Michael Pachter On E3

[mister_slim]

Gamespot (gamespot.com) has a Q&A with Michael Pachter, the Wedbush Morgan analyst, called Talkin' bout a Revolution (http://www.gamespot.com/news/2005/05/20/news_6126354.html).

On long-term market share:
So my guess is that it'll take a while for Sony to overcome that first year advantage, but in five years [it will look like this:], Microsoft at 30-35 percent, Sony at 45-55 percent, and Nintendo at what's left.
And on the Xbox:
The big surprise to me is that Microsoft is not taking any more Nvidia chip-sets after this quarter. And that means to me that once Microsoft runs out of the chips that they've inventoried, that they've stored to make future Xboxes, there won't be anymore Xbox.
He also makes some interesting points about the upsides to Nintendo's design choices on the Revolution. Somewhat flawed, but interesting.

[TrackZero]

Nice percentages. But I'd disagree. I'll claim that Xbox will take over this generation, with Sony riding second and Nintendo in 3rd (but with a larger marketshare than this generation).

But, this is what analysts do. They guess based on their feelings on the market. Noone will know until it actually happens.

[StGeorge]

I think he makes a very good point with the fact that Sony will dominate the casual and less affluent market with a $99 slim PS2 with a huge library of $20 games. Don't be surprised to learn that PS2 outsells Xbox360 from Thanksgiving to end-of-year.

[Chandler]

"I talked to Nintendo and their strategy is to try to ensure that all the big games that are made for 360 and PS3 are also made for Revolution. If they succeed at that, they're going to do very well." - MP

hmmm...Halo3, FF13, MGS4, Gears of War, GT5, DMC4, Blue Dragon, Mistwalker, Ninja Gaiden....

I don't see any of these on Revolution =(

[Ghost_Saint]

I think that the PS3 will be more dominate of the casual audience(and more so in Japan). But I definetly think the 360 is going to dominate the US market. The main reason for this is that the PS3 is basicly just a more powerful system built around the cell proccessor, which sony just puts out there and says, "Okay developers, have at it." Both Microsoft and Nintendo have much more focused plans for their consoles. Nintendo plans to draw on innovative features, and Microsoft plans to center everything around connectivity features, and decreased developement cycles through XNA.

Overall I think the main thing that's goint to separate the 360 from the XBox, is that the 360 is going to have a much better selection of games to choose from, but they're still going to be high quality.

[bobbler]

I actually pretty much agree with his %s

You cannot dismiss name recognition and past success -- PS1 sold about 70million units, PS2 sold over 80million, I'd be surprised if PS3 sold anything less than 70 million over the next 4-5 years -- I think a good estimate and goal for MS would be 50 million (that'd be over double their previous, which is quite a victory). I would be willing to bet the generation after the PS4 and xbox3 will end up in MS's hands, though -- they seem determined to win, which, until they do, is great for us. Who knows though.

[IndependentGMR]

The prediction this guy is making is called a "forecast." Market forcasts on new technology is wrong 50% of the time. Meaning, it's difficult to predict the in which the market will move.

[jacktion]

"The people who buy the Xbox 360 are not women."

"Microsoft seems to be taking the strategy that they are going to abandon the current-generation console."

"the Xbox essentially is going to turn into a paperweight in 2006."

This guy kind of rips MS a bit. Is the 360 going to go the way of the Dreamcast?

[Hg-203]

"I talked to Nintendo and their strategy is to try to ensure that all the big games that are made for 360 and PS3 are also made for Revolution. If they succeed at that, they're going to do very well." - MP

hmmm...Halo3, FF13, MGS4, Gears of War, GT5, DMC4, Blue Dragon, Mistwalker, Ninja Gaiden....

I don't see any of these on Revolution =(

While that’s all good and true, remember anything Nintendo will put out that would be anything close to a flag ship game will be “revolutionary” and therefore Nintendo will not be able to hype it.

