Digitally Downloaded’s Farida recently had the opportunity to have a talk with infamous games industry analyst Michael Pachter. Infamous because his words are often twisted by the enthusiast press as having a vendetta against Nintendo, and of late Nintendo’s Wii U console. To set the record straight he elaborated for us that he is not the tireless “anti-Nintendo Scrooge” of the industry that he’s made out to be after all.
Digitally Downloaded (DD): Quite a few developers, including Ubisoft, Vigil Games and Straight Right, have offered praise on the capabilities of the Wii U. Many consider this as just simple PR marketing for their investments – but seeing as the Wii U is pioneering as the first next-gen console to come, what is your take on the third party interest?
Michael Pachter (MP): I think that developers are going to make the most of the Wii U, and all are hopeful that it is successful. It’s not in anyone’s best interest for sales of the console to fall flat, so all will put the most positive spin on its prospects that they can. In my view, it’s unlikely to capture consumers’ imaginations, and I think it will be viewed as underpowered once competitive products from Microsoft and Sony launch. Until then, I think it will sell very well.
DD: Pre-orders for the Wii U have been rapidly selling-out largely around the U.S. This, combined with the Wii U’s launch-window of over 50 titles, the consumer base for the Wii U seems to have very large initial interest. How do you think the Wii U will fare in its first few months of sales?
MP: Pre-orders are going to almost certainly exceed the limited supply for the first month. I think Nintendo will manufacture 1.2 million per month (beginning mid-September), so there will only be 2.4 million or so manufactured at launch, with 600,000 likely going to Japan, 900,000 to the U.S. and 900,000 to Europe. I think that I personally know 900,000 people in the U.S. who want a Wii U, so of course it’s sold out on pre-order.
DD: In another interview with the A-List Daily, you said that you had the opinion that the Wii U is essentially a segregated DS. Although the potential for the GamePad doesn’t seem to have been fully realised by developers yet given it’s only just launching, do you still believe this will be the case by the end of the Wii U’s first year of sales?
MP: I don’t see the Wii U as being as novel as the Wii was, given that the control scheme (Game Pad with touch screen) is so similar to the DS’s control scheme. I’m not sure that the dual screen experience will be as enjoyable if the two screens are in different places, but I suppose we will see what developers come up with to delight fans.
DD: A while ago, we remember you saying that you believed the Wii U would be “all but assured of limited third-party launch support”. With anticipated third-party titles such as ZombiU, Rayman Legends, Bayonetta 2, Ninja Gaiden 3: Razor’s Edge and Monster Hunter 3 Ultimate as well as significantly increased multi-platform support reaching Nintendo, do you still stand by your previous statements?
MP: I think that third party support can be measured by commercially successful titles. That means titles from EA, Activision, Take-Two, Valve and Bethesda in addition to the ones you mentioned from Ubisoft and Japanese developers. Activision appears to be the only “major” other than Ubisoft to be on the console in a big way, and I think time will tell if the others support the Wii U. Right now, I don’t see the level of support that I expect to see for the next consoles from Sony and Microsoft.
DD: Could the possibility of more third-party support for Sony and Microsoft be attributed to their lesser-renowned selection of first-party IPs than Nintendo, from your own perspective?
MP: No, greater third party support has nothing to do with the first party lineups at Microsoft or Sony. Third parties create content in order to sell it and make profits, and they choose to support Sony and Microsoft because they expect greater sales than from Nintendo, period. This could be because they feel that Nintendo’s console is inferior, because they think the Nintendo core customer is different from the Sony or Microsoft core customer, or some other reason. It’s not really clear why, but they haven’t historically supported Nintendo well since the N64, and I am not hearing many comments about strong commitment to the Wii U.
DD: Do you believe that the Wii U will still cater to both existing Wii consumers (what with almost full backwards-compatibility, retention of casual-friendly titles and prominent utilisation of the Wii control scheme still existing) and the newer, ‘core’ fan base Nintendo is trying to attract with its new console?
MP: Yes, I think Nintendo will cater to both existing Wii and newer hardcore customers.
