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Analyze This: New Year Resolutions for the Video Game Industry
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Analyze This: New Year Resolutions for the Video Game Industry

January 28, 2009 Article Start Previous Page 2 of 4 Next

Michael Pachter, Wedbush Morgan Securities:

What Nintendo, Microsoft and Sony should focus on this year with their respective consoles...

I would advise the console makers to focus on lowering prices for their consoles. It will be tough for Nintendo and Sony, with the incredibly strong yen, but I think consumers need a price point below $200 for the Wii and below $300 for the PS3 before they will truly feel comfortable committing to a discretionary purchase in 2009.

Nintendo has strong demand as a defense against price cutting, but that demand should begin to wane, now that they have sold so many Wiis.

Sony has the opposite problem, with stagnant demand for their console. Consumers don't fully appreciate why they need Wi-Fi, a hard drive or Blu-ray, and yet Sony continues to believe that consumers should buy PS3 for these features.

In my view, only a fraction of consumers wants Wi-Fi -- those who intend to play online and who cannot figure out how to connect to the Internet with a cable. Similarly, only a fraction wants a hard drive; witness the success of the Xbox 360 Arcade and the Wii as proof. An even smaller fraction is ready for Blu-ray.

The bottom line is that Sony over-engineered their box, and they have consistently expected consumers to appreciate that the extra features are "good for them."

The truth is that consumers would probably prefer a more streamlined offering, with increased functionality at a higher price. I think Sony made a mistake getting rid of the 20Gb PS3, as I think that this should have been their "core" model.

Microsoft is a different animal. They have made some traction among the masses, but they continue to be branded a hard-core console manufacturer. This is sort of like Alienware advertising PCs for home office use.

I think Microsoft has to continue to expand its Xbox Live Arcade and casual offering to reinforce that the Arcade version of the 360 is a real alternative to the PS3. If Sony cuts the PS3 price by $100, Microsoft has a steeper hill to climb.

What game developers should focus on this year...

Developers should figure out how to make games that the Wii audience wants. The Wii audience will buy mainstream games like Guitar Hero and Rock Band, and if developers can figure out how to address this market, they can be successful.

Looking at games like Carnival Games and Jillian Michaels' Fitness Ultimatum, it's clear that the Wii owner will buy anything, regardless of quality. Should developers successfully address this audience, they can make some real coin.

Overall prediction for the industry in 2009...

I think this is the year that makes or breaks publishers. Blind dependence on past market trends (i.e. make games for PlayStation and Xbox) won't work this year.

The publishers must focus on the Wii, and they must make every effort to market to that audience. If they do, we should see solid industry growth, likely in the high teens.

If they don't, I am afraid that Wiis will become paperweights, with owners continuing to play Wii Sports and Wii Fit, and not buying new software.

Article Start Previous Page 2 of 4 Next

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