Digitally Downloaded (DD): The current generation of consoles brought a lot of changes to the industry. With the anticipated arrival of the PS4 alongside the Wii U, what are your expectations for the upcoming console generation?
Michael Pachter (MP): I think that the upcoming generation has the potential to be somewhat underwhelming, given that advances in processing power will be less dramatic than in the past. The step from PS1 to PS2 was an increase in data processing power of around 48-fold, enabling 3D-like images; the step from PS2 to PS3 was around 40-fold, allowing HD and fast frame rates; the step up from PS3 to PS4 is likely to be only four-fold, so greater graphical detail and faster frame rates will be possible, but the difference will be barely discernible.
I think that all games are likely to run in full 1080p at a minimum of 60 frames per second, but it isn't clear that much is gained by adding more than two million pixels (the output of a 1080p display) or by running at faster than 60 fps. The latter is definitely possible, but it's unclear whether the consumer will appreciate much of a difference at 72, 90, 120 or even 240 fps. My expectation is that every frame will contain two million pixels, which has been a problem in the past, so textures and shading will be even more lifelike and realistic. Other than that, I'm not sure that the appearance of games will improve dramatically.
DD: In a recent statement, people concluded that your technical expectations for the PS4 included "hyper-realistic games" and the graphical capacity to render images at 240FPS. In theory, this is an immense (and arguably redundant) advancement over the current capability of consoles. Would you care to elaborate on this for us?
MP: I didn't say the word "hyper-realistic;" that was a NeoGAF interpretation. I said "capable of rendering 240 fps" as an example to a business reporter of what a four-fold increase in data processing could mean. The people who found that comment offensive are clearly just unhappy people with nothing better to do. Specifically, I said a four-fold increase in processing power, and simply multiplied 60 fps by four to illustrate the point. I do not expect games to be made that fast, as elaborated above, because I don't think it will add much to the experience. As my idol Jamie Kennedy says, "haters gonna hate" no matter what I say.
DD: Considering the ongoing decline of mid-tier development alongside the financial duress many triple-A developers are experiencing, do you expect the industry to undergo a significant shift in priorities in light of the new generation?
MP: My understanding is that game development won't be significantly more expensive going forward. Both Ubisoft and EA have said to expect a 10 per cent increase in R&D, while Activision has made noise about the potential for a "dramatic" increase in R&D. I tend to believe EA (which makes many more games), and expect only a modest increase. If that is true, we probably won't see a major decline in the number of developers. Publishers will still be trying to make money, will still rely on third party developers for ideas and talent, and provided that consumers embrace the new consoles, we should see a resurgence in health for the industry.
DD: Many argue that the current model of development in the industry is neither productive nor sustainable. Bearing this in mind, do you expect the PS4 to pioneer another significant technical leap for the next generation (as with the PS3), or to focus on other attributes?
MP: I agree that the current model isn't healthy, but I think that is more attributable to the rise of online multiplayer, which literally has grown eight-fold this generation. Online multiplayer results in consumers playing the same game much longer, and the only party that profits from this is Microsoft (through Xbox Live Gold). Publishers and developers must now design games that have 10 hour single player campaigns and unlimited multiplayer, resulting in gamers playing their games for hours on end; that limits the propensity to buy other games, so overall software sales have been on the decline for four straight years.
I'm sure some of your readers will comment that I don't have any idea what I'm talking about, and others will say I'm calling them entitled, but software sales have declined by 39 per cent since 2008, and that gap has not been filled by DLC, which has added only around 5 per cent to overall sales. The current business model does not provide enough revenue to support the development of as many games, and if gamers aren't willing to spend more, they won't get as many choices. I think we will see another attempt (by Activision) to monetize multiplayer (on the Bungie game) this year. We'll see if gamers revolt against, or accept the new business models.
With that said, I think the PS4 will focus on other attributes to deliver a rich multimedia experience, and expect integration with music and movies.
DD: On the topic of multimedia, what do you expect to see Sony do regarding cloud gaming, given its acquisition of Gaikai?
MP: My view is that Gaikai lets the PS4 become backwards compatible by allowing users to stream old games. It isn't clear whether they will allow people to play their old games, or whether it will require the games to be purchased again, but I think that is the intention.
DD: It has been evident for a while that Sony is in a worrying financial condition. How do you believe it will be able to absorb the initial costs of establishing a console in the market?
MP: I don't cover Sony as a public company, but my understanding is that they have cash and credit lines, and I'm pretty confident they can fund a major product launch. If they can't, they have many assets that they can sell (television and movie content, the music business, etc.). I don't see this as being a problem.
DD: What are your thoughts on the concept of consoles-as-a-service? Do you consider it to be a viable business model, particularly in regards to Sony's future endeavours?
MP: I don't see consoles as a service materializing this generation. It's too much of a change all at once, and if Sony did this alone, Microsoft would not, giving consumers a clear choice. I think we will see a slow migration to a service model, with the aforementioned subscription multiplayer I expect from Activision. It will be one game at a time, and not a frame-breaking change in business model.
