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Pachter: PS4, Xbox One under $400; current-gen price drops this year
Wedbush Morgan analyst Michael Pachter is predicting a sub-$400 pricing scheme for the PS4 and Xbox One – $349.99 for the PS4 and $399.99 for Xbox One. This comes from the investment firm's annual E3 preview report, which unsurprisingly calls out the next generation consoles as the main focus of this year's Electronic Entertainment Expo in Los Angeles. Pachter says the Xbox One pricing "makes sense given that the Xbox 360 Pro debuted at that price point in November 2005," though he stresses that this is without any type of subscription or subsidies program - like a cable television provider. As for PS4, Pachter asserts it'll make its debut at a lower price point than the PS3 as that $599 debut "negatively impacted its long-term popularity." "We also expect the hardware manufacturers to announce price cuts," Pachter writes in the report (pdf link). He predicts both the PS3 and Xbox 360 will be reduced by at least $50 in the run-up to the holidays, while he says the Wii will be knocked down to $99 - maybe we'll get our own Wii Mini? Pachter also says Nintendo may try to increase Wii U sales through a price cut or "a bundle that includes some of its more popular software." Finally, he anticipates a PS Vita price drop, too.
Wedbush thinks Grand Theft Auto 5 will launch in October
With this morning's announcement that BioShock Infinite will now launch in February 2013, publisher Take-Two Interactive altered more than a game's launch date. Take-Two is a publicly traded company, and one fewer gigantic product launch during the holiday season – arguably Take-Two's only holiday product launch, unless you count fall launches of Borderlands 2 and XCOM: Enemy Unknown as "holiday" – means that shareholders will want to know what's up. That worry is reflected in Take-Two's stock price, which took a five percent hit since the market opened this morning.But when Infinite got pushed out of the holiday season, it opened the slot up for another high-profile Take-Two-published title: Grand Theft Auto 5. "In our view, the delay opens the window for Grand Theft Auto V to be released in October 2012," Michael Pachter of Webush Securities wrote in an email this morning, echoing a release window leak from earlier this year.In his eyes, Infinite wasn't just delayed to make it "something even more extraordinary," as Ken Levine put it, but because the folks at Rockstar, "notified Take-Two that GTA V would be ready for October." He believes this resulted in Take-Two offering Irrational Games an extra few months to prepare BioShock Infinite. His logic? "The studio [Rockstar Games] has scheduled every prior GTA release during that month (with GTA IV delayed to April 2008, due to bugs in the PS3 version)."Furthermore, Pachter and co. speculate we could hear more about GTA 5's launch date "as early as May 22" during a scheduled quarterly investor call, or perhaps in a few more weeks at E3 2012. We've yet to hear back from Irrational, Rockstar, or Take-Two on the subject.
3DS sold under cost since price cut, Nintendo 'hoping' to profit by March 2013
Nintendo took a big hit last year when it dropped the price of its then-nascent handheld, the 3DS, to $170 just a few months after initial launch. Such a hit, apparently, that Nintendo is selling the unit for less than it costs the company to produce, as revealed in the company's latest financial earnings. "Its hardware has been sold below cost because of its significant price cut in the fiscal year ended March 31, 2012," the financial report says.But don't count Nintendo out! The company says it "expects to cease selling it below cost by the middle of the fiscal year ending March 31, 2013." Which, in normal human terms, means Nintendo expects to start making money on the console around August of this year. So, you know, if you're really trying to stick it to Nintendo, go buy the 3DS between now and August. That'll show 'em!The 3DS currently sells for $170, down from the $250 price tag it launched with back March of 2011.Update: We've added context from financial analyst extraordinaires Michael Pachter (of Wedbush Securities) and Jesse Divnich (of EEDAR) just below the break.