DD: With the recent partnership between Nintendo and Unity Technologies and the positive response so far, as well as the praise being offered by indie developers (Frozenbyte and Broken Rules) on the performance so far on Nintendo’s established communication with indies and many launch-day indie titles lined up for the platform, how do you think Nintendo will fare with the success of the eShop on the Wii U?
MP: eShop is going to be a tough sell. I think that adoption of downloads will be directly correlated to adoption of multiplayer, given that most consumers don’t feel a compelling need to connect consoles to the Internet solely to buy indie games. I suppose this is a chicken and egg argument, but it seems to me that multiplayer adoption drove the success of XBLA, given its impact on XBL Gold memberships. I think the same happened with PSN; as more people joined to play multiplayer games, sales of indie games grew. This should be similar on the Wii U, so we will see if Nintendo or third parties come up with a killer multiplayer app to drive Internet connections.
DD: Do you believe that what Nintendo has in mind for Nintendo Network (which we are yet to know much about) is something to exceed its rivalling digital platforms as of the moment, and in the full phase of the next console gen?
MP: Yes, I think Nintendo intends to exceed their current digital and online offerings.
DD: Before the Wii became a hugely acclaimed success in the industry after launching, you seemed to have the exact same concerns for the console as you do now for the Wii U. You also claimed that the Wii “got lucky” – why do you believe the Wii U to be a different case?
MP: I actually changed my view of the Wii when I first played a game on it. It was magical, and I really had high expectations after E3 2006. I didn’t feel the same way about Wii U. If I’m wrong, I’ll admit it.
DD: The Wii U doesn’t seem to be pioneering new technology integrated into gaming the exact same way the Wii did, but the Wii U also seems to be improving over its predecessor in quite a few other aspects, e.g. a new approach to online gaming interaction, a more approachable digital platform, better third-party support and options and an entertainment hub factor. Do you think Nintendo’s new approach to the gaming industry will serve successful for it?
MP: I agree with all of your comments about online, digital platform, third party support and other options. I think that Nintendo is doing a lot of things right, although some (online in particular) are somewhat late and may take several years to develop. I’m not sure that any of these will drive console adoption, primarily because in many ways they are far behind Sony and Microsoft, who have most of these things already.
DD: It could be said that the competing online facet everyone’s been anticipating from Nintendo is quite late, but with the introduction of the previously unseen concept of Miiverse, would you say that Nintendo has justified its lapse in this particular sector of gaming?
MP: Yes, I think Nintendo is making up for lost ground online, but I still think it’s late and will take a long time to grow into a competitive service.
DD: Nintendo is yet to release any further details on its online system aside from Miiverse, and it seems both developers and consumers have been left in the dark for now. With the Wii U just on the horizon for release in November, what do you have to say on this issue?
MP: I think that Nintendo is still working out online, almost as if it is late to the party. It is late to the party, and I think that its online rollout will be an uphill battle.
DD: But with the Wii U scheduled for U.S. launch just less than a month away, wouldn’t you say the belief that Nintendo’s online service still not being completed before they announced a launch date would prove rather worrying?
MP: I don’t know if Nintendo’s online offering will be ready in time for the launch, but if it is, it will almost certainly be a work in process.
We’d like to thank Michael Pachter for taking the time to talk to us.
Great interview. I liked that you asked him about Nintendo's communication about the Wii U's online component, or lack thereof. It simply boggles my mind that Nintendo has said virtually nothing outside of what Miiverse is and that there will be an eShop. Nintendo's lack of clarity on an integral part of their console alone is what's stopping me from getting one at launch.
I completely agree with every single concern that was discussed and while I anticipate Wii U doing well in the market, I think there will be several factors that will keep Wii U from being as successful as its predecessor, with the most notable of these being the iPad Mini.
Well, they did say at the Wii U Preview event that they will detail Miiverse before the system launches. I agree though, I don't understand why they are seemingly so tight lipped on it…though perhaps it's to blow everybody's expectations away?
What he said about third party support though, is kind of a two way street really. I mean, how is EA supposed to look Wii U owners in the eyes with a serious look, after this Mass Effect 3/Trilogy fiasco?
On the "eShop is going to be a tough sell.", he didn't acknowledge the Digital Promotion, which they have announced, just not a lot of details on it…so, that's at least like a carrot to encourage digital purchases.