And yes while I’m not a full Nintendo fanboy, I’m willing to give them the benefit of the doubt for now.


Looking at the interview I saw this quote

GameSpot: But how can you succeed if the graphics aren't the same, if the experience isn't the same?

I made an argument about this in the killzone dev interview. But now I’ve gots a question to the general question to the general EA community. Are graphics really the killer app for moving games off of store shelves and into your house?? I normaly think not, but with all this E3 hype and from all the controversy it seems like more and more people think it is…


If anyone finds that moving this discussion way of topic go ahead and dump this post I guess… or move it to another thread.

// edit adding the graphics question

[bobbler]

The 360 won't be going anywhere near the way of the Dreamcast. Sega marketing was awful (and non existant almost) -- MS has marketed pretty well and will continue to do so. This generation should make MS pretty happy, it'll catch a lot of ground on Sony (they say they want first place, but I doubt any of MS internals wouldn't be happy with a 2nd place again if it meant they were getting closer to Sony's sales). Thats the way I see it at least.

It seems to me next generation will have a lot more people with more than one console. Much higher than this generation.

[DiBiddilyBop]

I'd say those numbers are fairly accurate. The PS3 is going to have the majority install base in the US and the vast majority in Japan. Mainly I think this is going to happen due to name recognition and brand loyalty. The 360 is going to get the head start and is probably going to be much better off this generation because of it, but it's still not going to be able to overthrow Sony as the console leader once they've both been on the market a couple years simply because Sony has such a tremendous lead this generation and a lot of people are going to show brand loyalty. I personally *know* that I will be buying a PS3 because there are so many PS2 series that I love, but am hesitant as to whether or not I want to buy a 360. I think a lot of gamers feel the same way, especially the non-hardcore crowd. I only picked up a PS2 this generation, although after the new Zelda comes out I may have to cave and buy a Cube. The Revolution... well, no one knows anything about it really. The only ones buying Nintendo this generation is the older crowd who are going to show brand loyalty for nostalgic reasons. That is unless Nintendo surprises everyone and pulls off something truly revolutionary...

[dr_qwandry]

hehe Dreamcast.
the main problem with the dreamcast was too many arcade games, not enough games that you could really sink your teeth into.

As for the next gen stuff. I'd say that it will be close with the PS3 and Xbox 360. PS3 has a well established fanbase and many companies that are making the "good stuff" for them. But on the other hand the Xbox 360 has a great online community Team Ninja and Halo 3 and Rare. So i'd think that there stratagies will revolve around them trying to one up each other at every chance. Let's just hope that means good things for the consumer.

[*Legion*]

hehe Dreamcast.
the main problem with the dreamcast was too many arcade games, not enough games that you could really sink your teeth into.

You know, that's a really solid observation. It wasn't just arcade ports, but also arcade-like games that had about the same amount of depth.

Looking at the 9+ rated games on dc.ign.com, it's Tony Hawk games, Crazy Taxi, Jet Grind Radio, a crapload of fighting games (Soul Calibur, DoA, Street Fighter, Marvel vs. Capcom, and endless other permutations), Tokyo Xtreme Racer, Sega GT, a bunch of other racing games.....

There's a few titles like Shenmue, Soul Reaver, and RE: Code Veronica that provided a bit more to "sink your teeth into". But they were definitely few and far between.

The one thing that kept me on my Dreamcast was the NFL2K franchise. There was just nothing else even close anywhere else.

[riposte101]

I believe that x360 has a chance at number 1. The largest reason for this will be the Korean market. Here's the way that I see it. The Korean market is HUGE. I mean as large as the US. A disproportionately large percentage of their population plays online games. They are really making inroads into the US market now. Just walk through the South Hall at E3 this year and you can see Korean game developers were everywhere. NC Soft is making a serious push into the US market. Huxley from Korean Developer Webzen looks awesome. The reason that this helps the X360 is because of .NET and XNA. Korean developers are known for developing only for the PC. With .NET and XNA, code written for the PC will run on the X360 flawlessly. X360 will enable Korea to port its games over to the X360 cheaply. This coupled with Korea's push into the US market will push the wide scale adoption of the X360 in Korea because of the number of quality Korean games for the system. With a market as large as Korea buying up X360s and X360 possibly controlling the US market, Microsoft has a chance at number 1. It'll still be close with the PS3 running neck and neck. But this is my analysis.