World of Warcraft will reign for another 20 years according to industry analysts
With all of the recent focus on World of Warcraft following its latest expansion, it's no surprise that the industry leader is at the center of another round of "What will topple WoW?" discussions. In an article on Eurogamer, industry analysts and developers lend their thoughts as to what made World of Warcraft so dang popular to begin with, and what it will take -- if anything -- for another game to beat its popularity, subscription numbers and cultural footprint. Wedbush Morgan analyst Michael Pachter declared that nothing will top the title for at least 20 years due to an insurmountable lead, although this became debated by the other participants. Cryptic's Jack Emmert thinks WoW will be "chipped away at" instead of toppled. Age of Conan's Craig Morrison thinks that nobody can consciously plan to overcome WoW's lead saying, "You don't topple a cultural phenomenon. But you can join one." GamersFirst's Bjorn Book-Larsson doesn't think there's a need for WoW to be toppled due to the size of the market. Codemasters' Dave Solari imagines that the winning formula "would have mass market appeal, with instant accessibility, would work on all platforms, particularly mobile, be incredibly viral and social -- like a feature-rich FarmVille." Undead Labs' Jeff Strain thinks that MMO studios should be looking at it a different way: "They should instead be striving to achieve the same level of success with their own game ideas." Some even speculate that Blizzard is the only studio capable of besting its own game, perhaps with its second MMO that's due to be announced in 2012. Head on over to Eurogamer for the full discussion.
Pachter: 3DS will cost $250 in the U.S., likely won't come stateside before April
Wedbush Morgan analyst Michael Pachter recently shared with us his insight on yesterday's pricing and release date announcement for the Nintendo 3DS. He predicts that the 25,000 yen ($299) price point for the Japanese launch of the handheld will depreciate somewhat as it travels to Western markets, arriving in the U.S. for $250, Europe for €250 and the U.K. for £200. And although Nintendo of America CEO Reggie Fils-Aime stated the 3DS would "launch in all of our major markets by March 31, 2011," Pachter foresees an even later arrival in the West. "Looking at how Nintendo does things," Pachter said, "if you're launching February 26 in Japan, and their earnings reports say before the end of the fiscal year in U.S. and Europe -- is there any prayer, even a 1 percent chance that they'll launch a week later in the U.S., March 5? No freaking way. It's not even remotely possible they're launching first half of March. I'm betting it gets delayed until April in Europe and U.S.." Some analysts have balked at the fairly high Japanese launch price of the 3DS. Though Pachter admits the launch price is "higher than what's customary" for the handheld market, he said the market will bear the toll -- a lesson hard learned by Nintendo when it launched its latest home console. "They screwed up on the Wii. It was sold out for two full years! You just couldn't get one," Pachter said. "What was the point? They should have sold it for $300 at launch, and made another $50 for every Wii sold during that period. It sold so competitively in the first few weeks that it was going for $1,000 on eBay -- and they absolutely don't want to see the 3DS on eBay." %Gallery-103582%
Roundup: Analyst commentary on Kinect pricing
Everybody has an opinion at the moment about Kinect's $150 price tag, but let's hear what the analysts who get paid for their opinions think. We've got reactions from EEDAR's Jesse Divnich, Lazard's Colin Sebastian and Wedbush Morgan's Michael Pachter, after the break.
Pachter: EA, DICE and Respawn will impact future Call of Duty sales
Do you imagine that every morning, when Michael Pachter wakes up, he dons a black robe, a pointy hat, drops a bunch of stuff into a bubbling cauldron and just predicts? Yeah, we do too. What a life, right? His latest portent involves Respawn Entertainment, the new shop of former Infinity Ward-ers Jason West and Vince Zampella, and it goes a little something like this: the Call of Duty franchise will see lowered sales, thanks to more competition in what we like to call 'the near-superhuman military dudes blowing junk up' market. "I think that it is likely that future games will sell fewer units in the past, primarily due to increased competition from Respawn, DICE and EA games that will likely be in the same or similar genres," Pachter said. He also anticipates that many gamers will recognize that West and Zampella are off the franchise, but that "the majority of consumers will either not know or will not care enough to shun future games." The lack of Infinity Ward's branding certainly didn't stop World at War from moving a bajillion units.
