Pachter: Nintendo should become third party

Market analyst Michael Pachter (Wedbush Securities) has suggested that Nintendo should consider licensing their intellectual property like ´Super Mario´ and ´The Legend of Zelda´ to rival console makers, as well as tablet and smartphone manufacturers and providers.

Pachter said this in an interview with me the day before yesterday and he reiterated his point during the market analysis panel at Gameplaces International in Frankfurt yesterday. Alongside Pachter, Jesse Divnich from EEDAR and Peter Warman from Newzoo took part in the 90-minute discussion, hosted by myself.

Paraphrasing him, he noted that there were no more blue oceans for Nintendo to discover. They got lucky with the Wii, he said. Now, though, the company would have to face direct competition in what he called a red ocean full of sharks and they were sure to lose such a battle. He also noted that he did not view the Wii U as a next generation console, but simply as an HD-capable Wii, which merely catches up with Xbox360 and PS3. As such, Pachter said, it will arrive two years late and likely suffer from a similar lack of software as the 3DS did - and still does. In what was a lively and often entertaining discussion, the charismatic Pachter also noted rather modestly that he was "often wrong, but never in doubt."

His colleague Peter Warman appeared to disagree on the issue of Nintendo. Slightly exaggerating his point, he noted that market analysts are the single reason why Nintendo is struggling at the moment. Investors rely solely on their market data and vision on the future of games. And on many points analysts views are exact the opposite from those of Nintendo, or at least Nintendo's CEO Satoru Iwata.

Warman believes the challenge of Nintendo is not as much battling the other console manufacturers but competing against the long list of companies and investors lining up to take the cloud, browser and app gaming experience to the TV screen. And casual games will go first, taking a stab directly at Nintendo's core business. And because of Nintendo's very early announcement, Nintendo has provided Apple the opportunity to announce their Apple TV on the same day the Wii U launches. After all, Apple launched the iPad 2 on the same day as the 3DS. That was no coincidence.

"Games are no longer products but a service," Warman added. "A service you take across the various screens you interact with and a service that keeps evolving ensuring never-ending engagement and entertainment. A service allowing you to pay an amount of money that suits your budget and suits the kick you get from playing it."

When the discussion moved on to Sony, Jesse Divnich said that the Xperia Play was, again paraphrasing here, dead in the water. He questioned why Sony Ericsson was in charge of the device and not SCE. There was no reason to even talk about it, he asserted. The Vita, however, received almost unanimous praise by the three analysts. They were getting enthused about the hardware and the relatively low price tag. Further entries in the home console arena, Michael Pachter asserted, would not launch before 2014, though.

EDIT I misrepresented Michael Pachter's opinion and I apologise for doing so. Michael clarified his stance thus:

I said that they must consider supporting other platforms with their software, but didn't mean to suggest that they must get out of the hardware business altogether. I merely believe that they can no longer command the prices and market share from their hardware that they have enjoyed in the past, as competition is eroding their advantage.