IndustryGamers - Informing the Games Industry

Pachter's Podium: PSP2 Must Be Priced at $199 or Lower, Nintendo Has Lots of Naysayers to Silence

Posted May 20, 2010 by James Brightman

It's once again time for our monthly Q&A column with Wedbush Morgan Securities' Michael Pachter. In this edition, the analyst examines this year's E3, the chances for Sony to revive its PSP business with PSP2, the Facebook/Zynga relationship and more. Dig in...

IG: Here's a 3-part question to start.... Fellow analyst Jesse Divnich recently wrote for IndustryGamers, claiming that this E3 could be the most important in the history of the industry. Do you agree?  What are your predictions for the biggest surprises we'll see at the show? And finally, who will "win" E3?

Pachter: Jesse hasn't been to all of them, so I'm not sure his comment has sufficient context.  On the hardware side, there is no question that major reveals from all three console makers is unprecedented, and although we've already seen an early prototype of Natal and a very polished Move, everyone is interested in pricing, launch dates, and title lineup.  I personally am most excited about the 3DS, given that the innovations in the DS over the last several years have been only marginal.  I think that Nintendo has a lot of naysayers to shut down (including me), with a lot of people thinking that the iPod Touch is going to eat the DS's lunch.  Everything else is pretty well-known, but there will always be a surprise or two at the show, and I'm hoping we see something like a single console developer going multi-platform.  I'm also hopeful that we hear about Nintendo's 2011 lineup.

 

IG: With Super Mario Galaxy 2, Prince of Persia: The Forgotten Sands, Red Dead Redemption and Alan Wake all releasing in a very close stretch of time, do you think we'll see sales cannibalization or are the titles different enough to succeed?

Pachter: I think that the big games in May are sufficiently different, and SMG2 doesn't really compete with the others, since it is the only one on the Wii.  PoP has gotten lackluster reviews and RDR has gotten phenomenal reviews, so these are likely to be the two outliers of the group, with PoP getting hurt and RDR being helped by their respective review scores.  I think that Alan Wake is sufficiently different, and I am personally a huge fan of Remedy.  I'm going to play that one first, even though I already have two of the other three.

 

IG: What are your thoughts on the rumored two-camera, Cell powered PSP2?

Pachter: No thoughts on PSP2 until I see the price.  I think that the PSPgo is a fine device, but the price point has absolutely killed it.  If Sony takes it and makes it more expensive with multiple cameras, I think that they will destroy the brand.  The only way I can see a PSP resurgence is to price it below the iPod Touch, which is a versatile device with a really great display.  The PSP2 has to be priced at $199 or lower to have a real shot.  If it has a Cell processor, that price point isn't likely.

 

IG: It seems like a number of companies each have a system to lock in consumers, which could fracture the industry when it comes to gamers.  You have Bioware's Social Network, Blizzard'sBattle.net, Ubisoft's Uplay, EA's new Online Pass.  None of them connect up. Is there a future endgame to all of this?  A Facebook Connect-style uber login to rule them all?

Pachter: While it's a great idea to interconnect Bungie.net, Battle.net, Uplay, Online Pass, etc., it's not necessarily in any single publisher's best interests to do so.  Ultimately, I think that the common ground

will be either Xbox Live or PSN, but I don't think that the PC developers (meaning Blizzard) care much to be on consoles.  Each publisher hopes to monetize online game play, and in order to charge individual subscriptions for online play, they need to control the server network.  Microsoft or Sony will do it for them (for a fee), or they can try to go independent.  Independence only really works on PC, since it's tough to get outside the wall on Xbox Live (probably impossible), and not in Sony's best interest to allow it on PSN.  I think that unification will occur gradually, with the publishers taking baby steps, and I think that Battle.net will lead the way.  Online Pass will likely work across all of EA's sports titles, but it's not clear to me that it will be shared by EA's games label.  One step at a time.

 

IG: Zynga and Facebook just came to terms on a 5-year deal. What impact do you see this having on the social gaming sector?

Pachter: Zynga and Facebook HAD to come to terms.  It is clear that without Facebook, Zynga would have had trouble attracting the billions of users (I have heard that FarmVille has 80 million unique visitors), and without Zynga, Facebook wouldn't have as many people log in every day. The two companies have helped one another to thrive, and it really didn't make sense for them to be at odds with one another.  In the scheme of things, Facebook had greater leverage in the negotiations, since there were willing parties lined up to replace Zynga on Facebook had they left (meaning EA's Playfish or Playdom).  Had that happened, there would have been a ton of angry Facebook users, and both Zynga and Facebook would have been hurt, which doesn't really help anyone.  I think that the companies behaved professionally, and came to terms in a way where both were able to accept a mutually beneficial result.  That's the way it's supposed to work.

As for impact on the sector, I think it's important to prove out the social network business model.  Facebook should profit from delivering users, and new businesses who attract customers from Facebook should know what the cost of acquisition is.  It was really the wild West before Facebook started charging a percentage on transactions, and I think that the certainty allows others to weigh the risks and rewards of using Facebook to drive traffic.  I think we'll see a proliferation of new offerings on the site, and think that social gaming will continue to lead the way.

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.