Analyse This

Sometimes I love doing this. Every now and then you stumble upon something that amuses you. Something that almost writes itself in a witty and slightly obtuse way. Sometimes this is just too easy. Approximately two thirds of the times when I catch myself thinking “this is so stupid it’s already funny” I am reading something written by or said by a certain Mr. Michael Pachter.

For those of you unfamiliar with his work, Pachter is an “analyst” for Wedbush Morgan Securities. He tells the investment company what way he thinks the console industry will go. In an almost Orwellian twist of logic people with money (I think there are still a few) actually listen to what he says. They use his advice to pour millions of investment dollars into areas they hope will make them even richer. This is the guy that said he thought Sony would release a cheaper PlayStation 3 without the expensive Blu-Ray drive. You know, the one that actually makes the game discs readable. The drive that would, in its absence, make the PS3 a really expensive route to playing PSN games.

So, what is the lovable buffoon up to this time? Strangely he isn’t making far-fetched and unfounded claims that are obviously ridiculous to anyone who has more games industry experience than a humid monday morning looking at the consoles pages in an Argos catalogue. He is almost, almost mind you, talking sense.

In a document consisting of two hundred and ten pages his company have provided a blueprint for how they think the industry will pan out for the rest of this console generation. Most of it is probably very clever and accurate but what’s funny about that? I’ll be focussing on the few choice bits that are “classic Pachter”.

In the report Pachter claims that, amongst other things, the PS3 will overtake the Xbox and finish the generation in second place. This is entirely possible. The reason he gives? It will end up doing much better in Japan. That’s Japan which has a total population roughly 40% that of the US. Seems like fairly sound logic doesn’t it? Well, it isn’t really. Japan might have twice the population of the UK but it is only the third largest market for video games after the US and the UK so if the Xbox continues to outperform the PS3 in both of those markets then Japan deciding they’ve had enough of the endless stream of exclusive JRPGs and what they’d really love is some sack-based platforming isn’t going to make a whole lot of difference. It might contribute to the reversal of market positions but it will not be enough alone to cause it.

Pachter goes on to give reasons why the Wii will continue its march towards global domination:

We expect the dominant console at the end of the this [sic] cycle to be the Wii, as we think that the console’s low price point, innovative control mechanism, and compatibility with standard definition televisions will provide it with a competitive advantage over the next two years.

Those are the same standard definition televisions that the PlayStation 3 and Xbox 360 are also compatible with. For the record I believe he is also talking about a control mechanism which is to be rivalled (and let’s not pretend any different – probably bettered) by both the PlayStation and Xbox brands within those same two years he’s talking about. Oh, and just to round things off – the Xbox 360 is currently retailing at a lower price point than the Wii. I wonder what the next pearl of wisdom will be?

We expect Nintendo to sustain this competitive advantage by introducing a high definition version of the Wii, perhaps as early as the end of 2010, in order to convert its large installed base into true ‘next generation’ households

Hold on, you just said it would sell well because people want it to work on their standard definition televisions. Now you’re saying it will sell well because Nintendo are going to make an HD version which, following your own broken reasoning, is not compatible with standard definition televisions. Which is it? Or are you implying that the global recession is soon to be over and the entire population of Japan will suddenly find themselves up to the armpits in Yen with nothing but large screen HD televisions to spend it on? If they buy a new HD television they’ll have to upgrade their standard definition consoles won’t they because the two display types are clearly incompatible? No, they’re not, you just think they are because you don’t know if it’s Tuesday or October.

All things considered I actually think that Michael Pachter and Wedbush Morgan have probably stumbled into a correct forecast here. I believe that it is entirely likely that the PlayStation 3 will eventually overtake the global sales of the Xbox 360 and I don’t think either of those consoles has a hope of catching up with Nintendo’s little white box of low-resolution cartoons. I just think that Michael Pachter has used some very dubious logic in his reasons why the market will end up that way. If I’m honest, I really don’t understand why Michael Pachter is employed by Wedbush Morgan. I can only assume that he makes the best coffee in Los Angeles.

Source: Industrygamers