"For Nintendo, yes, things really are that bad" - analysts

By Robert Purchese Published 28 October, 2011

Do plummeting bottom-lines heap pressure on Wii U?

So Nintendo posted a six-month 70 billion yen loss (-£579.3 million / -$926.3 million), and now braces for its first yearly loss in decades. But it's Nintendo - are things really that bad?

"For Nintendo, yes, things really are that bad," Wedbush Morgan analyst Michael Pachter answered Eurogamer.

"Nintendo started out this cycle with a dominant handheld position and made a conscious decision not to compete with Xbox 360 and PS3 on graphics. They expanded their handheld dominance, and their decision not to compete with Xbox 360 and PS3 worked, and five years later, they are dominant on both console and handheld. However, their momentum has stalled, as iPods and smartphones proliferate, and as the 'high definition' consoles have overtaken the Wii."

"I called for the Wii HD in 2009 and again in 2010 because I saw all of this coming, and had enough respect for Nintendo management that I presumed they had to see things the same way that I did. It is clear that they didn't share my view, and this week's earnings report and sharply lower forecast are the consequence of their decision to stay the course in the blue ocean rather than compete in the red ocean.

"Unfortunately," he added, "this week's results show that Nintendo's blue ocean is no longer blue; the sharks are not only circling, they are devouring Nintendo's market share at will."

Nintendo's flagship Wii console has lost momentum and is now outsold consistently by Xbox 360 in the US, PS3 in Japan and PS3 in Europe.

The 3DS was supposed to catapult Nintendo back on top. But it didn't, so Nintendo did something it hadn't since 1997, and slashed the price of the 3DS after not quite five months on sale (in Europe).

Selling hardware at anything but a chunky profit isn't Nintendo's style, and the company yesterday attributed a significant portion of the six-month "huge loss" to lowered revenue from 3DS hardware sales.

But for Screen Digest analyst Piers Harding-Rolls it's still "too early to call the death knell of the 3DS". "This Christmas will tell us a lot more," he told us, "and its performance over the next two months will also be key in convincing third parties to increase investment in the platform.

"Nintendo's blue ocean is no longer blue; the sharks are not only circling, they are devouring Nintendo's market share at will."

Michael Pachter, Wedbush Morgan analyst

"At present, a lot of publishers are taking a wait-and-see approach and, even with a strong Christmas, I don't see major 3DS investment from third parties until the end of 2012."

Nintendo expects Super Mario 3D Land and Mario Kart 7 to bring home a big Christmas for 3DS - a handheld that has so far suffered from a lack of key Nintendo games. Will Christmas 2012 be the turning point for 3DS?

Whether it is or isn't, Michael Pachter believes 3DS will never achieve the same money-spinning success as DS.

"I said that the iPod Touch and the emergence of smartphones made it easy to deliver simple and fun games to the masses, carving out a sizeable chunk of the DS target market," Pachter said. "That has clearly happened, as is evidenced by Nintendo's lowered DS forecast and sharply lower DS/3DS software forecast.

"It's pretty clear that the potential for Nintendo handhelds is smaller now than it was when the DS was launched," he added, "and software sales are going to continue to suffer, as the value proposition of 'shovelware' on the handhelds has declined precipitously with the emergence of free-to-play and $0.99 games on iPods and smartphones."

Nintendo now expects to sell not 9 million DS consoles by the end of March 2012, but 6 million. Wii sales expectations are still 12 million for the full year, although Wii and DS software sales expectations declined.

Nintendo expects 3DS will still sell 16 million units by the end of the financial year, but the software prediction has fallen considerably from 70 million to 50 million units. Piers Harding-Rolls reckons hitting that 16 million hardware target will be "a challenge".

But, argued M2 Research analyst Billy Pidgeon, "slowing Wii and DS sales were expected". It was "the yen's relative strength against the US dollar and the Euro [that] was the real inhibitor here".

"Unfortunately," Pidgeon added, "the negative economic factor of a strong yen may continue to plague Nintendo and other Japanese companies dependent on American and European markets."

But what does all this mean for the future? What if 3DS sales don't pick-up, and what if Wii and DS sales also continue to decline - what will the ramifications be for Nintendo's new console, Wii U?

