Michael-Pachter
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Report: Wii software growth has peaked, dropping off
Despite having a significantly larger install base than any other console, Nintendo's Wii software sales have apparently already peaked and are starting to drop off. That's according to an analysis done by Gamasutra, which compared the growth patterns of the last six major consoles and found that the Wii is peaking far earlier than any of the others. This past May, Wii software sales were down 29 percent year-over-year and, for the whole of 2010, the Wii may only sell two games per console. For a system in its fourth year, that's an "unprecedented" rate of decline, according to analyst Michael Pachter. These are still just estimates, and if Wii's software sales turn around -- perhaps because of multiple big releases later this year -- it's possible that the numbers could hold steady at this rate for a few more years, rather than dropping off further.
Microsoft claims 'unprecedented demand' for new Xbox 360
Although Microsoft didn't provide specific sales figures (per usual), the company claims it's seeing "unprecedented demand" from retailers for its new Xbox 360 console. In a statement released following May's NPD results, Microsoft claimed a "significant sales spike" for its new Xbox 360 250GB "short" model, along with its older Arcade and Elite units (which both received a $50 price reduction). The new console hit US store shelves around June 14. As for the sales spike's impact on the June NPDs (which will be released next month), Wedbush Morgan analyst Michael Pachter stated in his analysis of May's results: "We think that the boost in June hardware sales could allow June software sales to approach flat, notwithstanding a lackluster release schedule." %Gallery-95126%
Pachter: April's low game sales 'baffling'
The April NPD sales figures for the US were bad. How bad? Let's try: The April NPD figures were as if millions of analysts "cried out in terror and were suddenly silenced" bad. Speaking with IndustryGamers, Wedbush Morgan analyst Michael Pachter says his group found the results "baffling." He notes that sales were the lowest since May of 2007, "when this generation was barely underway," and it was the weakest April since 2005. Pachter also stated, "The sequential decline of 54% is the greatest in the 11 years that we have been tracking monthly data (except for December-January declines), dwarfing the previous record of 42% set in March-April 2002." At a loss to explain exactly why April 2010 was so bad, Pachter feels it was just a "fluke." He explained, "We do not believe that core gamers suddenly shifted allegiance to Facebook or iPhone games in April, nor do we believe that Call of Duty Modern Warfare 2 online play increased dramatically during April." With May's lineup including several major titles across multiple consoles, the analyst feels the month could show "dramatic growth." If not, well, let's just hope for the best right now. Flukes happen.
Analysts discuss impact of EA Sports Online Pass
Over at IndustryGamers, several analysts have chimed in on EA's latest assault on used game sales: The EA Sports Online Pass. The pass will offer players access to online features -- up to and possibly including online multiplayer -- on all future EA Sports titles starting with Tiger Woods PGA Tour 11. Should someone buy a game used, additional passes can be purchased for $10. The overall consensus among analysts: It's a good thing and a smart move on EA's part. According to Wedbush Morgan's Michael Pachter, it only makes sense that EA should be compensated for rendering online services. He noted that EA "currently does not get paid" by those who purchase used games and that the pass "is ensuring that second-hand purchasers will pay something for the maintenance of the server network and for access to premium content." The majority of analysts agreed with Pachter, with EEDAR's Jesse Divnich noting that games now extend far beyond their own physical media. "Seven years ago, when you purchased Grand Theft Auto for $50, the entire experience was encapsulated on a DVD," said Divnich, "in 2010 that is no longer the case." He added that it is "perfectly reasonable" for EA to expect payment for features that aren't included directly on the disc. Also, DFC Intelligence's David Cole expects more companies to pursue similar programs in the future. Meanwhile, Lazard Capital Markets' Cole Sebastian referred to the program as "a double-edged sword for publishers." While it may lower used sales, said Sebastian, it also diminishes the resale value of games that customers would trade in to purchase new ones.
Pachter: First Activision-Bungie game 'well along' in development, will sell at least 10 million units
Though firm details about the terms of the Activision-Bungie partnership are still awfully slim, industry analyst extraordinaire Michael Pachter has given his two cents to Gamasutra about the financial potential of the merger, which should result in Activision earning a great deal more than two cents. First, Pachter suggests this is a publishing partnership instead of a mere distribution agreement, which will increase Activision's profit margins from around 10 percent to anywhere between 15 and 20 percent on all of Bungie's titles. He estimates that, should the developer's future titles be as popular as its Halo franchise (which typically sold 10 million units a piece), they could sell as many as 15 million units by virtue of Bungie's new multiplatform ambitions. According to his calculations, Activision stands to make $65 million off the first successful Bungie title should it match the success of the Halo series. The time to test Pachter's calculations might be closer than you'd think -- he reports that the first Bungivision product, which is set in an "action game universe," is "well along in its development." We're not sure how "well along" said title actually is, but we'll keep our ears perked up for an announcement at E3. An announcement for Guitar Halo. There, we said it, alright? We were all thinking it, and now it's out there.
