Locked: Michael Pachter predicts PS3 will win this round of console wars

Forums - Sales Discussion - Michael Pachter predicts PS3 will win this round of console wars

I just found this and thought that it was interesting:

Tuesday, 24 January 2006

"SIG has compared year-by-year sales and estimates for the first five years of each machine's life, using sell-in and factory shipments.  It points out that in its first year both PSP and DS managed around 13 million units each, with DS slightly ahead.

Year two cumulative stats give PSP 25 million over DS' 22 million. In Year Three the difference rises to ten million (38m to 28m). In Year Four, PSP's lead has stretched to 15 million and to 20 million by Year Five.

Software unit sales will increase cumulatively from Year One's 70 million units to 122 million in Year 2, and over 200 million in Year Three.

SIG stated, "Sony will likely expand the addressable market for portable gaming devices with the PSP. As the class of gamers seeking console-like gaming grows, the PSP will be the only serious alternative to Nintendo portables. In time the variety and depth of games on the PSP could attract a larger demographic than even Nintendo portables."

It added, "Yet we must keep in mind that the PSP is Sony's first attempt and the launch has not been without problems. Hardware pricing is probably stifling PSP adoption, and ported game selection is limited."

SIG also points out that software revenue mix in calendar year 2005 will be Nintendo 58% / third parties 42% for DS, but Sony 24% / third parties 76% for PSP."


Essentially, a lot of the same arguments were made which claimed the PSP would dominate over the Nintendo DS but that has never seemed to happen

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Here's the big problem with analysts for Video Game market share.

Because most aren't serious gamers (which they shouldn't be), a large portion of their prediction comes from such factors as Formats (DVD, Blu-Ray), "Brand Value," and multi-media flexibility.

A disproportionately small value is given to how much fun people actually have playing these systems. Good games -- such as Metal Gear or Mario Galaxy -- are only given credence when their predecessors are known to move system units; in other words, those games are only given system selling value because of their brand name, not because they are actually fun.

To an analyst, the number and quality of games on a system is important, but not nearly as important as I believe it is to a consumer. For example, I know Pachter believes that a large portion of the PS2's success was the brand recognition established from the PS1 and its DVD playback ability; I certainly agree that both of those played a part, but my personal opinion is that the massive number of exclusive titles -- both high profile and budget -- played a much bigger role than he (or most analysts) tends to recognize. And again, I don't entirely blame him; how do you quantify such a property as the fun-ness of games?


How do these "enlightened" analysts keep getting attention (and getting paid), when they’re often so far off the mark?

@tabsina – Yeah, internet in shocking here.  Here's hoping for Howard to get kicked out of office.  I don't trust Rudd anymore than him, but quite frankly, I'm sick of Howard (for many reasons) and at least Rudd has thought about the future of broadband in Aus.

Ray007 said:
How do these "enlightened" analysts keep getting attention (and getting paid), when they’re often so far off the mark?

@tabsina – Yeah, internet in shocking here. Here's hoping for Howard to get kicked out of office. I don't trust Rudd anymore than him, but quite frankly, I'm sick of Howard (for many reasons) and at least Rudd has thought about the future of broadband in Aus.

Because the people investing in the sector are even more clueless. It's like the legally blind guiding the completely blind.

HappySqurriel said:

SIG stated, "... In time the variety and depth of games on the PSP could attract a larger demographic than even Nintendo portables."

Wow. SIG sure nailed that one, huh?


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I predict Pachter will loose his job by 2009... now, if only i could be paid for such an accurate prediction...


"A beautiful drawing in 480i will stay beautiful forever...

and an ugly drawing in 1080p will stay ugly forever..."

What I don't like is when these analysts pump and dump, like the other day with Majesco. There is a ton of insider trading that goes on behind closed doors. That's how these analysts keep their jobs, by defrauding the public.