"The pressure is on for Wii U."

Billy Pidgeon, M2 Research analyst

"The pressure is on for Wii U," acknowledged Pidgeon. "Wii and DS will continue to decline, so Nintendo needs a good uptake on Wii U hardware coupled with a good attach rate.

"Wii U is not likely to match Wii performance, but the attach rate should be better if enough quality software titles are available as a smaller base will be more enthusiastic."

"Both 3DS and Wii U innovate," Piers Harding-Rolls told us, "but neither at this stage offer the potential of as much mainstream engagement as their predecessors. Add in competition from non-specialist connected devices and Nintendo's business is looking much less robust than at the height of the Wii adoption.

"With the 3DS failing to perform, the company has had to cut the price - this will have a knock-on impact on other internal costs to make up the margin loss in other areas. This could mean a reduction in R&D spend or perhaps a reduction in content development investment across its products.

"Nintendo is likely to find 2012 a challenge as it waits to drive sales again with the launch of the Wii U. The strength of the yen against the dollar has exacerbated the situation."

Michael Pachter concluded: "The Wii U will either succeed early, forcing Microsoft and Sony to accelerate the launches of their respective next generation consoles, or will sell only modestly, allowing Nintendo's competitors to launch later."

Nintendo president Satoru Iwata commented today that Wii U will be released between April 2012 and March 2013. He didn't commit to a pre-Christmas 2012 launch.

Will Wii U be rushed out to pick up the slack?

Picture of Robert.

About Robert Purchese

Bertie is Eurogamer's Senior Staff Writer. When he's not hunting down news stories he's often found playing with his kids or gabbling about fantasy games and strange online worlds. @Clert on Twitter.

Read more articles from Robert by visiting the Robert Purchese archive page.

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Comments (64) Latest comment 6 months ago

Comments for this article are now closed, but please feel free to continue chatting on the forum!

  • Goodfella #1 7 months ago

    Interesting, a headline without an actual article.

  • RhapsodyRules #2 7 months ago

    Self explanatory.

  • Entity #3 7 months ago

    analyst Michael Pachter
    Already can't take this seriously.
    Edited by Entity at 28/10/11 @ 16:06

  • wizlon #4 7 months ago

    Doom and gloom as usual. Reagrdless, I'm fairly sure Nintendo will be ok, a few more 3DS games next year and a solid Wii U launch lineup should get them back on the right track.

    ... and what's this about sharks?
    Edited by wizlon at 28/10/11 @ 16:09

  • RhapsodyRules #5 7 months ago

    The analyst is Michael Patcher? That saves me a lot of work reading through the whole thing.

  • monkfishjoe #6 7 months ago

    Oi, Pachter. Do one!

    Seriously, this is thier first loss in about 30 years. It was bound to happen after the enormous success of the Wii and DS.

    They will get over it and life will go on.

    Move away, nothing to see here.

    Edit: for terrible spelling...
    Edited by monkfishjoe at 28/10/11 @ 16:12

  • Gearskin #7 7 months ago

    "With the 3DS failing to perform"

    Yesterday it was outselling the DS in the same period.

    Whoop Whoop! Analysis.

  • harzo #8 7 months ago

    ""I called for the Wii HD in 2009 and again in 2010 because I saw all of this coming, and had enough respect for Nintendo management that I presumed they had to see things the same way that I did. It is clear that they didn't share my view..."

    No. I don't share your view either Pachter you over-paid, rambling fuck-wit.

  • paulf #9 7 months ago

    overtaken in yearly sales maybe but wii has still almost sold as many as ps3 and xbox put together, their problem is lack of software sales

  • pinchofsalt #10 7 months ago

    Michael Pachter concluded: "The Wii U will either succeed early, forcing Microsoft and Sony to accelerate the launches of their respective next generation consoles, or will sell only modestly, allowing Nintendo's competitors to launch later."

    So it'll succeed, or not. Nice.

    Is the 3DS a failure if its selling more than the DS at the same stage after launch?

  • JahB #11 7 months ago

    That man us an idiot. Xbox720/ps4 release dates are already set and won't move, regardless of Wii u sales.