There's a few quotes we can go on with their online, but those don't matter until they give us the details and we hear it from the horses mouth…even then, it's a "trust but verify" issue.
I will say, being that he though the 3DS was going to do extremely well (not sure if he thinks it has, even though numbers are above the DS' I believe), I wonder with him not expecting the Wii U to do as well as the Wii…if this means we all need to buy Nintendo stock NOW!? 🙂
"though perhaps it's to blow everybody's expectations away?"
– I would argue that's a very bad marketing strategy, and I think more than anyone else in the games industry, Nintendo is a well-oiled marketing machine.
I think Nintendo is being very close-lipped about the online service because they don't want people to gain unrealistic expectations about the service.
"What he said about third party support though, is kind of a two way street really. I mean, how is EA supposed to look Wii U owners in the eyes with a serious look, after this Mass Effect 3/Trilogy fiasco?"
Thing is, though, it's Nintendo's job to give third party publishers a reason to invest in development on its console. It is not EA's job to support the Wii U. It's EA's job to make games that sell a lot of copies. And if Sony and Microsoft are supporting EA better, EA will support those companies more.
"I will say, being that he though the 3DS was going to do extremely well (not sure if he thinks it has, even though numbers are above the DS' I believe), I wonder with him not expecting the Wii U to do as well as the Wii…if this means we all need to buy Nintendo stock NOW!? :)"
The 3DS has done extremely well. It's been the #1 console in Japan (Nintendo's most important market) for months now, and is utterly slaughtering every other console there.
"I would argue that's a very bad marketing strategy"
Where was the argument? Blowing away expectations is a bad marketing strategy? Or, staying closed-lipped is?
I think I'm misreading your point.
Oh, you actually wanted my argument – lol, sorry, I was using a turn of phrase.
Ok. When you've got an impressive feature on a as-yet unreleased product, generally what you want to do is focus on those impressive features to drum up support for the product. After all, you need to sell something that people haven't seen before – you need to give them a reason to buy it.
And something that people can visualise – such as funky online features – is even better than stuff that people can't see, such as specs. Most people don't care about specs because they aren't directly interacting with the innards of a console. They do however care about online interfaces and experiences, because they're directly "touching" those.
So Nintendo not showing off its online features means one of three things to me – 1) They're not that interesting, 2) They're interesting but not yet finished 3) They're terrible and Nintendo's hiding the reality so as to not affect initial sales.
I tend to believe it's 2).
"Thing is, though, it's Nintendo's job to give third party publishers a reason to invest in development on its console. It is not EA's job to support the Wii U. It's EA's job to make games that sell a lot of copies. And if Sony and Microsoft are supporting EA better, EA will support those companies more."
That's still a two way street I think. I absolutely think Nintendo will give publishers a reason to invest in the Wii U (Bayonetta 2, Monster Hunter 3 Ultimate, Ninja Gaiden III, are just a few examples), but to say that EA announcing Mass Effect 3 for the Wii U, then announcing Mass Effect Trilogy for the others doesn't seem stupid to gamers, I don't see it. If anything, they should decide to miss the Wii U launch with Mass Effect 3, and give Wii U owners the proper port…but it will help them justify not developing for the console, because their ripoff game didn't sell well, if that's what they're looking for. Are consumers that dumb? Maybe. I don't think early adopters will be though, and I think it will sell terribly. If I were Nintendo, I wouldn't put a DIME into that game's marketing at this point.
I think it's going to be interesting to see what happens in the U.S. with the 3DS, because I just don't think it has been selling well…and the fact Nintendo hasn't touted September's numbers for it makes me 0_0, and wonder what exactly is going on with it.
As for Pachter and commenting, I always have to check what he says (make sure I don't need to get him to clarify something)…and see how far he goes, or doesn't go. Sometimes he stays on base, and this time I think he did for the most part.
"generally what you want to do is focus on those impressive features to drum up support for the product."
I don't disagree with that, but I think Nintendo knows what their supply is, and again, they did say it would be detailed before launch. Their financials are being reported next Wednesday, so it could be happening here soon… more so to tame investors maybe, than to sell consoles.
