming has really taken off. Even if we see an end to the really massive mainstream titles, doesn't mean indie developers will stop making great stuff.

It worked last time. We're living the second coming as we speak.
PC gaming will survive everything. Its had ups & downs before and always came back strong. Consoles are popular and always will be, the downside now is consolidation of developers. In the old days the game developer roamed the plains wild & free, grazing on the tasty grass of independance. Gradually one got bigger than all the others and got hungry for the forbidden fruit of other grass eaters.
Over the course of years, the one big one kept eating and eating, the number of free programming teams diminished through a combination of dropping out of the industry and projects requiring vastly larger teams and so there were projects that never got developed because there simply weren't the staff for them.
The cost of larger teams meant that the projects were automaticaly more expensive and the risks for undertaking them that much higher which leads to executives clucking their tongues and worrying about the bottom line because its harder to write off a loss when its so large. The solution is to LCD everything, developing for the lowest common denominator means a greater chance of leaving a large number of people a bit disappointed rather than passionately exciting a far smaller number, economically speaking the latter makes no sense (its exactly the same reason that TV is a pile of shit).
There's only 2 real solutions to this that I can see. First is to hope that middleware becomes vastly more popular. If, for example, Epic sell a physX enabled Unreal 3 engine construction kit then smaller developers don't have to worry about building everything from the ground up, letting them focus on making their games unique & interesting. Likewise if Telltale games released thie Telltale Tool for licencing, then we might see a rennaisance in small adventure game development.
The second option is the death of the giants and the rebirth of the indeps. If EA and ubisoft were forcibly split up (as they're pretty close to monopolies) and returned to publishing other companies games rather than making their own and buying studios, we'd hopefully see a return to the halcyon days of numerous small developers taking on lower budget, somwhat risky and ambitious projects. Sure some failed miserably but many succeeded and manage to survive.
The PC has one major advantage that no console can match, we'll always need PCs and as long as something exists for business reasons, there'll be SOMEONE trying to make pacman run on it instead of doing real work.

Good ol' Indie games, I had good times with World of Goo on Steam.
And that bring me to another point. Steam, Steam, Steam... Definitely one of my favorite digital distributors and Valve which is one of my favorite game companies.
With a company with Steam selling computer games digitally, I really don't see how anyone could say that PC gaming is dead. Steam provides hundreds of games and makes it ridiculously easy to get games, similarly to what GOG is trying to do except for more modern games.
As Aliasalpha said, PC gaming will survive everything.

And one of the major causes of the "PC gaming is dying" issue. Unless things have changed since the last time I looked this up, the figures that cause this hysteria are based on the NPD sales figures and unless I misread the description I saw a while back, they don't take into account digital distribution & MMO subscriptions. That means that GOG, Impulse, Steam & the trillions of WOWslaves are off the sales charts. My god, they're not showing up in the sales figures yet people are playing them! You know what that means? PIRACY!!!!!!!!!!!
PC gaming isn't dying, its evolving.

Very ridiculous that people try and say that PC gaming is dying due to NPD sales figures.
And yes, I agree that it is evolving. Just as we went from floppies to CDs, now we're going from CDs to digital distribution.

Its not ridiculous at all when you consider the entire industry looks at NPD's figures to help determine things like annual budgets. Despite the fact that they do not track digital distribution at all, NPD is still considered the source for information on the state of the gaming market.

People have been talking about PC gaming being dead or dying since at least the birth of the PlayStation. Unsurprisingly, it hasn't happened (see attachment). The PC is where the real innovation and growth occurs, and this will continue to be the case.
It isn't that PC gaming has become less popular, it's that consoles have become more popular. Because of this, some developers choose to throw in their lot with the consoles because they can potentially sell to more people. Despite this, the PC still has a lot of impressive titles, a good portion of which continue to be exclusive or are significantly better on the PC (even if the PC version is delayed).
What we have seen a lot more of is consoles becoming more and more like PCs. The Xbox 360 has online multiplayer, messaging, HD resolutions, and even runs DirectX, things which were exclusively the domain of the PC only a short time ago. As Microsoft continues to standardise PC gaming via the Games for Windows initiative (ensuring universal support for gamepads, widescreen resolutions, etc.) it may be that a console will eventually be released that actually is a PC.

Not by a long shot, everything that's been said so far in this topic is true. The landscape has simply changed.

I'm not saying that it's ridiculous that people look to NPD as the source on the state of the gaming market.
I'm saying it's not fair to base the assumption that PC gaming is dying on NPD sales figures.

I've never understood this concept. There are tens of millions more PCs in use today than there are consoles. Within the next year or two, the number of active PCs in the world is supposed to speed past the billion unit mark. All of the consoles in the world combined can't even approach that mark, so how can they possibly expect to potentially sell more on the console than on the PC when the PC has much greater potential in numbers alone?