  • dose #12 7 months ago

    Pachter saw it? Utter bullshit. He's been 'predicting' Wii HD coming out since 2010, and that's it.
    http://www.qj.net/qjnet/wii/pachter-wii-hd-in-fall-2010.html
    http://www.vg247.com/2010/01/21/wii-hd-is-coming-this-year-says-pachter/

    Stop listening to this guy. He knows as much as, if not less than the rest of us.
    Edited by dose at 28/10/11 @ 16:20

  • DSR3 #13 7 months ago

    Once Mario Kart 7 and Super Mario 3D Land come out, I think 3DS sales will skyrocket.

  • smelly #14 7 months ago

    As long as webshites keep posting his crap - He'll keep getting paid the big bucks to spout useless bullshit.

    And webshites will keep posting his crap as long as he keeps giving them sensationalist soundbyte headlines designed to get fanboys in a tizzy... Be it (in this case) fanboys of nintendo being upset by said article, or fanboys of other systems coming into gloat because how DARE nintendo make something other than shooters.


    .. and so the cycle continues..
    Edited by smelly at 28/10/11 @ 16:30

  • v.profane #15 7 months ago

    Billy Pidgeon sounds like a Viz character.

  • RawNinjaKid #16 7 months ago

    Agree with most here: Pachter - UTTER BULLSHITTER!

    It's a shame that N is set to post a lost AFTER 31 YEARS. But how much has the Xbox and Sony lost over the past 5 years. N will respond to the market conditions and things may get worse before than get better.


    I suppose this idiot thinks next Xbox/PS will be cheap as chips!!
    Edited by RawNinjaKid at 28/10/11 @ 16:54

  • LazyDan #17 7 months ago

    I went through and found a bunch of Pachter quotes in a previous 'analyst' article. He's gotten far more wrong than he has right, and only seems to ever simply support the trend in current news with his comments. For example, currently the news is very doom and gloom about Nintendo, so his comments reflect that. If Nintendo were to have a sudden turnaround and a new set of runaway successes, his comments would also suggest he predicted it all along and believes it'll continue.

    Utter tosspile.

  • 32768Colours #18 7 months ago

    Blah blah blah, I said this and I said that, and look at how clever I was to see all this coming... etc... etc...

    Pachter, if you're so bloody good at predicting stuff, why aren't you a billionaire venture capitalist by now, instead of blathering imbecile who earns his money judging others by their successes and failures?

    We're all guilty of playing armchair critic, but what a pathetic and unconstructive way to actually earn a living!

  • Malek86 #19 7 months ago

    @Gearskin: to be fair, the DS didn't get a 30% price cut within the first five months of release. It also wasn't released worldwide almost simultaneously like the 3DS was.

  • Garibaldi #20 7 months ago

    You'd think Nintendo might be able to absorb a failure or two due to the insane cash reserve they must've built up with the Wii. Then again, my knowledge of economics is somewhat limited.

  • nickthegun #21 7 months ago

    Spelling mistake in the headline. Should read:

    "For Nintendo, yes, things really are that bad" - says our pet analyst Michael Pachter

  • KDR_11k #22 7 months ago

    If Pachter says Nintendo is doing badly that means they're about to win big. Everybody knows Pachter is always wrong.

  • nickthegun #23 7 months ago

    Michael Pachter concluded: "The Wii U will either succeed early, forcing Microsoft and Sony to accelerate the launches of their respective next generation consoles, or will sell only modestly, allowing Nintendo's competitors to launch later."

    Mystic Meg eat your fucking heart out!

  • Alex_V #24 7 months ago

    I'm not sure what an earlier Wii HD would have done to stave off the current malaise. I do think Nintendo have done a terrible job in carving out a niche for the 3DS - most people I speak to don't even understand that it's a different product than the original DS.

  • Mr.Spo #25 7 months ago

    It's also only fair to point out the DS had a big advantage in that it launched in the Christmas season in Japan and the US, giving it a big early boost that wore off fairly quickly. I'd say that cancels out the boost from the price cut, as 3DS was terribly overpriced, whereas DS launched at a reasonable price in every territory. Both devices have gotten off to a slow start, but 3DS has a chance to accelerate its growth earlier than DS did.

