Michael Pachter, analyst at Wedbush Morgan Securities, believes that Sony is going to face an uphill battle in launching their rumored PSP2 system. In the latest episode of his Pach Attack show at Gametrailers, Pachter said that the handheld market is about to hit a saturation point.
“We’re way approaching saturation on the handheld market,” he said.“We’re starting to see DS hardware sales crack, I think the big woody of the iPod Touch is cutting into the handheld market, I think the PSP is dead on arrival and I think the PSP2 is going to be dead on arrival. It looks to me like young kids are just as happy playing with an iPod Touch or a Nano.”
Luckily for Nintendo, Pachter think the 3DS will do well initially, but the cheaper software on the iOS devices will draw children and parents back eventually.
“The 3DS will prolong the handheld market for the game manufacturers, but ultimately, I think handhelds are in trouble. I really think as the iPod Touch gets more and more powerful, you’re going to see a lot of free games over there,” said Pachter. “What’s the difference if you play Tetris on an iPod Touch or on a DS? Well, you pay a buck on the iPod Touch, you pay $20 on the DS. Parents prefer $1 or free software, I think the iPod Touch is going to sell really, really well. So, after the 3DS has had its little rush I think the handhelds will continue to decline.”
Can no one stop the iOS juggernaut?
9 Comments
December 6, 2010
If Industry Gamers is a serious site then you should ask the question as to whether there is a business relationship between Michael Pachter / The Pach Attack show / and Microsoft?
When presenting the show, Pachter has exclusively Xbox 360 merchandise on display in the background.
December 6, 2010
Doesn't the 3DS support downloadable software? If they were really smart, both the 3DS and the PSP2 would heavily support their online marketplace, and model it similarly to the iStore one, such that "mini-game" sort of software does fall into the same price range as on an Apple device, and maybe allows for similar coding so that porting from one to the other is effortless. That way, if you want games, the Sony/Nintendo offerings would offer nearly all the same "byte-sized" games as the iPhone, for the same price, but also offer A+ titles that the iPhone can't run (or at the very least has poor controls for).
December 6, 2010
That would require Nintendo to make their online service a bit more robust. They seem reticent to do so.
On Orange's point, prior to the Halo Reach and Call of Duty: Black Ops merchandise in his office, his home office had no game paraphernalia whatsoever. Prior to that Pachter sported a Wind Waker-style Zelda figurine, Fallout Bobble head, Guitar Hero guitar, Eye of Judgement and a Professor Layton hat in his office. So 'exclusively' is a bit much. Is it possible that Pachter is sent stuff purely to put in the background of the show? Yes. But for the most part it changes every 10 episodes or so.
December 6, 2010
Both Nintendo and Sony have kept their downloadable software markets well away from offering games also sold at retail. Sony is still smarting from smackdown retailers gave them over the PSPGo. If Sony wanted to have a real shot at competing with the PSP2 they'd offer downloadable movies and music as well as games, and a good web browser too. People are going to be more reluctant to devote a whole pocket and $250 to $300 to a dedicated game device (where games cost $30 or more apiece), when they can have a phone that plays pretty good games, as well as takes HD pictures, plays music and movies, and has tens of thousands of games available (90% may be crap, but that still leaves a lot of good ones, and the prices average $1.50 or so).
Nintendo and Sony have yet to show how they plan to respond to that reality. I think they could mount a vigorous offense against the phones, but I doubt they'll want to reinvent their business model. The smartphones will likely continue their relentless march while Sony and Nintendo talk about how their devices can play killer games... while being outsold 10 to 1 by smartphones.
And that's not even looking at how Nintendo and Sony are missing the freemium market... as I discuss here: http://20thlevelmarketing.blogspot.com/2010/12/mobile-game-revenues-doubling-in-game.html
December 6, 2010
Microsoft has the right idea with the XBLA Indie section, but they really need to push it harder to get more traction. But they're of course the only ones without a dedicated handheld, unless they're planning on releasing a Zune HD with the Windows Phone 7 OS. WiiWare is held back by Nintendo's complete lack of caring about online. And Sony has the right idea, but they need to push something towards indie developers so they can create a mass of $1-5 games for the PlayStation Store.
December 6, 2010
Well many would say over 90% of the games on the Ipod are crap and you can not base the average price of the games worth playing by factoring in the prices of the crap games. lol
Also not sure why the PSP2 does not support downloadable movies and music when I already have those features on my older PSP. O_o
December 6, 2010
This is just crazy talk. DS sales are declining because the platform is like 6-7 years old. Remember that Pachter is an analyst. From his perspective, any business that isn't growing is dead, because it isn't an interesting investment opportunity. There are many games, however, that simply don't work or aren't anywhere near as fun on iOS devices. As long as there is demand for these games, there will be demand for handheld devices with buttons. The business model may change (Nintendo may need to create an app store and support downloadable distribution and even lower prices), and the market for non-iOS games may stop growing or wind up smaller than it is now, but it's not going away. Nintendo has been making a fortune on handheld games and I don't see them just walking away from that market any time in the future. Unless someone can solve the problem of playing certain types of games on a touch screen, there will always be at least one platform with buttons competing with the iOS devices.
December 7, 2010
As long as there will be big Nintendo and Sony game franchises, that they'll sell, and that technology improves, there will be sales on both 3DS and PSP2 devices, provided the devices are not too expensive.
That's like that since the creation of video games. Big good games (quality focused), fair hardware price and technology equal success. Any other scenario is failure.
When will key people understand what's so simple?
December 7, 2010
The problem comes when good games don't sell enough to pay back the development and marketing costs. Which is increasingly a problem for both console and handheld titles. And if the new handheld hardware doesn't ship enough units fast enough, publishers will be hurting. Especially when 3DS development costs are significantly higher than DS development costs.