DD: With Nintendo's recent collaborations with various developers and publishers, it is evident Nintendo aims to engage better with third-party developers. What strategies do you expect Sony to adopt with third-party development for the PS4 this time around?
MP: Sony has always received full support from third parties making multiplatform games, and I expect this to continue. They have had less support from third parties with exclusive content, and have had to buy the developers to keep games exclusive. I expect to see fewer exclusives next generation, as the economics don't really make sense, and expect to see more multiplatform games from studios like Insomniac, who historically have made Sony exclusives.
DD: The video-game market has been experiencing a contraction in the overseas market for the past couple of years. With this becoming a potential duress for the industry, where do you believe Sony's priorities lie with the PS4, its development and the next generation in general?
MP: I think that making the PS4 announcement in New York rather than Tokyo demonstrates the shift described in your question. The Japanese market is no longer as important, and Western markets are far more important. I think the timing (6 p.m. New York time) is a modest accommodation to Tokyo (7 a.m. there) and a slight snub to Europe (11 p.m. and midnight in most places), reflecting the importance of the U.S. market. I may be reading too much into this, but it could be because of multimedia capability, and the inclusion of music or movie people at the event.
DD: Curiously enough, there are still a number of highly anticipated PS3 titles to give the console a formidable start to 2013. What are your thoughts on the PS4's alleged revelation at such short notice?
MP: Don't make much of the short notice, as Sony didn't want to commit to a date it couldn't meet. I've heard that they intended an event in February for a long time (at least since November), but the late announcement simply served to keep me from attending.
DD: With the PS3 still performing to a reasonable extent in the market, how do you believe Sony intends to manoeuvre/persuade its current fan-base into the next generation?
MP: My guess is that the next generation console will not be backward compatible, but may allow PS3 discs to be "read" so that they can be validated, and the consumer may be offered a PSN or Gaikai experience that will enable the playing of older games. I think this is enough incentive to get many consumers to buy new consoles, as the lack of backward compatibility will also force publishers to adopt the PS4 standard more quickly. I could be wrong with this prediction though.
DD: With the transition into the next generation taking shape, how do you believe Microsoft will respond to Sony taking the initiative with its console unveiling?
MP: Microsoft will announce at E3, not before. I think they are on track to launch at the same time (October or November), although I think that Microsoft is far more ambitious about multimedia, intends to include a TV tuner, and has many more relationships with television content owners that must be worked out prior to launch. Expect Sony to own the spotlight until the first week in June.
- Farida Y
Follow me on Twitter: @FaridaKYusuf
21 comments:
Great interview!
I agree that the current consoles need a refresh, but I'm still not ready for the next generation of consoles just yet.
Good interview, the only thing Id say is japan is a very strong market still
So neogafs interpretation of his quote was wrong? he should be whining to Bloomberg for misquoting him http://www.bloomberg.com/news/2013-02-01/sony-preps-playstation-update-in-push-to-keep-consoles-relevant.html "They’ll be able to put a lot more characters on the screen and allow for
hyper-realistic games,” Pachter said, so instead of calling a bunch of games enthusiasts assholes he needs to get his head out the sand and not say such outlandish things, he should apologise to the gaf community, as the anonymity the 'net provides means he's just going to become running joke.
not really for home consoles. The 3DS is going to sell much more than all other home consoles in Japan this next gen just like DS did last gen and even PSP came close
Or, he could get on with his life and his job.
Being a "running joke" for years doesn't seem to have affected his employment or his duties at Wedbush. I don't think they are the type of employer who suffers fools for the sake of guffaws. :)
I cautiously agree with this, but I want to first see if Nintendo can ignite the Wii U over there. That platform, with its off-screen play in typically space-constrained households, ownership of the Nintendo brand and roundup of most of the top Japanese gaming titles seems best positioned for that market.
the 3ds is outselling everything globally, not just in japan
Thanks for the thought provoking interview. When we can separate the Pachter "sound-bites" from actual informed back-and-forth with the guy (i.e. context) we can better appreciate his opinions.
The three main points that I focused on:
1) The relatively small leap in performance of the next cycle. Agree with this observation, and Chris' sentiment below. With so many people seemingly calling for "dat next-gen jump in graphics" I can't help but wonder what exactly that means? Looking at Far Cry 3 on a high-end PC today (low end, I suppose, in 3 years), how many more leaves do they need to render? I feel like people will end up buying into a marketing message borne of desperation because there has to be something as opposed to an actual quantifiable leap in experience. I do look forward to how the new boxes push forward service integration in the living room tho. Speaking of...
2) Gaikai being monetized as a Sony Virtual Console service makes a ton of sense. This site has posited on the role of PS+ going forward, and my opinion is that the service doesn't charge enough. It possibly treats customers too well at the expense of game sales...if I'm playing 1 or 2 new (to me) games via the service/month, it holds that I will pursue less new game purchases since my time is finite. Sony needs to reap higher revenues here AND they need to make that $400 million acquisition of Gaikai pay off. Thus I am waiting to see if they announce an enhanced service, perhaps at different tiers, for a higher monthly.