Finding a new dimension for gaming at the 3D Gaming Summit
A small crowd of movie and game producers met this week at Universal City in Los Angeles for the first-ever 3D Gaming Summit, to sit down and discuss the trend of 3D imaging in gaming and film. Much of the talk at the summit was speculative -- with almost no actual consumer devices on the market and nearly none within price range of the average consumer anyway, gaming in 3D isn't much more than an idea at this point. Most of the technology companies in attendance are still working to get content producers to use their systems to create games and films rather than selling hardware directly to consumers. Still, the panels and discussions at the summit offered an interesting look at what many believe to be the eventual future of the industry. From a lunchtime interview with Mortal Kombat and Resident Evil director Paul W.S. Anderson to a Playstation Move demo (and a panel moderated by a Joystiq editor), the 3D Gaming Summit showed off a lot of guesswork, a few interesting demos, and a few big holes that will need to be filled if 3D gaming is going to ever take off.
Netflix to gain two million subscribers from consoles in 2010
Analyst Michael Pachter says that despite a lower amount of new Netflix subscriptions lately, video game consoles will still give the movie rental service a boost this year, providing over two million new subscribers thanks to the Xbox 360, PlayStation 3 and the Nintendo Wii. Pachter suggests that the Xbox 360 will continue to provide 350,000 new subscribers, and the PS3 and the Wii will each turn in around 800,000 new subscribers this year. But Pachter also says that future growth is limited -- the PS3 doesn't have quite the install base that the Xbox does and, while there are a lot of Wiis out there, Pachter's firm believes that most of those consoles aren't even connected to the Internet ("we estimate fewer than 35%," he writes). So the total new subscribers estimated for 2011 drops down to 900K to 1.2 million. That's still a lot of MST3K downloads -- because come on, if you're watching anything but that on Netflix, you're crazy -- but not enough to keep Netflix's estimated growth from being called "unsustainable."
Analyst: 3DS will help Nintendo stave off iPhone
Lazard Capital Markets analyst Colin Sebastian has said in a new report that the Nintendo 3DS system will not only increase unit sales for the DS platform (obviously), it will satisfy demands of consumers now excited about 3D technology, and help differentiate Nintendo's offerings from iPhone software. He notes that cheap iPhone games are cutting into the DS business. "However," he suggests, "with a differentiated 3D display, high quality games, and profitable business model for publishers, we believe the 3DS could help reduce the competitive threat from smartphones." Wedbush Morgan analyst Michael Pachter, however, doesn't believe 3D on its own is enough -- because if that's all it is, Apple will simply copy it. "It seems that if 3D on portable devices was easy," he told CVG, "Apple would have beat them to it. If they truly pioneer a technology, my guess is that Apple will mimic the technology." That's a pretty pessimistic outlook. We're going to have to play a lot of Grand Theft Auto: Chinatown Wars on our touchscreen-based handheld game console to cheer ourselves up after reading that.
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."
'Ripper' is Visceral Games' PSN & XBLA game, according to Pachter report
[The Illustrated London News; October 13, 1888] Of the many highlights from the Wedbush firm's visit to EA HQ last week, as recorded in analyst Michael Pachter's report on the publisher released to media outlets today, one stuck out like, well, like a 19th century serial killer. Pachter has apparently announced Ripper, a "new PSN, Xbox Live game" from Visceral Games. In other words, put two and two together, my dear Watson, and that rumored Jack the Ripper game is actually Visceral Games' reported downloadable project. Pachter's notes don't provide additional details on the Ripper game and only reiterate that Visceral also has Dead Space 2 in development. When questioned, a Visceral Games representative issued a "no comment" to Joystiq. We'll keep sleuthing around for clues, though -- and in the meantime, kindly report any suspicious-looking games to our tips line.
Analysts predict hardware, software drops in February NPD
In advance of NPD sales results for February 2010, analysts are predicting year-over-year declines for pretty much everything. Wedbush Morgan analyst Michael Pachter, according to Gamasutra, is predicting that hardware and software sales will decline 10 percent, with Wii hardware sales hit particularly hard (around 40 percent) due to shortages. Beyond the Wii, the continuing decline of the music genre is partly to blame for the reduced sales. Analyst Colin Sebastian is guessing at a 15 percent decline, despite encouraging early sales for games like Heavy Rain and preorders for games like Battlefield: Bad Company 2 (which, as an early March release, may fit into the NPD February sales period) and God of War III. The fact that high-profile games are likely to show sharp declines after strong first-week sales will prevent software trends from turning for the better.
