Shysters posing as ‘analysts’ - by Sean Malstrom

What is worse? The fraudsters posing as analysts to attract investor money? Or is it the game journalists, who have no integrity or else they’d stop quoting them every week, are acting as their willing stenographers?

One good thing about the Wii is that it is revealing that the ‘analysts’ do not analyze. As you’ll see below, they can’t even get basic historical facts right from even a few years ago. Let’s go through this entire Gamasutra story. For your reading pleasure, my comments will be in red.

With both next-gen consoles now priced at $299 and ready to unveil motion control solutions before long, Nintendo would be best served cutting Wii prices to $199 while it still has an advantage, analysts say.

Ready to? I thought they were already unveiled! Did someone not see E3 2009?

Analysts had anticipated Microsoft would lower the price of the Xbox 360 in response to Sony’s $299 PlayStation 3 Slim unveil, and move came today, far sooner than some had forecast.

The Xbox 360 Elite will receive a $100 price cut to $299.99, putting it on level with the PS3 Slim. The Pro SKU drops $50 to $249.99, but the system will be phased out as its current stock depletes. The Xbox 360 Arcade model, which includes a memory unit and no hard drive, keeps its $199.99 price point.

Given that the Xbox 360 has had the most stable sales performance of any current consoles this year, was the price reduction even necessary?

But the Xbox 360 DID have a prior price drop. Consoles that recieve price drops, even if the sales number remains the same year over year, is a sign of declining sales performance.

Gizmondo also had a stable sales performance for this year. This is why looking at a percentage is a waste of time.

Last year, people were saying the Xbox 360 was in the doldrums and in trouble. Incredibly, there seems to be no ‘big picture’ view of the industry.

EEDAR analyst Jesse Divnich says yes, because $299 is now the “sweet spot” for console pricing and any hardware above that mark will become an outlier. This means Microsoft’s pricing move is aimed at remaining competitive, rather than at boosting sales — Divnich isn’t expecting much of a sales lift.

Why is $299 a ’sweet spot’? These were the same people who told us the HD Twins would have amazing sales despite their high price points when they launched! Back then, they said, “It was all about the brand!”

Lazard Capital Markets’ Colin Sebastian agrees. “We view the Xbox price cut as a proactive measure to maintain market share and boost momentum ahead of the key 2H selling period,” he says. Whether the hardware price cuts can drive a turnaround in the summer industry slump, however, depends on how software does in the holiday season.

It is clear Xbox 360’s price drop is acting like any other Red Ocean product.

Analysts felt that the price reduction for PS3 placed some pressure on Nintendo — now that the Xbox 360 has followed suit, they say, the pressure now intensifies, especially as new motion control schemes from both next-gen consoles are poised to attract Wii’s demographic.

What is this Wii “demographic”?

Do they really believe that motion control schemes were what attracted the Expanded Market in the first place? Where did the DS get its expanded audience then?

Divnich notes that the Wii’s success came both from its lowest price point as well as its library of family-friendly games. “In previous console generations, these price sensitive and casual gamers would have had to wait three to four years before more advanced hardware consoles were in their price range and sported a strong library of cheap casual/mainstream/kid oriented titles,” he says.

Divnich is just making up history now. What he is saying is flat out wrong. The PlayStation 2 launched in the U.S. at the price of $299. At that time, the Dreamcast was doing price cut after price cut. Gamecube would have a dramatic price cut. Sales momentum of both consoles never improved.

If Playstation 2 launched at $299 and it was considered the ‘high end’ back then, then why is $249 suddenly the ‘low end’ of the market?

“Essentially, Nintendo stole potential PlayStation 3 and Xbox 360 consumers from this hardware lifecycle three years in advance,” Divnich adds. “In order to maintain this position Nintendo should drop their Wii console down to $199, not because the current Xbox 360 or PlayStation 3 pricing structure poses a threat; rather, because they will eventually pose a threat.”

The ‘rationality’ of price dropping to compete better is nothing more than the ‘rationality’ of the Red Ocean mentality.

Nintendo is going with a ‘Blue Ocean’ mentality. It is still a long time before PS3 or Xbox 360 actually release a motion control device with software. This move by the HD Twins is akin to ‘mature’ games released on the Gamecube to remove its ‘kiddy’ image. Momentum won’t be turned around that easily.

“Nintendo’s strategy should be to capture as many consumer dollars as possible while their competitors are still weak in their offerings to the casual audience and price sensitive consumers,” Divnich adds.

Ahh, there is that magical market again: the ‘casual audience’. I have to chuckle how Wii is always ‘threatened’ because the HD Twins are supposedly moving from the ‘high market’ to the ‘low market’ with their price cuts and family friendly games. Yet, the Wii somehow only stays at the ‘low market’. Disruption says that the Wii would grow to the ‘high market’ as well. In other words, why is the Wii never a threat to the HD Twins? Even if the HD Twins put out motion controls, the Wii still is running rings around them with new interfaces.

EEDAR is also joined by Stern Agee in predicting a new $199 price point for Wii before the holiday season sets in, possibly as soon as October.

“The truth about consumer goods, something Sony and Microsoft have finally realized, is that you design your product around the price threshold consumers are willing to pay—just because you can cram nine processors into your console, it doesn’t mean consumers will pay a premium for it,” Divnich concludes.

But Microsoft and Sony DID think customers would buy their consoles at those prices. It was all about the brand, so we were told.

What I am surprised is that our amazing analysts are not mentioning that Nintendo did price cut the Gamecube in a major way. It did not change the momentum of the console. Do they really think Iwata is going to make that same mistake?

It seems like all these ‘analyst says’ articles are nothing but advertisements for their firms and free ‘content’ for game journalists since they don’t appear to be able to create compelling content on their own.

These are junk articles. ‘Filler’. People get upset because these ‘articles’ are insulting to the consumers’ intelligence. Stop being stenographers please, game journalists!