I think with stores in the U.S. getting demo stations this week, that the marketing will be opening up full throttle here soon…
"That's still a two way street I think. I absolutely think Nintendo will give publishers a reason to invest in the Wii U (Bayonetta 2, Monster Hunter 3 Ultimate, Ninja Gaiden III, are just a few examples), but to say that EA announcing Mass Effect 3 for the Wii U, then announcing Mass Effect Trilogy for the others doesn't seem stupid to gamers, I don't see it. If anything, they should decide to miss the Wii U launch with Mass Effect 3, and give Wii U owners the proper port…but it will help them justify not developing for the console, because their ripoff game didn't sell well, if that's what they're looking for. Are consumers that dumb? Maybe. I don't think early adopters will be though, and I think it will sell terribly. If I were Nintendo, I wouldn't put a DIME into that game's marketing at this point."
Notice how Nintendo's best third party support almost always comes from Japanese companies? I suspect that Nintendo is not even close to making the kind of investments to justify EA dedicating the resources to port an entire trilogy to the Wii U.
Reading between what Pachter is saying here, the broad point is that Nintendo struggles with third party support specifically in western markets. We're in an environment where Activision and EA are important breadwinners for a console, and the ball really is in Nintendo's court to do something to encourage both of them.
Nintendo didn't outbid Sony or Microsoft to gain exclusive DLC for the next Call of Duty game, for instance. Pachter's point is, perhaps they should have.
That is an interesting point – perhaps Nintendo is playing a "word of mouth" game, and letting the sold-out first batch of consoles do the talking, such as it is, for the effectiveness of the online infrastructure.
That isn't necessarily what I would have thought of doing, as it flies in the fact of my understanding in marketing theory, but hey, I'm certain Nintendo has the research to prove me wrong in this instance.
Pachter should be ignored.
Hes a moron
look at what he said about cod on wii u and look at what happened
" I think that third party support can be measured by commercially successful titles. That means titles from EA, Activision, Take-Two, Valve and Bethesda in addition to the ones you mentioned from Ubisoft and Japanese developers. Activision appears to be the only “major” other than Ubisoft to be on the console in a big way, and I think time will tell if the others support the Wii U. Right now, I don’t see the level of support that I expect to see for the next consoles from Sony and Microsoft. "
Yeah because valve has a title at launch?
pachter is a moron on another level
Matt please, you are smarter than this please.
Do not allow pachter on your site again
"It's been the #1 console in Japan (Nintendo's most important market) for months now"
Its been the number 1 global system since last june
No, what he meant was the Wii U, in future, would need prospective titles from those developers that he mentioned. He actually did make sense, as that would help the Wii U on a huge scale.
It was an interesting discussion and apart from his shady opinions on the Wii U's future sales, he did bring some good insights on the console.
no he never makes sense. As a system doesnt need those devs to sell systems
This is the same loser who said there wasnt a single successful third party game on ds…………
HES ALWAYS WRONG ON NINTENDO, ALWAYS
therefore hes best ignored
its fact, not sure why there is a disagree
What I think you're missing is that Pachter doesn't represent any one particular company and he isn't a salesperson for them either. Instead, he gives his professional analysis on what these consoles will likely do on the market for their investors, by taking into account all the factors that could possibly sway consumers to/from the product at hand.
Gamers, in particular, don't like what he's says many times, because he speaks the truth as he sees it about each of the consoles. In his world, preferences will get you fired. It's just that simple.
Yes, he does point out a few issues that he predicts for Wii U, but as a whole, he seems opmistic for its future. I'm sure that Nintendo listens very closely to Pachter, because his predictions oftentimes are things that they need to make sure don't come to fruition.
I would throw in a
4) Not yet finished (thus bringing about your 3rd point) and they are still not fully sure what direction to take it/differentiate it
Otherwise, less than a month before launch and on a point they have absorbed mucho criticism over the last 10 years AND watched a competitor build a threatening market presence from nothing largely on the strength of this feature…just, oh man, Nintendo. Why is this not ready for showtime?
You know, I feel there is a macro discussion to be had here: "Has Japanese Societal Influence Misdirected the Market Perception of Japanese Tech Giants" or some such. Has the insularity of Japanese culture and society created a corporate bubble in Japan that blinds their largely Japanese leadership to the direction other markets are moving? Digital, mobile, online services have all been rife with missed opportunities.