[A-Team]

"I talked to Nintendo and their strategy is to try to ensure that all the big games that are made for 360 and PS3 are also made for Revolution. If they succeed at that, they're going to do very well." - MP

hmmm...Halo3, FF13, MGS4, Gears of War, GT5, DMC4, Blue Dragon, Mistwalker, Ninja Gaiden....

I don't see any of these on Revolution =(
If Square has its way with next-gen platforms, then you and I could be seeing more than just another 'Final Fantasy: Crystal Chronicles' on the Revolution.

And GT5... well, let's not get ahead of ourselves here. Didn't the Rockstar North/Sony contract run up with San Andreas?

[riposte101]

And GT5... well, let's not get ahead of ourselves here. Didn't the Rockstar North/Sony contract run up with San Andreas?

This is true. If I were MS I would buy up Take Two Interactive and guarantee that GTA only appears on the Xbox. It'd be worth the billion dollars. I mean MS only made 50 billion last year in profit what's one billion if it means securing GTA?

[A-Team]

Pachter: So the only way Microsoft gains appreciable marketshare is for Nintendo to fail.
I'm a little confused by this quote, but I'll try to reason it out in a reply and see what you all think.

Appreciable marketshare, if I recall correctly, is an indicator of sales to "other" individuals that are less likely to purchase something because of their experience (or lack thereof in this case) with the brand name (in this case Microsoft). Granted the definition I've given and Pachter's quote, I must then assume that Pachter is suggesting that Microsoft can not succeed in gaining any appreciable marketshare without first winning over the folks still trailing behind Nintendo.

My question then would have to be why does Pachter not feel that Microsoft can gain appreciable marketshare by taking some of Sony's customers? Is he assuming that nearly all of Sony's customers will remain loyal and Nintendo's customers won't?

[A-Team]

This is true. If I were MS I would buy up Take Two Interactive and guarantee that GTA only appears on the Xbox. It'd be worth the billion dollars. I mean MS only made 50 billion last year in profit what's one billion if it means securing GTA?
Without getting too technical about it, a merger agreement between Microsoft and Take-Two goes well beyond one simple developer (Rockstar). Keep in mind that Take-Two Interactive operates two very powerful publishing firms of their own, 2K Games and 2K Sports, and has a very firm hold on a number of other organizations aside from Rockstar including Joytech, Global Star Software, and Gathering.

Also, (1) after all of the licensing competition between Electronic Arts and Take-Two/2K Sports and (2) after seeing all of the titles that EA has promised Microsoft, something like that just wouldn't make any sense.

[H.M._Murdock]

Why is this guy's crystal ball better than everybody else's?

[Furious Wang]

Why is this guy's crystal ball better than everybody else's?

cuz his ball is bigger.

bigger balls mean better predictions.

[riposte101]

Without getting too technical about it, a merger agreement between Microsoft and Take-Two goes well beyond one simple developer (Rockstar). Keep in mind that Take-Two Interactive operates two very powerful publishing firms of their own, 2K Games and 2K Sports, and has a very firm hold on a number of other organizations aside from Rockstar including Joytech, Global Star Software, and Gathering.

Also, (1) after all of the licensing competition between Electronic Arts and Take-Two/2K Sports and (2) after seeing all of the titles that EA has promised Microsoft, something like that just wouldn't make any sense.

It would make plenty of sense. You are going to have to go more in depth on a reason why this wouldn't make any sense. Any number of deals could come out of this. I don't see the licensing competition between EA and Take Two to be an issue. After the deal, MS could then sell/give away their baseball exclusivity to EA as an olive branch for 2k or allow for a management buyout of 2k.