    Things aren't terrible for Nintendo in the long-term--but they are terrible in the immediate context of their success with Wii and DS. However, as one of the analysts pointed out, so much of the loss of money can be put down to the absurdly strong yen and the weak Euro/Dollar impacting Nintendo's bottom line. The 3DS's price cut came halfway through the quarter, and sales tripled over the previous quarter, without any hit games (by Nintendo's own admission). If sales triple in half a quarter at the new price point without a hit game, then with a full Christmas quarter, with Mario Kart and Land in the West, a Nintendogs bundle, the new price point and Monster Hunter in Japan, surely 3DS is going to get a massive kick up the arse this Christmas??

    And what's more important is that at least one of those titles is a long-term seller, the kind of ever-green hit that drove the DS--Mario Kart 7. It's exactly the title Nintendo needs to push the 3DS onwards and upwards not just this Christmas but through next spring and beyond. Add to that the fact they're getting serious about dlc and firmware updates for the eShop and online multiplayer with Kart, and it's pretty clear Iwata and co are responding quickly and seriously to the criticisms leveled at the 3DS. The line up of games in the long term is very good--Resident Evil, Metal Gear, Animal Crossing, Mario Tennis, Paper Mario, Luigi's Mansion 2, Fire Emblem, Mario & Sonic, Professor Layton and Kid Icarus undoubtedly the highlights. Animal Crossing is potentially another ever-green seller, as well as a title positioned to take advantage of SpotPass and StreetPass. The 3DS should do very well for the next 12 months at least--the longer term future of both it and Vita is up in the air. There simply isn't enough data to speculate as to whether or not the handheld market can exist alongside the smartphone market, but I'm hoping it can--even as the smartphone boom lures hundreds of millions of consumers into gaming, tens of millions (in years to come, as Vita and 3DS become cheaper and more established) may be lured into or back into the traditional portable fold. The long-term aim of Nintendo is to create experiences akin to Nintendogs and Brain Training--experiences unavailable on any other piece of hardware, genres not yet exploited by videogames that will draw the masses in (Iwata has stated that details of such games will be revealed in the coming months). That's a bigger ask than ever, given the shape of today's portable market, but this comes from the man who stood proud at E3 2005 and promised a revolution on the back of a commercial failure of a console and near irrelevancy in the home console space, and then went onto deliver exactly what he promised.

    That's only going to happen if Nintendo address one key weakness--software pricing. It's quite telling they've drastically cut their 3DS software shipment forecast. People aren't buying the games because they are, by and large, over-priced. I will pay up to £25 or £30 for a top-notch handheld game, but asking £30 or £40 for every retail release is absolutely absurd. I want 3DS to succeed--but I also hope Nintendo struggle to meet their revised software estimates, and in turn decide to take a closer look at their software pricing strategy for 3DS, both at retail and on the eShop.

    As for Wii U, it's still far too soon to call. Valuable lessons have been learnt from 3DS, not least on software, which Nintendo have said will be far more robust, hence the 'delay' (if there can be a delay when no release was committed to) of the launch. Marketing will also have benefited--too many people thought 3DS was just another revision, so Nintendo will want to market Wii U as the next generation Wii, not a simple extension. Hopefully Nintendo will have learnt valuable lessons from the online troubles too, and have robust online features from day one with Wii U, as opposed to a month or more later as with 3DS. And finally, Nintendo must be willing (if necessary) to take a hit on price in order to keep the machine affordable. Wii U cannot have an inflated tag as 3DS did, or it will die before it has a chance to prosper.

    3DS's troubles may be the best thing that could have happened to Nintendo. They've experienced success beyond their wildest dreams with Wii and DS, trumping even their most optimistic Wii sales estimate of 60 million lifetime by at least 30 million units. To stumble so badly so soon after so much success has forced Nintendo to look inwards and outwards for the causes of their failings, and react quickly to a competitive market. They're reacting far quicker and with far more intent than Sony did when the PS3 floundered on arrival, and now Sony are going from strength to strength. Hopefully something similar will happen here--the road might be tough, but if Nintendo are up to it, we should all benefit from their current troubles.

  • peterfll #26 7 months ago

    Michael Patcher, O why are you such a knob?
    Do you care that everyone thinks you're a conceited little sod?
    Do you think anyone really give a shit what you have to say?
    It's so much easier than doing a real job any day.
    Apparently you predicted that Nintendo would release the Wii HD?
    But the Wii U ain't that, you sad old parody.
    Perhaps you should stop blowing your own big bloody trumpet.
    And accept you're just a bit of a tosser, like it or lump it.