I mean, looking at every traditional Japanese tech giant from Sony to Nintendo to Olympus to Sharp etc, they are ALL hurting and were ALL once in the position of market leader. To be fair, market leaders for all their size, wealth and power become susceptible to having the market pulled out from under them by some disruptive product and this phenomenon is certainly not limited to Japan. And I do realize that in many cases the cost of doing business has handicapped the Japanese co against a nimble perhaps more vertically integrated competitor. And yes, there is that super-strong yen. Also, I am not referring to the new class of Japanese cos like DeNA/Gree that have captured new markets and sucked up massive profits.
…I suppose I have just talked myself out of my initial point. Carry on.
I think all the threads are there for us to see what the market is weaving. Nintendo has secured the most powerful franchises in Japan. They ostensibly demonstrate stronger Japanese third party support, co-development efforts and advertising on behalf of Japanese partners. They have strong relationships there and are willing to invest in those partners. Meanwhile, with Microsoft a non-factor in that market and PS4 a year or two away (and Sony no longer a sure thing with the steady shift of Japanese customers to mobile, the Vita's flop and the company's overall dire straits across many of their key businesses) it gives strong incentive to hitch your wagon to Nintendo if you are a Japanese gaming company.
In other words, support in that market looks like it is consolidating around their strongest local player, Nintendo, who themselves are making the investments to expedite this process.
In the West, looking at how the company's products lack so many of the features/tech that customers outside of Japan expect, I can't help but think it underlines both a lack of investment in western partners and a lack of vision in anticipating the winds blowing in the greater global market. While I do think they are course-correcting on both counts above, as Pach indicates, too bad they didn't have a better reading of the tea leaves. I guess counting money during the salad days is a time-consuming endeavour.
Their relationship with EA is definitely particularly puzzling though. Almost 2 YEARS AGO we were under the impression that Nintendo was working with them closely, both in technological support for Wii U and in the form of very strong software support. We arrived at this conclusion because the CAME OUT AND SAID IT at E3 2011 and gave us all manner of winky-winks and nudgey-nudges. What the hell happened!?
But he is not really that dumb…it is just that the job he is hired for is on one level completely not catered to us ordinary gamers: to evaluate the market and give his investor clients an idea of the macro-trends in the video game industry and thus where potential investment could be made. It doesn't help his perception around these parts that his conclusions are not popular when he has something less than positive to say on a topic because invariably some group or another always gets offended.
Of course, in one sense, he is hired to appeal specifically to us: he gets such a rise out of the gaming enthusiast crowd it is a sure-fire driver of site traffic on video game websites :p
Yes, it does. Nintendo is obviously more focused on the Wii U expanding their previously poor third-party support with a more competent online system and the option for the Pro Controller. And they said it themselves that they want the Wii U to expand to their consumer base (especially into the "hardcore" fanbase), with which a lot of third-party support will be very useful. And with both Nintendo exclusives, and awesome multi-platform titles guaranteed for the Wii U, more people will be comfortable to adopt it as their main (if not only) home console so they don't miss out on any great games.
A system may not necessarily need those devs to sell systems, but they damn well need those devs to sell more systems.
no he is dumb
Those are very interesting points indeed! Matt has a better knowledge of the societal issues in Japan than I do and I'm sure he could elaborate a bit better on this than I could. Hint… hint… 🙂
Going back to your initial point about Nintendo's online structure, but I'd have to agree with you a bit more than others that have been brought up. I've read extensively about Miiverse – I used to write for a large Nintendo site – and I just don't find it interesting and/or innovative, like so many claim that it is. To me, it comes off as being extremely limited and light-hearted and when combined, those together (alone) can easily create a frustrating pain in the backside of a service, in my opinion.
I think that there's a real possibility that Miiverse will have about the same novelty enjoyment factor as the 3DS' AR Cards. You'll get those handful hours of "Wow!" and then it's a large service that's over-hyped and shouldn't have been structured around the entire console's online capabilities. Of course, I'm hypothetically speaking, but that's just how I see the matter so far.