Law of the Game analyzes ex-IW bosses' suit against Activision
[Maveric2003] When various legal fracases arise from time to time, we turn to Law of the Game's Mark Methenitis, an actual, real lawyer, for thorough analysis. So, Methenitis kindly looked over the full complaint filed against Activision by ex-Infinity Ward heads Jason West and VInce Zampella, and then described to us the importance of the little things: the wording of the contract between the two ex-heads and Activision, the financial implications of the possible loss of the Modern Warfare name (for either side), and the ... shall we say, flamboyant ... language used in the document itself. According to Methenitis, the complaint's colorful phrasing is "for dramatic effect and little more." Methenitis pointed out in an email exchange with Joystiq that "readers shouldn't place too much emphasis on the language in the facts" and that the story told by the claims "sounds like a relatively common 'business deal gone bad' kind of suit." As for this particular case, though, he allowed, "Granted, based on the value of Call of Duty and Modern Warfare, the stakes are high both for the royalties and future creative control of the brand." (Methenitis here is referring to the ex-studio heads' allegation that Activision had handed over creative control of all Modern Warfare-branded games, part of the "Memorandum of Understanding" that was agreed upon between the two parties before the creation of Modern Warfare 2.) The stumbling block for West and Zampella, Methenitis said, could be in the wording of the memorandum. "That [receiving their royalties and retaining control of the Modern Warfare name] may be more problematic if the wording of the Memorandum of Understanding isn't such that it can be enforced as a contract," he said, adding, "Given the context and description in the suit, it seems like the term 'Memorandum of Understanding' in this case is just a fancy title for a contract rather than a less-than-enforceable agreement similar to a Letter of Intent." (Head past the break for Methenitis' full analysis.) While Methenitis wouldn't weigh in on the possible end result of this suit, Wedbush Securities analyst Michael Pachter mentioned in his latest report that, "We think that West's and Zampella's claim for creative control over the Call of Duty and Modern Warfare brands has little merit, and we expect Activision to retain control over the brands." One thing's for sure, if a messy lawsuit does get underway (and isn't settled out of court like so many are), we'll assuredly catch wind of more dirty laundry.
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.]
Pachter: Apple will have a game console soon
Michael Pachter is probably the most visible gaming industry analyst out there -- while he's not always right about his predictions and insight on the video game industry, he does usually know what he's talking about, and he's definitely got the ear of a lot of investors. And so when he says that Apple is planning to turn the Apple TV into a game console, people listen. In fact, that's exactly what he said on his online show last week -- he says that "by accident," Apple has "become a serious gaming company." Steve Jobs never really was interested in gaming, and yet, because the iPod touch has really jumped into gaming with the App Store (and the iPad will follow), Apple will go for games more and more as a way to sell their hardware. He also says the Apple TV will get hooked up to the App Store sooner or later, and that it probably won't be sold as a straight game console, but will eventually succeed as a "multi-use, multi-purpose device" that plays games. Hardly an original idea, of course, but the rub here is that while lots of people have suggested Apple make a jump like this, the company itself hasn't been interested in doing so. Despite the App Store's success, Jobs still doesn't seem interested in games (the iPad is getting new iWork apps on day one, but all it gets officially for games is upscaling), and Apple has echoed the original idea of the TV as a "hobby." Hooking up the Apple TV to the App Store would be an interesting move, but I'm not convinced it's one Apple wants to make quite yet. Pachter says it'll happen as soon as 2012 -- we'll see.
Pachter: Natal more than $50 after all, DSi XL won't sell
In a stunning show that game industry analysts indeed are fallible human beings, Wedbush Morgan's Michael Pachter has changed his mind on Natal's supposed price. The prolific analyst prognosticated last year that price would be the primary factor in moving Natal hardware, leading him to predict that it would launch for less than $50. However, he now tells IndustryGamers that it will likely cost more, noting, "consumers will come to believe that the product and software has a lot of value." Furthermore, Pachter says that the higher that Microsoft and Sony price their motion controls, the less likely a consumer is to buy the competing product. In other words, if you spend $100 on Natal, you probably won't be too keen to plunk down another $100 for Sony's motion controller (and vice versa). Pachter also tackles the DSi XL. He has some choice words for the beefy handheld, pointing out the $60 difference between the DS Lite and DSi XL models. "I'm not sure that bigger screens provide the value that Nintendo thinks," says Pachter, adding his belief that the entire DS line is due for a price cut. He concludes the device won't succeed at launch "since it costs only $10 less than a Wii." Other topics discussed include Richard Garriott's foray into social media, the marketing of Dante's Inferno and the specter of third party success on the Wii -- "most third party Wii games just plain suck," says Pachter.
