IndustryGamers - Informing the Games Industry

Pachter's Podium: Super Mario Galaxy 2, Halo Reach Not System Sellers

Posted March 23, 2010 by James Brightman

IndustryGamers: Nintendo took us all by surprise it seems with the 3DS announcement. What was your reaction? What kind of impact do you see this new DS having?

Michael Pachter: I don't have anything to say about the 3DS until I know what it is.  The press release said it has “3D effects without the need for any special glasses.” I don't really know what that means.  It doesn't precisely say it has a 3D display, or that the content is 3D, so it's really premature to speculate about the prospects for success.

As for my reaction, I found it incredibly surprising that Nintendo would announce the successor to the DS the week prior to the launch of the DSi XL.  They have essentially said to consumers "we have a new model of the DS coming out this week, and oh, by the way, it will be obsolete within a year."  I can't remember seeing a company do something like this since Osborne Computer did so in 1982 (and declared bankruptcy the next year, when sales plummeted).

 

IG: When we met with Reggie Fils-Aime at GDC, we brought up your comment about Wii lacking an upcoming catalyst. He said that their first catalyst is meeting the huge demand and the second is the platform's "strong lineup" of first and third-party titles. He also said your batting average needs to be checked: "And one of the things that I love about Michael, as well as all the analysts that cover this industry, is that they can make some pretty bold pronouncements and not be held to going back and looking at how good the batting average is. Our batting average has been pretty high."  What are your thoughts on Reggie's comments?

Pachter: One of the things I love about Reggie is that he is paid to be biased.  It is his JOB to promote Nintendo and its products, and he's exceptional at his job.  He is a sincere, smart, great guy and he sounds completely logical when he talks about his company.  For most of the time over the last 3 1/2 years, his company's products have been on fire, and he had it relatively easy--it's not hard to say great things about a company when everything is going well.  Now, his company is still doing fine, but in comparison to prior years, Nintendo's products are showing signs of weakness.

In contrast to Reggie, I'm paid to be objective.  I am almost NEVER 100% correct, and neither I nor the people who pay me expect me to be.  We are paid to be "close enough," and to provide investors with objective views about the future.  When talking about what will happen in the future, all that really matters is that we're rational, logical, thoughtful, thorough and remain unbiased.  That's why I'm not held to a batting average.  The reason you and other members of the press ask me questions is that I'm accessible, responsive, colorful, and more often than not, am credible.  If I failed to be credible, people would not seek my opinion.  So my credibility batting average is really quite high.

I still think that the Wii as a hardware SKU lacks catalysts.  I can't imagine Super Mario Galaxy 2 or Metroid Other M as system-sellers, any more than I would expect Halo Reach or SOCOM to be.  The hardcore Wii audience already has a Wii console, so these game launches aren't likely to be catalysts.  This far into the cycle, the only thing that really gets consoles moving is price cuts, and Nintendo was reluctant to cut price last year.  In fact, the company waited until late September to cut price, even though year-over-year U.S. sales from April on were down 47%.  Over the first two months of this year, Wii sales in the U.S. are down 39%, but some of that could be due to inexplicable supply shortages (one would think that Nintendo could manage the supply chain better 3 1/2 years after launch), so I'll give them the benefit of the doubt.  However, we saw declines in sales of Wii Fit Plus with Balance Board and Wii Play, suggesting that demand for the Wii and its products is on the decline.  So as far as I can see, unless Nintendo decides to cut price, there is not much of a catalyst coming.  I don't see the Wii Vitality Sensor driving sales, but I suppose I could be wrong.  I often am... 

 

IG: Fellow analyst Jesse Divnich recently wrote an op-ed for IG about why PlayStation Move will succeed. He seems to be more bullish on the motion controller than most people, whereas you seem to think Natal will perform far better sales-wise. Now that we've all seen Move at GDC, have you altered your opinion on Sony's product?

Pachter: My projection for Natal outselling Move is based upon something Microsoft told me in May, 2009--that Natal would be packed into the box for every Xbox 360 sold after its launch.  They may have changed their minds, but I understood them to plan for a "forced" bundle.  Recent rumors of the Xbox 360 Slim support the concept of a Natal bundle, since Natal plus software could cost $60 - 80.  If they can cut the production cost of the 360 by $50 with a slim version, they could afford to bundle Natal into the box at the same $299 price point, and I think that they would sell millions of these a year for the next few years.  Sony has made it clear that Move will cost less than $100, and that includes the camera, the Move controller, and software.  I doubt that Microsoft can get away charging as much for just a camera and software, so I expect Natal to be $20 cheaper than Move on a standalone basis.  If I'm wrong about the bundle, and if Natal is priced the same as Move or more, it will probably end up selling fewer units than Move.

Next page: Pachter talks about Microsoft's courting JRPGs and Ubisoft's launch of Red Steel 2...

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.