Report: EA planning premium, pre-launch DLC for retail games at $10 - $15 [Update: EA explains]
During a recent visit to EA's offices, Wedbush Securities' Michael Pachter (and other analysts) got what he calls a "candid" view of the future for the publisher. Among the many glowing things that Mr. Pachter had to say in the report from the meeting, he reveals that EA group general manager Nick Earl told him EA has plans "to release premium downloadable content (PDLC) as a product for sale prior to the release of a packaged product." Comparing the PDLC to Battlefield 1943 -- a game for which we unfortunately have yet to see any post-release support from EA -- Earl revealed that the content will be priced at between $10 to $15 through Xbox Live Arcade and PlayStation Network, and will arrive prior to a "full-blown packaged game." That "full-blown packaged game" will of course still carry a "full retail price" when it does arrive in stores. Pachter expanded to Gamasutra, "I think that the plan is to release PDLC at $15 that has 3 - 4 hours of gameplay, so [it has] a very high perceived value, then [EA will] take the feedback from the community (press and players) to tweak the follow-on full game that will be released at a normal packaged price point." This is just one part of the digital effort EA is gearing up for in the coming year, according to the report, which details an expected "1/3 [growth] of revenues over the next few years" in the digital market. Between this and 'Project Ten Dollar,' EA's certainly taking an aggressive approach to new monetization routes on the digital frontier. It remains to be seen how it'll all pan out, but for now things are at least staying interesting. Update: EA's Jeff Brown explained the PDLC concept to us in more detail this afternoon, saying: "EA is working on a number of projects for delivering premium content to consumers before, during, and after the launch of a packaged-goods version of the game. EA SPORTS, EA Games and EA Play are each experimenting with download strategies that deliver fresh game content in formats players want to experience. To date, there is no set pricing strategy for the entire EA portfolio. And many of the proposals include free-to-play content on models similar to Madden Ultimate Team, Battlefield Heroes and Battlefield 1943. None of the proposals call for charging consumers for traditionally free game demos."
Analysts: No cause for concern over reported unpaid Modern Warfare 2 bonuses
Following the departures of two Infinity Ward executives, a related story has gained significant traction and deserves some attention. BingeGamer reports that the development studio "has yet to be paid a single dime in royalties for Modern Warfare 2," ostensibly to be paid by publisher Activision. As Infinity Ward is a wholly-owned Activision studio, we turned to some leading industry analysts to explain what appears to be a private contractual matter. EEDAR analyst Jesse Divnich tells Joystiq, "I couldn't speak to what the royalty agreement between Activision and Infinity Ward is. If royalties haven't been paid out yet, I wouldn't consider that too alarming. The game has only been out for a little over 90 days. Additionally, it is common to see royalty agreements based upon factors such as hitting release date, review scores (a.k.a. 'Metacritic Clauses') or revenue milestones. I think if you just replace the word 'royalties' with 'bonus' it should make some more sense." Wedbush Morgan's Michael Pachter explains, "I don't know the nature of [Infinity Ward's] contract, but my bonus is paid after year-end (in February), and theirs is likely the same. The idea that they haven't been paid 'yet' is not all that surprising. The year just closed, and the final SEC documents were filed yesterday." He continues, "IW sold itself to Activision back in 2004, Activision owns the [Call of Duty] IP, and the guys leaving were employees under some kind of contract. Activision appears to believe that they have breached this contract, and may or may not be justified in withholding bonuses." Check out Pachter and Divnich's full analyses after the break. [Editor's note: This post has been altered to reflect updates in the Infinity Ward leadership shakeup.]
GameStop reveals 2010 capital allocation program
We know, we know -- you've been sitting around all day worried sick about GameStop. Ever since the recent announcement of a cut profit forecast and the resultant drop in share prices, we've been in exactly the same boat. Good thing then that the company has announced plans to repurchase $300 million in stock from investors as part of its 2010 "Capital Allocation Strategy," with intentions to increase earnings per share by 10 percent. Wedbush Morgan analyst Michael Pachter sees the announcement as "positive," echoing the company's statement of continued financial growth in 2010. "We believe that industry sales will rebound in 2010 and that GameStop is well-positioned to gain share the first half of the year. The company has high exposure to the hardcore software releases, which we expect to drive market growth in 2010, and comparatively low exposure to hardware, which we expect to decline," he says. It certainly doesn't hurt that GameStop plans to open 400 new stores over the course of the year -- the financials even leave $100 million on the side, reserved for "acquisition activity." It would appear that, at least for now, we can all can stop worrying. Finally.