Pachter: Call of Duty to decline $250 million in 2010
With Activision's holiday fiscal report expected to release this week, Wedbush Morgan analyst Michael Pachter is predicting that the Call of Duty profit machine may not repeat its fantastic 2009 performance this year. As reported by IndustryGamers, Pachter believes the Call of Duty franchise will generate "sharply lower revenue," in 2010, to the tune of a $250 million decline. Not to worry, though, as he notes that Activision is likely to more than make up for that amount thanks to Blizzard's impending releases (hello, StarCraft II). Aside from that, of course, it's important to remember that we're talking about a $250 million decrease on almost a billion dollars, so it's not like Pachter expects Call of Duty to wind up in the toilet. It's worth noting that the previous Call of Duty title, World at War, initially outsold Call of Duty 4: Modern Warfare, though Modern Warfare remained on top after the dust settled. Unsurprisingly to anyone paying attention, Modern Warfare 2 turned around to outsell the original Modern Warfare. Still, all three remain among the best selling games of all time, so maybe it's okay if the next one is only phenomenally successful.
Pachter: Netflix on PS3 provided 'significant' membership growth
Netflix may not have a home on the PS3's XMB, but that hasn't hindered Netflix's success on Sony's console. Wedbush Morgan analyst Michael Pachter told Industry Gamers that "the recent PS3 partnership is driving significant subscriber growth" to Netflix's subscription services. Netflix will likely benefit even further when the service becomes a standalone app on the OS. Pachter reiterated that the Netflix disc will no longer be necessary by the end of this year. "Netflix's exclusive relationship with Microsoft on the Xbox 360 will end in November (after two years), allowing the service to be accessed via the PS3 dashboard later this year." Twelve million members currently use Netflix, and the service is likely to expand even more once it transitions to the Wii. Sure, a smaller percentage of Wii owners are likely to be interested in the service, but with Wii's billion-strong user base, there's bound to be some traction.
Analysts: Gamers won't care about iPad
Now that the gaming public at large has had a chance to discuss Apple's iPad, it's for the analysts to weigh in. Speaking with IndustryGamers, prior to the iPad announcement, Wedbush Morgan analyst Michael Pachter intimated that he didn't expect the tablet set the gaming world on fire. "It's going to have limited appeal to gamers, although some people will buy it obviously," said Pachter. He elaborated that the device could affect Nintendo's DS, though. In the end, however, Pachter expects the iPad to benefit the iPod Touch, thanks to a "cross-fertilization of games" between the platforms. Meanwhile, EEDAR's Jesse Divnich, speaking after the iPad announcement, said that iPad games would likely have to cost $20 for publishers to "treat the iPad as a serious gaming device." Divnich noted to the low barrier of entry on the iPad / iPod as the sticking point, saying that big publishers have a hard time competing with indie developers that can sell games at rock-bottom prices. He further elaborated that the competition on the App Store stifles big publisher profits, which in turn stifles innovation. "The lower the profit potential, the less resources and desires there are to push gaming standards ahead." Frankly, that point of view seems to neglect that many low-budget indie games do push gaming standards ahead, but that's another post altogether. The point is, it looks like gamers may not be flocking to the iPad. Honestly, we could have told you that, as the above snippet from Joystiq's company chatroom demonstrates.
Michael Pachter gets his own show, unbuttons his shirt
We frequently see the words produced by gaming industry superanalyst Michael Pachter -- however, a new piece of programming on GameTrailers gives us the rare opportunity to hear them straight from the man himself. Yes, a new video segment titled "Pach-Attack" gives the technoprophet his own soapbox from which he can voice his opinions and say his sooths, all presented in crystal-clear HD video. We've embedded the inaugural episode of Pach-Attack after the jump. If you happen to check it out, you'll need to keep reminding yourself that the casually-buttoned gentleman you're viewing isn't actually Don Johnson.
Pachter: Netflix on Wii won't matter as much as on other consoles
Wedbush Morgan analyst Michael Pachter doesn't think the announcement of Netflix streaming on Wii is that big of a deal in growing the rental service's customer base. Pachter's perspective is that "fewer than 20 percent" of the US's 26 million Wii owners are connected to the internet, which is a necessary component to stream movies through the service. In comparison, he believes over 75 percent of Xbox 360 and PS3 users are caught up in the internets. IndustryGamers reports that Pachter expects "some traction" from the Wii announcement, but that it won't "jump start Netflix activations." He believes the Nintendo console's installed base will "embrace the Netflix service only gradually." With so many consumer electronics receiving the Netflix streaming service, Pachter does believe it'll "allow Netflix to maintain its prior pace of subscriber additions as new customer additions from the Xbox 360 installed base begin to slow."
