Wednesday, September 28, 2011

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.


Metaldave said...

It's funny but I can't think of a single time that Pachter has been right this generation. He was screaming Wii HD back in 2009 and while we all knew that Nintendo would release an HD console in the future, it wasn't just going to be a Wii HD. He was wrong. He has also been wrong in projecting interest in Nintendo products in general.

Remember that the 3DS was hyped to the Moon and looked where that got it? The Vita is only getting a little bit of hype but that will not last long when people see that they will need to pay almost $100 for a decent "memory card" and be questioning why Sony doesn't use standard SD Cards....

Unknown said...

I think that Nintendo are in for a rough ride, what with their casual market moving on, but to demand them to leave hardware is a bit extreme.

Nintendo is a cultural phenomenon, much like SEGA was in the 1990s. Their fanbase is enormous and very loyal, and Nintendo CAN adapt if there is a need to do so. Are Nintendo dead? Not a chance! People were wrong about the NES, N64, DS and Wii and they will be wrong again.

Anonymous said...

nintendo is for kids. always has been, always will be.

Biohazard said...


That's nice. Go play your "masculine" games to compensate your insecurities.

Anonymous said...

Too bad he's so darn influential.
Well, not exclusively him, analysts in general.

This gen probably would have turned out a whole lot different if they said it would. said...

Well, I do not really believe this will have success.

fix credit said...

Michael Pachter is a high-profile gaming research analyst for Wedbush Securities.

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ERP Software said...

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RGB said...

Analyst are for stock brokers. Rarely ever right. Not to say he won't be.

Alpha Pat said...

Anyone who thinks Nintendo should go third-party or consider it is a DUMBASS! Yes, I said it, you're a DUMBASS! Name one former first-party company that has ever thrived in being a third-party company. That's right you have none! And if any of you who mention Sega, then you're an even a bigger DUMBASS! Ever since Sega merged with Sammy, they have, so far, created mediocre and forgettable flagship titles (Sonic, Golden Axe) and crappy tie-ins to Marvel movies. Is this the future that Nintendo should be in? Most gamers these days have admitted that Sega is a former shell of themselves, so why is it logical for Nintendo to follow suit? For more egregious examples, take a look at 3DO and Atari. 3DO is dead. And Atari is not the real Atari (it's Infrogames renamed), and they were once trailblazers of the industry!

If Nintendo ever enters into the realm of third-party, they will have no choice but lay off considerable amounts of employees because just creating software won't yield as much revenue as making consoles, which means certain key developers who have helped shape the identity of their flagship titles will be gone! Like Sega and Atari, Nintendo will be vulnerable to takeovers and "mergers," and that means even more people will be let go because the company that owns the Nintendo brand will reconstruct the company according to their business design. You think Miyomoto will last long? The creative medium thrives off of ego, with everyone thinking they have a brilliant vision than the rest. Nintendo's titles will be supervised by people who really don't understand its design principles, and end up like what the Sonic series has become. Just you wait, we will be seeing a Zelda FPS if Nintendo ever makes games for other consoles! Don't believe me! Take a look at XCOM and Syndicate, once great but obscure strategy games that are now turned into first-person shooters. Gaming trends have become so narrow and restricted that developers believe creating first/third-person shooters is the only thing that passes off for a game now. If Nintendo is operating as a third-party, they will have no choice but to follow this! Some of you have complained that there are too many FPS and Call of Duty clones.

So, please, cut it off with this ridiculous mentality, as you are the reason why the gaming industry has become contrived!

credit repair said...

I thought it's already a third party. Legal or illegal... haha

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