That hasn't worked for Sony very well! 😉
The "cutesy" factor works brilliantly for Nintendo in Japan. I fully believe that their love for anime is one of the massive factors that makes Nintendo's systems so continually popular over there.
Let's just hope that Nintendo gets their online structure down, or hardcore gamers will never buy into Wii U as a sole home console.
Actually, I think maybe Nintendo wants to hold their cards close to their chest until just right before the Wii U's launch so that people are interested only days before they can get their hands on it. It's a very minor possibility, but the revelation of such an integral system is bound to garner the attention of loads of gamers – and they'll still retain interest long enough to buy a Wii U just a week or two later.
Otherwise, why would Nintendo be daft enough to release a launch date for a yet-to-be fully completed console, especially when they know they need to avoid a repeat of the 3DS launch crisis? As I said, it's a small possibility, but I think they're just waiting for the last minute to show a really core element of the Wii U. They did say they'd show more of Miiverse in-depth during the Wii U Preview Event thingamabob.
Oh, and there's a rumoured Nintendo Direct in about a week or two. Nothing official yet, but keep your ears out.
I hope you're right on this front.
From everything I've seen/read, I think it's going to be an online system that will appeal to younger gamers and Nintendo loyalist, but will be more of a annoyance to the hardcore crowd. I think that's why Nintendo is keeping it under wraps until the last minute. If they revealed that it is indeed a limited service, I don't think it's unreasonable to think that the hardcore crowd would drop their preorders/desires for Wii U in a split-second, seeing how the poor/limited online functionality for Wii was the largest turnoff for them last go around.
It's a good point – but just to play Devil's Advocate for a second – Nintendo knew the Wii U had to launch in time for Christmas in order to hit the sales targets. Just as the 3DS had to launch in time to close out the reporting quarter, release dates are decided on based on the investment demands. That's why the 3DS launched incomplete, and why it's a possibility that the Wii U will as well.
At this stage I would bet there are "more features to come at a later date" with the Wii U. Nintendo has waited until literally the last possible moment to sell it for Christmas.
I think you have a really good point RE the business culture in Japan. It does struggle to adopt to western ideas – even when they're proven to be successful. Look at the trouble that Howard Stringer had getting anything to happen with Sony – there is a culture of resistance in old Japanese companies to certain kinds of business innovation.
That said, I think the broader economy of Japan is the greater problem for the tech companies. Japan is a heavily export-orientated nation. It has very few natural resources of its own. Put those two things together, and then factor in the fact that Japan's traditional strength – producing quality goods at a high price – is being eroded by Korea and China which are just now producing quality goods (for the first time) at a cheap price, and you're at the real problem. Japan's traditional manufacturing strength is being destroyed because they can't compete on price, and in a global economic downturn few people have the money to continue to support their favourite Japanese brands at a high price.
There are some signs that the Japanese companies "get it" now though – Square Enix has done a brilliant job globalising its business, and as you mentioned there's the likes of Gree growing into a dominant mobile position across the world.
Here's by big prediction for 10-15 years down the track. The Chinese and Koreans will be producing the consoles we play games on. Nintendo and Sony (and Microsoft, this will affect western companies too) will evolve into content producers. Content is where the genuine profits are – Nintendo's internal developers can do as well on hardware that's not its own, and Sony's making acquisitions like Gaikai and developing services like Music Unlimited – these are preempting a withdrawal from the hardware market, I feel.
"At this stage I would bet there are "more features to come at a later date" with the Wii U. Nintendo has waited until literally the last possible moment to sell it for Christmas."
The only future feature not at launch will be the Miiverse APP for smart phones, and I guess PCs. They said that back in June, that the APP probably wouldn't be at launch for those devices.
As for waiting until the last possible moment before Christmas, this launch is the same as the Wii's launch, nearly identical. So, it's not really that surprising of a move. Now, waiting until December 26th world-wide would have been epic. LOL, missing Christmas, but hitting stores the next day… day after Christmas returns/sales would have been interesting to see how it did.
Well, I do hope you're right, Coffee, because I would rather not have to wait for six months like I did with the 3DS to finally have all the basic features firmwared into the console 😛
LOL! Or, 6 months for the first online multiplayer game like with the Wii… I'm trying to finish something on this topic, but knowing how I delay, it won't happen!