[president_fred]

cuz his ball is bigger.

bigger balls mean better predictions.
My mom told me its not how big it is but how you use it.

[grammatoncleric]

Because everyone thought xbox was going to do well, and the dreamcast would be the last sega system ever made, and that the ps1 would outsell n64........

yep everything always goes just the way people think it will.

[KDups]

Because everyone thought xbox was going to do well, and the dreamcast would be the last sega system ever made, and that the ps1 would outsell n64........

Yeah but this time it's different. Really it is. Really, really different.

[Pumped'Up]

360 will simply fail. it will only be good for the first month of release. then everyone will realize how sub-par the console is.

[01010]

360 will simply fail. it will only be good for the first month of release. then everyone will realize how sub-par the console is.

How did it feel when Sony put that big black cock up your ass?

[MosBen]

Riposte: One reason why it might not make sense for MS to buyout Take 2 is that, I believe, they just recently finished selling their sports game assets to Take 2. Also, there's a difference between buying out a smaller development house and a gigantic game publisher.

[Draft]

How did it feel when Sony put that big black cock up your ass?
Stop. He got me a couple times yesterday. Pumped'up is just a Sony Troll. At least Borys makes valid arguements.

[Zanzibar]

cuz his ball is bigger.

bigger balls mean better predictions.

Just ask John "Daikatana" Romero. Or Dave "Messiah" Perry.

[if76]

I'm a pretty hardcore gamer and I was fooled by the PS2 announcement. At the time Dreamcast was doing pretty well but then Sony announced their emmotion engine and showed just amazing technical demos. I couldn't rightly get a dreamcast when all that goodness was just around the corner. I'm pretty sure that the PS2 announcement is what killed the dreamcast at least for the hardcore set. Then when the PS2 actually came out we realized that the graphics really weren't much better than the dreamcast but by then it was too late.

Flashforward to 2005 and I am not so fooled. I think the majority of hardcore gamers know or at least suspect that the Killzone video was prerendered. All of the real-time PS3 footage didn't look better than the Gears of War demo.

I'm sure Sony will release some eye-popping yet shady tech demos when the X360 is released to try to have another dreamcast effect. I don't think they will work.

[Chandler]

If Square has its way with next-gen platforms, then you and I could be seeing more than just another 'Final Fantasy: Crystal Chronicles' on the Revolution.

And GT5... well, let's not get ahead of ourselves here. Didn't the Rockstar North/Sony contract run up with San Andreas?

Has Square ever made a multiplatform RPG? :cool: it just makes sense that they would keep the _main_ FF series on PS3.

And about GT5...i was um..talking about gran turismo lol.

[A-Team]

Has Square ever made a multiplatform RPG? :cool: it just makes sense that they would keep the _main_ FF series on PS3.

And about GT5...i was um..talking about gran turismo lol.
My bad on the GT5 part. I read that to be "GTA5" instead since it was a little late when I replied.

As for the Square issue, it makes perfect sense. Who cares if one person owns one system and another person owns another when you can easily port the same game to both platforms? Square doesn't have anything to actually gain from sticking with one name unless they manage to not make a profit (which won't happen).

[ianagain]

This is true. If I were MS I would buy up Take Two Interactive and guarantee that GTA only appears on the Xbox. It'd be worth the billion dollars. I mean MS only made 50 billion last year in profit what's one billion if it means securing GTA?

- The Rockstar/Sony contract was just renewed (and presumably fixed to remove that 6 mont window), Sony even mentioned in their press conference they would be getting a new Grand Theft Auto exclusively on Playstation 3. Whatever Sony is using to bait Take 2 back in is working very well, and Grand Theft Auto's market is consistently on Sony's machines. The XBox owner is not as "casual" of a gamer as J. Allard would have you believe, and the Madden/GTA/Gran Turismo crowd will remain firmly entrenched on Sony systems. Rockstar will go to where their market is. XBox ports of Grand Theft Auto sell well below what their PS2 equivalents do. It makes sense for Take 2 to go to where a) their market and sales are and b) Sony is offering them a contract that is probably atleast 8 or 9 digits to stay.