Sources: Red Dead Redemption development in trouble [update]
When we recently spoke with our trusted sources from Rockstar San Diego, in addition to yesterday's information regarding the Midnight Club franchise, we were also told about the allegedly troubled state of Red Dead Redemption. One source said that the game "was a complete disaster for most of 2009 and previous ... it has since turned around a little bit, but there are huge problems with it still." Unsurprisingly, the issues with the game are repeatedly claimed to be the result of mismanagement -- along the same lines as what was mentioned in the recent "Rockstar spouse" letter. "Red Dead [Redemption] has been in production for six years (mainly because of horrible management/lack of direction due to fear of disrespecting Rockstar NY) and it will never get the money back in sales it cost to create for those six years," claimed another source. We asked Wedbush Morgan's Michael Pachter to estimate how many copies he thinks Red Dead Redemption needs to sell to make back its development costs and, more importantly for Take-Two, to be profitable. "I'd say realistically, if everybody [at Rockstar San Diego] was working on it this whole time -- so let's assume it's four years to be fair [Red Dead Revolver was released in March 2004], that's $40 million (about $10 million a year to run the studio) -- to make that back and just break even you need at least $80 million in sales; 1.75 million units. For profit: $160 million/3.5 million units." Pachter added that "it's got a shot" and that, from what he's seen of the game, "it looks phenomenal." Our sources are less hopeful, unfortunately: "The functional team that was Midnight Club was shattered. All the people who didn't quit or get fired were thrown onto Red Dead Redemption, many of them being demoted. The completely disfunctional team that is RDR was put to top priority. The people who had floundered on that project or outright screwed it up were promoted and are now in complete control of the studio, and they're running it into the ground." We'll have to see when the game arrives in stores this April -- if it does. We contacted Rockstar for comment on this story and have yet to hear back as of publishing. Update: We were contacted regarding this story by one Rockstar source, who told us: "It will take 5 million 4 million sales at full price to recoup the development costs of Red Dead. The good news is they [Rockstar] are not expecting to make money with Red Dead Redemption. At this point, that project is just supposed to prove that the San Diego studio can make a great quality AAA title." If you'd like to contact us regarding this or other stories surrounding the "Rockstar spouse" letter, we'd love to hear from you.
GameStop shares drop 15% following holiday sales info release
Following yesterday's lowered profit forecast announcement from GameStop, the company's stock took a 15 percent dive as of last night. According to GamesInudstry.biz, stocks opened yesterday "sharply down" due to the release of lowered profit expectations, but rose again before ending the day at $20.46. We might not know what the future holds for GameStop, but Wedbush Morgan analyst Michael Pachter returned from the future for just long enough to say he believes "industry sales will rebound in 2010 and that GameStop is well-positioned to gain share [over] the first half of the year." It certainly doesn't hurt the retailer that 2010 is chock full of delayed 2009 releases, we imagine.
Current console adoption rate only now passing last cycle's, Pachter reports
Among the many fascinating (and not so fascinating) takeaways from Wedbush Morgan analyst Michael Pachter's recent and massive industry report are revelations about the current console adoption rate. As much as the Wii has seemingly penetrated previously untapped demographics (see grandma's now defunct bridge club) and ostensibly raised console adoption rates to new highs, the current generation is practically dead even with the last one when comparing the two generation's first four calendar years on the market. That is, from 2005 (when Xbox 360 launched in late November) through 2008, the current generation of consoles (Wii, PS3 and 360) combined for approximately 78 million unit sales, according to Wedbush Morgan estimates. Comparatively, from 2000 (the year PS2 launched) through 2003, the previous generation (GameCube, PS2 and Xbox) combined for 78–79 million unit sales. However, in this pivotal fifth year, Wedbush Morgan predicts the current adoption rate will begin to pull ahead of the previous rate.