Warcraft is so good and so good-looking that it got this immediate attraction; everybody who would ever consider playing an online game said, 'This is the one. I gotta try it.' And what'll happen is inevitably, like the health club model, after you pay your 30 bucks a month for 3 or 4 months and you only go once a week, you realize it's not worth it and you split. That's what will happen with Warcraft ... I think it's going to roll back to a million. I'm not predicting it's going to happen in three weeks; I'd guess it has a half-life of 6 months to a year,

-- Michael Pachter's prediction on World of Warcraft. This was after the game had been released, by the way. 


I'm curious, by the way. Why was this person ever taken seriously in the first place? I see no predictions of any kind that he's gotten right. Did he predict something correctly that no one else did at some point? That's usually how these guys rise to prominence.  


Blue3 said:
HappySqurriel said:
Blue3 said:
Probably right. Wii lacks the hardware power for a good 5/6 year life cycle.

I don't see how hardware power has anything to do with how long a console lasts ...

The difference in quality of graphics and processing power between the N64 and Playstation was huge but the playstation continued to sell (and have Million selling games) years after the N64 was discontinued; following up on that the XBox and Gamecube both had processing power advantages over the PS2 yet had much shorter lifespans.

Certainly, the difference in processing power between the Wii and PS3/XBox 360 is very large but so is the price difference. Eventually (say 2009/2010) the Wii will probably be $99 (with Wii Sports) While Microsoft is still trying to sell the XBox 360 for $200 (or more) and the PS3 is $300 (or more); there are far more people in the world who are willing to spend $99 on a console than are willing to spend $299 on a console.

lol you cant be serious. Even Nintendo fanboys should by now have accepted the fact that the reason for N64 failure was the dumb decision to use cartridges, Nintendos greed = cartridges = no 3rd party support = N64 failure . While PS2 games stand toe to toe with anything on xbox or GC, no sane person can say the same about wii games and PS3 or 360 games.

Why even buy a wii if a PS2 is half the price and has same quality games ? wont there be more people willing to spend $49 on a PS2 when $99 on a wii if its all about price ?


The PS2 will most likely be discontinued by Xmas 08, so I don't see how that's even an argument.  But what are people doing right now?  Oh yeah, they are buying a Wii instead of a PS2 at half the price...

The issue that Pachter seems to not understand (and in fact the issue Sony themselves seem to not understand) is the buying habits of the casual consumer. There are 3 factors to sell systems to casual buyers:

1.) The price. This is an obvious one. Historically, casual buyers will not purchase a system above $200. The PS3 will never reach this, and the 360 won't till near the end of the generation (not counting the core, which will never sell). Neither the PSone nor the PS2 experienced much success at all till they were below this price point. They were the first 2 real casual market systems.

2.) The most games. Another one that you would think is obvious, but for some reason people seem to miss. Casual consumers walk into a Walmart and see a wall full of PS2 games in front of them. In the back are cases less than half the size with Gamecube and Xbox games. They buy the PS2, because it has the most games. This is exactly what's going to happen to the Wii (and is already happening). It has more games than the PS3 and is gaining on the 360 fast. The game racks are in the front of the stores, right where random casual buyers will see them. It's the same deal with the DS vs. the PSP. The DS wall is twice as large, so it attracts the casual.

3.) The "next big thing." I always hear fanboys and analysts talk about some supposed Sony "brand loyalty." There is no such thing to the casual consumer. To the contrary, they are always looking for something completely new, and unique. They aren't loyal to a brand, because they are CASUAL. They buy whatever interests them at the moment. In this way, the hype behind the Wii is a giant beast that feeds off of itself and expands. The fact that it's always sold out, word of mouth, and the media hype behind the system just send the Wii into a state of exponential growth. The same thing happened with the PS2 and PSone. It has the media attention, and that's ALL it takes for the casual. The people who are talking about 80 million PS2 owners sitting and waiting are crazy. 80 million PS2 owners were casual, and they are buying the new casual system. The hardcore barely make a dent on the market, and they are the only ones who have anything like brand loyalty (and certainly not all of them either).