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Pachter's Podium: Nintendo Has Nothing New, 'Should Have Pre-empted' Kinect and Move

Posted August 18, 2010 by James Brightman

In this month's "Pachter's Podium," our exclusive Q&A column with Wedbush Morgan Securities' Michael Pachter, the analyst takes a hard look at Nintendo's Wii strategy and what they should be doing differently, the future of Infinity Ward, Mafia II's chances for success, if EA should be backing Tiger and more.

IG: Screen Digest recently predicted that Nintendo would launch a 'bridge' console of sorts (a Wii 1.5 or Wii HD as you've called it) before launching a true Wii successor by 2013. Given what you've seen this year and what you've heard from industry sources, do you still believe the Wii HD is coming? How do you see the NIntendo console strategy going forward?

Pachter: I guess now that Screen Digest has said it, it will finally happen. Nintendo has milked the Wii pretty hard, and although I think that there are another 20 - 30 million units to be sold at lower prices, they really have to consider the competition.  With Kinect and Move, Microsoft and Sony are positioning themselves as upgrades to the existing Wii installed base.  The recent year-over-year declines in Wii software sales suggest to me that the Wii audience is getting bored, and boredom usually indicates willingness to try something new. Unfortunately, without a product refresh, Nintendo doesn't have anything new. 

My bias is that Nintendo should have seen this coming a long time ago, and should have pre-empted the launches of Kinect and Move.  I really thought that they would see it as I did, and originally predicted a late 2009 launch for Wii HD, later changed to late 2010.  Now, Screen Digest thinks it will come some time in the next few years.  I am hopeful that Nintendo management will take our views to heart and consider doing something to upgrade the Wii, while continuing to offer the existing model at lower prices, much as Microsoft is doing with the Arcade and Core versions of its console.  Nintendo can make more money, which is why they're in business, by doing so.

Admittedly, introducing a "me-too" console is inconsistent with the company's Blue Ocean strategy, so I've resigned myself to the fact that I'm wrong, and that this is not going to happen.  I think it's admirable that Mr. Iwata stands on principle, but think he is doing a disservice to shareholders by allowing his competitors the potential to convert Wii households to Xbox 360 or PS3 households. Once they convert, they may not be so willing to come back when the true Wii 2 launches in a few years.

 

IG: Do you think that Mafia II will be able to successfully apply the GTA formula to '50s gangster films the way that Red Dead Redemption did to spaghetti westerns?

Pachter: I think that it's important that RDR was a Rockstar game, while Mafia II is a 2K Games game.  The two divisions have a different marketing philosophy, and I'm pretty sure that 2K won't be applying the GTA formula to anything.  The studio that made Mafia II (2K Czech) hasn't done anything else for the last six years, so we can be sure that there is plenty of tender loving care put into this game. However, they don't have a very deep history of game development, so they are less likely to receive high scores from game reviewers just because they are 2K Czech.  My best guess is that the game will review well, but in the 80s instead of the 90s, and that sales will be far more moderate than they were for RDR.

 

IG: What do you think the next game from Infinity Ward will be? Even with the key staff departures do you think that Activision will require them to do Modern Warfare 3, or will they be allowed to branch out while Treyarch and Sledgehammer focus on the IP?

Pachter: I think the next game from Infinity Ward is Modern Warfare 3. Activision showed a slide at its investor event at E3, and many of us thought we saw Modern Warfare 3 listed as a 2011 release, but the company won't give us copies of the slides, so it could be my tired old eyes playing tricks on me again.  I think your question was interesting: "will they be allowed" to do something different?  I don't think so. They have a great franchise in Modern Warfare, and unlike Nintendo, Activision is all about maximizing profits.  Activision's management knows that it has a gold mine in the Modern Warfare brand, and they will keep the gold flowing from the mine.

 

IG: Do you think Tiger Woods' recent poor performance will impact EA's golf franchise? Did EA make a mistake in sticking by Tiger during his scandal, and is it perhaps time to consider a new cover athlete?

Pachter: Without question, Tiger's great performance helped golf as an entertainment experience, and his recent poor performance has hurt golf. I think that game sales are likely correlated to the number of TV viewers, and TV viewership is down since he began to struggle.  I'm not a golf expert, but you don't need to be to recognize that Tiger is special, and my guess is that he'll overcome his personal problems and return to greatness.  So to answer your question, no, I don't think it was a mistake to stand by him, and no, I don't think it's time to consider another cover athlete.

 

IG: Do you believe Madden is actually benefiting from launching in August in advance of the season? Basketball video games usually launch after the season's already begun. Is the Madden advance timing a better strategy?

Pachter: Madden has been launching in August for at least the last 15 years (I didn't pay attention before 1995), and it seems to be a solid formula.  The pre-season starts then, and the regular season hype starts just about now, so it seems like an appropriate window.  Unlike other sports, viewership of NFL games is humongous, and so awareness of the season opener is much greater for NFL than for other sports.  I think August is safe as the Madden launch month for the foreseeable future.

James Brightman has been covering the games industry since 2003 and has been an avid gamer ever since the days of Atari and Intellivision. He was previously the EIC of GameDaily Biz.