Pachter: Nintendo is benefiting from global recession side effects
Normally when Wedbush Morgan analyst Michael Pachter whips out his crystal ball and starts getting the vapors, he doesn't have time to turn on his minirecorder and take down the futurespeak channeled through his body. Luckily for us (and you!), he not only recorded it this time, but also wrote it down in the form of the 2009 Interactive Industry Report! We delved through the beast of a document this afternoon and found an interesting segment regarding the Nintendo Wii relying on "slower adoption rates of current generation technology" (read as: high-def displays) to help boost sales.Pachter writes on page nine of the report, "The global recession served to benefit Nintendo at its competitors' expense," referencing Microsoft and Sony as having slower console sales this generation due to HDTV functionality built into the systems. He argues that consumers who might purchase the Xbox 360 or PlayStation 3 are more likely to buy the Wii not only because of the lower price point, but because of the subsequent HDTV purchase price. "Expect most consumers to defer purchasing a PS3 or an Xbox 360 until they have purchased an HD monitor," Pachter explains. Though we're not convinced that the same folks who would be purchasing an Xbox 360 or a PS3 would be running out to buy a Nintendo Wii in every case, we digress. What say you, Joystiq Biomass?
Pachter: PlayStation software sales will account for 31% of all games sold worldwide in 2009
Although Wedbush Morgan analyst, Michael Pachter, predicts PS2 will become somewhat irrelevant in 2009, he doesn't discount the combined strength of the PlayStation brand. He remains optimistic for the entire PlayStation family as he expects "software sales for Sony consoles to account for 31% of all game software sold worldwide."Pachter indicated in Wedbush's annual Interactive Industry Report that, while the numbers have been dwindling for PS2, overall worldwide software sales for PS3 titles have more than doubled within the last year. In 2008, 62.4 million units of PS3 software titles have been sold -- a huge step up from the 29.6 million units sold in 2007. The momentum of this growth will carry into 2009, according to Pachter, who believes PS3 and PSP titles (the latter of which only saw a 15% increase in worldwide sales last year) will pick up PS2's slack. PS3 titles will be the top sellers, despite the fact that Pachter predicts Sony won't "secure significant third party exclusivity" as it continues "to focus its internal development efforts on blockbuster games." It's interesting to note, in light of another report, this strategy hasn't really worked out for Sony.
Pachter: Mobile games are a fad, EA's emphasis on sector 'misplaced'
Some people in the video game industry predict the mobile games business could eventually grow to topple the handheld gaming market, Wedbush Morgan disagrees. In its July industry report, analyst Michael Pachter estimates the mobile games industry is currently closer to $2 billion and, even with expected growth, the market may only expand to $4-6 billion in the next three to five years. In a section titled "Mobile Phone Games are a Fad," Pachter explains that, while 1 billion iPhone applications have been downloaded across 31 million Apple products sold, "it is not evident that more than 20% of these downloads are games." Suggesting the iTunes App Store has generated "under $400 million in game downloads" in its first year. Pachter does predict the mobile game industry will grow at 25% per year for a few years, but will eventually fall as competing devices enter the market. The report also calls Electronic Arts' emphasis on mobile games "misplaced." EA Mobile has grown steadily over the last few years, but the report estimates the mobile games division is -- along with that of competitors Gameloft and GLU Mobile -- "barely profitable." According to the report, finger pointing in Apple's camp should directed toward the "open forum" structure of the store and Apple's business model. Apple runs the game download service for an estimated 30% fee, leaving 70% to the game's publisher, the report claims. The section on mobile games goes on to conclude that handheld systems, like the new PSP Go, will "maintain its niche, without significant cannibalization" from the mobile games industry.
Top brands of 2008 owned by Nintendo, EA, Activision, and not Sony
Wedbush Morgan Securities' 2009 industry report includes a list of the top thirty brands of 2008. The report notes that of the companies whose brands appear on the list, Nintendo, EA, and Activision were the only three with more than one brand to generate over $100 million at retail in the US last year.And boy, did they. The top brand of the year, Guitar Hero -- perhaps you've heard of it -- was responsible for $992 million in US sales in 2008. The next two brands, Mario Bros. and Rock Band, generated $761 million and $662 million, respectively.One company is notably absent from the top brands list: "Most strikingly," the report reads, "Sony had no top 30 brands for the third year in a row." Microsoft had two brands on the list (Gears of War and Fable) and Nintendo had four (Mario Bros., Wii Fit, Wii Play, and Pokémon). See the list of brands after the break.