3) On the topic of lower sales, I am fascinated with Pachter's theory that Multiplayer consumes gamer time and thus takes away from new game sales. There is no concrete way to prove this with sales data being incidental rather than conclusive. As a customer who doesn't play any of these fancy multiplayer games, I am biased into thinking that console economics has frozen out a lot of sub-AAA projects (moving them perhaps to mobile at lower risk and overall revenues). I sure have acquired a ton of iOS games this year!
The one thing I'm wondering is what the TV Tuner would be used for in the next Microsoft console, seems a bit odd, unless he's thinking the system is going to go the cable TV route of some sort, and offer it's own streaming service (like a Netflix maybe?). I'm still thinking Microsoft will have the most affordable console initially, attached to a Xbox Live subscription of course thereby making it more expensive, and that could start making things very interesting on the Nintendo and Sony front (specifically Nintendo, since they don't have a subscription model setup yet).
I'm still not sold on the Cloud gaming right now though, and that has more to do with the services going down from time to time, as even Netflix does.
I don't know how it is in the US, but the Xbox 360 already streams Pay TV here in Australia.
However, it uses a lot of data to do that at the moment, so I suspect a TV Tuner and a more traditional connection to Pay TV will work better in the next gen. It would make a lot of sense to me, as Microsoft is clearly aiming for its games consoles to be all-purpose entertainment units.
1) I agree with you. As you'll remember, I wrote an op ed not long ago about how Sony and Microsoft need to focus the marketing message more on services and features than power, but people are just not going to be that impressed with power jumps any more.
The vast majority of the market just wants to play interesting games. Wii Sports was interesting.
2) I suspect that the third parties offering games through PS Plus aren't making any money from it. The Ripstone guys from a previous interview never mentioned making money from PS Plus, just being at the top of the charts.
If they are making any money, it's secondary. And, if you look at the way Sony charges all of $11/ month for something like eight million songs through Music Unlimited, it seems clear that Sony is, for now, competing on price. It seems that they've turned it all profitable - see last financial results, so for now I don't think it would be so bad for Sony to charge a couple of dollars per month to give people a "Virtual Console" service that slaughters the competition.
3) Well, Pachter's point works in line with my own argument that "time" is the biggest expense that developers have to deal with - the point is that multiplayer games suck up a whole lot more of the consumer's time. Spending 100 hours playing CoD online is 100 hours that the other game developers haven't got a hope of selling a game to a consumer.
I'm sure award-winning analyst and consulting firms such as Wedbush have a better idea of who is and isn't competent for the job than some guys on NeoGAF ;-)
You're both right. The 3DS is by far the most effective console in the market right now - and Japan is its major market.
However the home console market in Japan is really struggling. The Wii U hasn't really taken off, and even the PS3 is now struggling to hit decent numbers. This is despite the PS3 still selling well in the west.
And of course the Xbox 360 was dead on arrival in Japan :P
The US market is struggling too relative to its size as well. Comparitively. Consoles are selling as well as they can
That's true as well. :-) It's just that the effect has been more pronounced in Japan than the west.
On point 3, your earlier article is exactly what i had in mind as well. Pachter's been voicing this point for a little while now and I certainly follow the "Time is Finite. Multiplayer Games soak up more time. Thus, less time is left for other game purchases." line of reasoning.
At the same time, even taking monster Call of Duty sales into perspective, there are plenty more customers who don't play those games much less spend 100s of hours with them. I am wondering if console publishers can realistically still serve those customer bases at their project scales and desired price points because surely that represents a good chunk of lost revenue as well.
This is really my roundabout way of saying that a lot of value has migrated to other platforms and wondering if Pach sees any next-gen console initiative capable of recapturing that.
I'm glad the 3DS hardware sales seem healthy overall (I will surely upgrade to one eventually) but am disturbed that this has not translated to the widespread software support enjoyed by its predecessor. I hope this year's Big Show will allay those fears as last year's felt a bit of a bummer in terms of 3DS support.
I've also read reports saying that Durango is kitted with an HDMI input as well...don't understand what thats for. Gotta say I can appreciate Microsoft's ambition in building up all these services and working overtime to link all their computing platforms.
Regarding Nintendo pricing, comments made by their executives have given me the impression that the U price can be dropped without too much pain if needed. If the base SKU was a loss-leader by the margin of a single game sale I assume production scale in the later part of this year will give them additional flexibility with price if Microsoft and Sony come out with very aggressive pricing.
Actually, that new ZombiU bundle about to be released in the US feels kind of like an unofficial price cut to me. $40 more than the deluxe and you get a pro controller AND one of the standout games for the young system (along with all the Deluxe pack-ins, including Nintendo Land).
yep
Every system needs to get ignited.
no I mean it beat every other console COMBINED in Japan. While it isn't that much more than PS3 (a console that is 7 years old and $80 more) at this point globally. Japan is the most important for handhelds so they set the pace. Japanese buy more handhelds than home consoles which goes against the trend.
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