I know I'm "new" here (I've been lurking for years because it's dangerous for my wallet to post on sites like this), but I registered because I've seen a few of these kinds of threads about "competitive" gaming recently. I have played several games at a highly competitive level so I believe I can offer some insight and help people out that are interested in competitive gaming, particularly PC FPS games.
First and foremost, the number one thing you need to consider in your audio setup is what your end goal is. Simple right? Not exactly, let's say you want to be a professional CS:GO player and you've got the talent to make it happen. You go out and get the coolest, fanciest audio setup money can buy and it gives you an advantage over the competition...
That's good right? Well no, actually it's not in this context. See, if you manage to get noticed and picked up by a top online team and start attending LAN tournaments what you're quickly going to find is you *can't use* your fancy audio setup. Not only because they don't allow external hardware, but because the LAN environment means you need noise blocking earmuffs just to be able to hear the game sound/communications at all. That's why you see guys wearing three pieces of equipment (earbuds, noise blockers, headset to use as a mic).
So if you're used to using the fancy setup you're going to have a bad time when put in situations where you can't, which is why you don't see pros sporting fancy audio setups. When gaming events were smaller you'd frequently see pros wearing HD555 cans or something similar, that's basically stopped because blocking outside noise is significantly more important than quality audio. The bottom line is that if you have any desire to compete in LAN events you need to be able to play with garbage sound, and buying or using anything fancy will hurt your chances.
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Alright, so let's assume that your goal isn't to play professionally, because honestly it's extremely unlikely that anyone reading this will ever reach that level. The other thing you need to consider is whether or not you intend to play in a league/team environment or if you are just going to play casually with friends. Keep in mind that the latter doesn't mean you don't take it seriously or that you don't care, it just means that you have more flexibility in choices because of the level of competition you're going to face.
If you think you may want to play competitively in a league/team environment then your focus should purely be on audio quality. Your priority should be on getting a solid pair of HD headphones and a good amp/dac, then you set the audio setting in-game to "headphones" and call it a day. I'll get some flak for saying this I'm sure, but "virtual surround" is absolute garbage for competitive gaming and should be avoided at all costs.
Think about what virtual surround is doing for a second, it's primary function is IMMERSION and not purely positional. That means when a bullet is shot past you it will register first from the direction it came from and THEN the direction it traveled... that's good right? No, at least not for competitive gaming. It's bad because the only piece of information you need is where it came from, anything else that causes even a moment of extra noise can mask other sounds that are critical to winning a round/match.
So that bullet you heard whiz past might obscure the sound of an enemy player hitting the ground after dropping off a ledge, or picking up a gun around a corner from you. That kind of information is often what separates good players from average ones, the ability to isolate and process that into good decisions.
The other factor? Put simply, good players don't make noise where you will hear it. It is far more important to have clear and precise audio so that you hear those little sounds like the examples I mentioned above because those are the only sounds they can't mask in certain situations. In a competitive environment you aren't going to have people running around so that footsteps echo halfway across the map, that's lesson #1 if you want to be a good CS:GO player: walk everywhere when you have time.
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With that being said: if you intend to play casually you can do whatever you want. You want to play around with virtual surround? Go ahead, it's not tied to your equipment and you can always turn it off, the same things that make a good pair of headphones for gaming (soundstage, clarity, accuracy, etc) are also going to be better for virtual surround. So why the big rant above? Because people need to understand the mindset that's best for competition and stop putting so much emphasis on the hardware.
There are *very* few instances where equipment will actually make a difference in your ability to improve (don't confuse that with performance), and off the top of my head the only one I'd single out is your monitor. Which if you're interested in learning about I'm happy to assist, just shoot me a PM or create a thread in the appropriate area and I can explain further.
People in the gaming community these days are like lost sheep, they complain about "smurfs" and "hackers" and blame their gear/settings/teammates for their performance. The fact of the matter is that these games aren't great audio sources, it isn't like listening to the highest quality audio recording of a live orchestra where you can pick out the subtle differences with the right setup. It's primitive, it's fast, and it's primary purpose is to convey information and not feeling.
If you want to play a single player AAA game - go ahead and enable and configure 3D and immerse yourself, at that point you're playing for the experience just like you would if you were listening to a concert or watching a movie. Competitive gaming is a different beast, you're in it to WIN and winning is a lot more about your mindset and your ability than your gear setup. I *love* my HD650's, and I definitely hear more clearly with them when I'm gaming so it helps me in that respect...but it isn't because of better positional sound or virtual surround or anything else. It's just that they are better headphones that produce better sound and with my experience it makes it easier to differentiate sounds and what they mean.
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Sorry for the long post, I've just seen a lot of recommendations floating around from people who are really caught up in the equipment hype and it reminds me of the golf forums I frequent. A lot of people talking about what kind of clubs you should play based on handicap and how this or that will make you better, it's all rubbish. What makes you better at golf is talent, focus, determination, proper instruction and good practice habits. The same is true when it comes to competitive gaming, don't get too caught up chasing some miracle solution to make you a better gamer because it doesn't exist...
Disclaimer: these are entirely my opinions, I don't claim to know everything and you are welcome to disagree. I often use strong language as a means of conveying emphasis and you shouldn't take everything I say literally, if you do we're going to have a bad time.