- Take 2 is huge, they are arguably the third largest publisher in the industry at the moment. This generation will probably see the last of Activision, who cannot live on Spiderman and Tony Hawk alone, and Atari, who is losing millions on clunkers like Enter the Matrix and Driver 3. Very soon the four major players will be Ubi, Take 2, Vivendi, and EA; none of these companies will risk that much Marketshare for a quick sale to Microsoft. They also wont risk sinking with Microsoft when they can keep their options open and end up on whatever console is successful.

- The original article overlooks a very important aspect, especially to Nintendo: multiple console households. I would guess that 60-70% of Gamecube sales are to consumers who already own an XBox or a Playstation 2. By keeping their price extremely low and releasing a handful of AAA titles every year, Nintendo grows their market by sharing it with Sony and MS. When XBox has a slow month, people will spend $150 to get Resident Evil 4 and a Cube. This trend will increase as people get further away from their initial console purchase and games like Zelda come out. I wouldn't be surprised if Nintendo relies on the strength of Japanese sales combined with a solid "second place" in America to come out even on hardware sales next generation too. By not focusing on graphics, they can once again assure they are the cheapest system on the market. Nintendo in-house development is the most reliable in the world. If they are the cheapest system and they have six or seven AAA Mario and Zelda games they can assure sizable market share (but with a more literal meaning of "share" :).

[Nimos]

Originally Posted by Michael Pachter
So my guess is that it'll take a while for Sony to overcome that first year advantage, but in five years [it will look like this:], Microsoft at 30-35 percent, Sony at 45-55 percent, and Nintendo at what's left.


This means that the percentages left for Nintendo will be somewhere between 10-25 % ... or around 17.5 %

Unlikely

[Hellstorm]

Nintendo will be just fine, if not do better than this gen. But we can be sure of one thing, Nintendo will be the one making the most profit.

The more I look at XNA, the more it looks like MS' software exit strategy out of console hardware.

[KDups]

The Rockstar/Sony contract was just renewed (and presumably fixed to remove that 6 mont window), Sony even mentioned in their press conference they would be getting a new Grand Theft Auto exclusively on Playstation 3.

Not meaning to troll since you make a lot of good points, but this one isn't true. Rockstar said it would be supporting the PS3, but they didn't mention anything about GTA besides Liberty City for PSP. IGN even retracted their info that an exclusive GTA was announced for the PS3 launch.

I'm curious to see where this franchise goes, should be interesting.

[mister_slim]

"I talked to Nintendo and their strategy is to try to ensure that all the big games that are made for 360 and PS3 are also made for Revolution. If they succeed at that, they're going to do very well." - MP

hmmm...Halo3, FF13, MGS4, Gears of War, GT5, DMC4, Blue Dragon, Mistwalker, Ninja Gaiden....

I don't see any of these on Revolution =(
I don't see any Mario or Zelda on PS3 or 360, either. Basically, Nintendo is trying to make it really easy to port to the Revolution and using all those old games as a carrot for publishers. Looks like the Rev will emulate any of Nintendo's old systems, which makes it really easy for EA to bundle old Maddens for a collector's edition. I think the Rev could hit the ground running software-wise.

Appreciable marketshare, if I recall correctly, is an indicator of sales to "other" individuals that are less likely to purchase something because of their experience (or lack thereof in this case) with the brand name (in this case Microsoft). Granted the definition I've given and Pachter's quote, I must then assume that Pachter is suggesting that Microsoft can not succeed in gaining any appreciable marketshare without first winning over the folks still trailing behind Nintendo.