Pachter: Crysis via OnLive like 'playing on a fully-optimized gaming PC'
No, it's okay. You can read that again. According to a report released by Wedbush Morgan's Michael Pachter, the company was given a demo of streaming game service OnLive this past March. Pachter states that latency between the user and OnLive's servers is supposed to be no more than 80 milliseconds, while the games he demoed were running at 25 milliseconds. While Pachter isn't certain if OnLive will "dominate any time soon" he believes that the micro console's video conferencing feature "will likely attract widespread demand." (Wait, it plays Crysis like a gaming PC and it's video conferencing that will sell this thing?)Pachter states that OnLive should appeal to families that have yet to buy into the current generation of consoles, especially if the service is priced right. The sweet spot, apparently, is right around $5 a month. A higher price could be met with "consumer resistance," says Pachter. Furthermore, Pachter is already predicting that OnLive may not last long as a standalone service, suggesting that it might be purchased by another company and offered as "part of an expanded service offering." For example, Microsoft could purchase the company to further expand the Xbox as an entertainment hub -- Pachter notes Microsoft's previous acquisition of WebTV, which was co-founded by OnLive CEO Steve Perlman. That's assuming neither Apple nor Verizon beat Microsoft to the punch, of course.It's too early for us to say if any of this will come to pass -- we're not analysts, after all -- but we were certainly impressed with our own OnLive experience. Still, until we can plug OnLive into our internet and play Crysis for ourselves, we're a bit skeptical. That's okay though, because we're supposed to be.
Pachter says Sony is 'ripping off' consumers with PSP Go
Wedbush Morgan analyst Michael Pachter hates the PSP Go. Alright, alright, he doesn't quite hate it, but he does despise its price point. On a recent episode of Bonus Round, Pachter matter of factly states, "$249 is too much. Period." He goes on to say that while the handheld is priced to compete with Apple's $229 8GB iPod Touch, it doesn't deliver the iTunes App Store or downloadable music from iTunes (as conveniently, at least, as the iPod Touch). Furthermore, he posits the $250 price of the PSP Go is vastly overinflated considering its contents, claiming it costs Sony less to build and ship the PSP Go than the PSP-3000 model, "The $169 PSP-3000 is a profitable device -- the disc assembly, for a UMD, costs more than 16 gigs of flash does. So this new device doesn't cost them as much as the PSP-3000 and they jack the price up $80?" When Keighley presses Pachter as to whether Sony is "ripping off" the consumer or not, he answers, "They're rippin' off the consumer ... they're making a lot more money on the PSP Go than the PSP-3000."%Gallery-64545%
THQ's Farrell says company is aiming for core foothold
THQ CEO Brian Farrell believes his company can still gain footing in the core gaming market, focusing on a quality level that "resonates with the consumers and the press." Speaking at the Wedbush Morgan Securities annual conference, attended by Gamasutra, Farrell maintains THQ has continued to strike a chord with the core audience. Saint's Row 2 -- a game Farrell described as "the number-two open-world game in the category" behind Rockstar's GTA -- has "done 2.6 million units life to date." Whether "done" means sold or shipped, is unclear. Farrell also told the audience the Warhammer 40K franchise is one "we should start talking about more." Citing upwards of 4 million units for the original Dawn of War RTS, through initial release to expansion and gold edition. In its first week, Dawn of War 2 jumped to the top of the PC sales charts. Farrell could be accused of shining as might positive light on the current poor situation his company is in. Analysts have predicted the publisher has a 50% chance of bankruptcy since THQ reported a net loss of $191.8 million for the three months ending December 31, 2008, and a loss of 24 percent of its workforce. As for Farrell's comments, it could be said that achieving a quality bar may be difficult when the company has recently decided to axe a large portion of Quality Assurance employees from Volition, the team behind Saint's Row 2. In the streets, we call that irony.