My question then would have to be why does Pachter not feel that Microsoft can gain appreciable marketshare by taking some of Sony's customers? Is he assuming that nearly all of Sony's customers will remain loyal and Nintendo's customers won't?
This is one of Pachter's points I had a problem with. The announced 360 titles have revealed nothing to attract someone buying a Rev for Nintendo games or for their children's content. And I doubt many PS2 owners had complaints about much besides the hardware, which seems competetive and improved. So I don't know where 360 growth can come from, other than outside the current market (unlikely, but probably the reason for that MTV spot) or from people buying a 360 to supplant their other console (which is not going to happen until the price drops quite a bit). Lack of a cheap Xbox to test the water could hurt MS.

I was most bothered by Pachter's claims that the Rev will be significantly cheaper to develop for (less powerful, cheaper assets) and that the Rev will also see a lot of ports from EA and whatnot. Is the Rev significantly underpowered or not? Based on what I'm hearing from interviews, the Rev is not as underpowered as it's being portrayed. I guess we won't know until Nintendo releases some actual videos.

[riposte101]

- XBox ports of Grand Theft Auto sell well below what their PS2 equivalents do.

Of course they outsell on the PS2. It comes out first on the PS2 and remains a PS2 exclusive for 8-12 months.

Atari, who is losing millions on clunkers like Enter the Matrix and Driver 3.


Some of your facts are way off. Enter the Matrix may have sucked balls, but they certainly didn't lose millions on it. Enter the Matrix has sold 6 million units to date. Hell it sold 2.5 million on the PC alone. That's unheard of.

Nonetheless you make some good points. But MS has nearly unlimited wealth if they wanted they could write a blank check to acquire Take Two.

[mister_slim]

Atari spent $47 million to buy Shiny, plus $10 million for the Matrix license, so I doubt the Matrix has been that profitable thus far. Also, San Andreas has sold better than twice Halo 2's numbers.

[ianagain]

I got the GTA exclusivity story from IGN before they retracted it, so I have to admit I'm wrong on that. Thanks for letting me know, I work retail and it's one more bit of misinformation I'll try to keep from getting out there.

Of course they outsell on the PS2. It comes out first on the PS2 and remains a PS2 exclusive for 8-12 months.

Some of your facts are way off. Enter the Matrix may have sucked balls, but they certainly didn't lose millions on it. Enter the Matrix has sold 6 million units to date. Hell it sold 2.5 million on the PC alone. That's unheard of.

Nonetheless you make some good points. But MS has nearly unlimited wealth if they wanted they could write a blank check to acquire Take Two.

Any gamer who isn't buying GTA on the XBox because they already have it on the PS2 is someone who has bought both systems, and therefore doesn't figure into this article's numbers.

GTA is still awkwardly growing into its position on the XBox: the gadget/hi-def fiends are unimpressed by its graphics, the hardcore gamers already own it on their PS2, and the online FPS/Tom Clancy nuts aren't interested. On the other hand GTA has become synonymous with Playstation in many minds, and Rockstar/Take 2 would be foolish not to keep banking on that. Many casual gamers may not even be aware GTA is available on XBox. I'm sure San Andreas' sales figures this June will reinforce this, and maybe Rockstar is waiting to see before they sign back up with Sony. No matter the size of the check, a Microsoft buy-out would be suicide for the Grand Theft Auto series, and that is Take 2's livelihood.

Not to mention the PR nightmare the MSN Butterfly would have if Microsoft stamped its name on the most infamously violent videogame franchises in history.

Enter The Matrix did sell fairly well, but it got returned even better. The same is true of Driver 3. Second and Third shipment sell-through was horrible because Atari was competing with the flood of Used copies that were already on shelves. This means that the gamers who did buy it feel they got burned, and wont return to those franchises again. I know this doesn't hurt Atari in the short term, but their E3 line-up was based on sequels to both these titles and more Dragonball rehashes. Relying on expensive-to-develop franchises that have already lost their fanbases is going to be a huge mistake. They've also lost BioWare to Microsoft and are pissing away their D&D licensees. I still don't see much more hope for Atari as a publisher.