  • Spuzzell #27 7 months ago

    Ah, a finance based business model story on Nintendo, a subject and topic that has always fascinated me. This'll be genuinely interesting. "..said analyst Micheal Pachter" *instant close of window*

    The man is an idiot. If you must share his ridiculously ill informed opinions, can you at least mention him in the title of the piece so I know not to bother opening it? Cheers.

  • Kami #28 7 months ago

    I love EG, all the Michael Pachter hate...

    You all make me... *sniff* so happy... XD

  • HerrQwerty #29 7 months ago

    I wish I had a job that involved making up shit. The shit I would make up would at least reflect the industry not this brainfarting 'insight' of Mr Prachter. Oh well back to the Job Centre. :cry:

  • Bluetooth #30 7 months ago

    Great, another attention seeking, loudmouthed analyst.

  • roz123 #31 7 months ago

    They have released next to no decent software for the wii yet in 2011. Thats why its selling fuck all

  • Rens11 #32 7 months ago

    Nintendo only have themselves to blame neglecting the Wii for the last few years except for a couple of games not investing in first party titles and a lackluster launch lineup for the 3ds hasn't helped either

  • Kalime #33 7 months ago

    That michael pachter surely is pretty arrogant... "I'm so smart I could have saved Nintendo, but they didn't listen to me... I have predicted this and that"... Don't call a potential client "dumb" even if you believe they are.. first rule of consulting for dummies...

  • murphy1978 #34 7 months ago

    Might help if they launched a console with a killer game; arguably that hasn't happened since the N64. By the time the big guns come alone, a lot of momentum has gone.

  • andromeda #35 7 months ago

    Michael Pachter - Analcyst

    say no more

  • Vortextk #36 7 months ago

    I love how foolish it is to tar and feather the man while offering your own horrendously uneducated opinions on the matter on a fucking video game websites comment section.

  • TonyHarrison #37 7 months ago

    Analysts have been getting things wrong regarding Nintendo for the best part of a decade. The GameCube was going to be their last home console, The DS (and now the 3DS) was supposed to go the way of the virtual boy, the Wii was going to be their last home console (note how they keep saying things in the hope of eventually being right) and it would not clear 18million in lifetime sales.

  • Kami #38 7 months ago

    Exactly.

    The problem is this idea that Nintendo are doomed has been around since the 90s, and it's become as much of a hopeless joke as the "PC Is Dying" line. It's not that I don't get that analysts have their jobs to do - but being an analyst is basing your projections on past behaviours and facts.

    That despite all the evidence to the contrary they continue to bash Nintendo is at best unprofessional, and at worst pathetic.

  • photoboy #39 7 months ago

    Pachter didn't "call" for an HD Wii, he predicted one. Smacks of sour grapes to me that he got his prediction wrong so now he's rubbishing Nintendo.

  • Jay1983 #40 7 months ago

    @Kami
    Totally agree. Definitely pathetic.

  • makeamazing #41 7 months ago

    I see the problem with the 3DS is that people really don't think its a big step up from the DS... and with a lack of software, people are just using it as a replacement DS and so when they do get one are not getting any software.

    After the success of the Wii, I always thought they would struggle to emulate the same level of success, people who rushed out and got a wii, are unlikely to get a Wii-U. At work 5 of use had got a wii, and none of us are getting a Wii-u, well at least on release.

    So for me, i do think that Nintendo has reacted slowly but also the economy has also had an effect, people are just not going to buy in the same numbers for the next few years

  • Rack #42 7 months ago

    For terminally stupid and/or ill-informed investors expecting Nintendo to grow from 2007 levels the situation is dire, Nintendo stock is almost certainly overvalued to a ridiculous degree. Nintendo itself will no doubt struggle onwards with modest sales for a good while yet

  • penhalion #43 7 months ago

    Nintendo's policy of releasing pretty much nothing for their consoles except at the start and end of their life cycles has finally caught up with them. It is no longer enough to promise a mario or zelda and have the units fly off the shelves. People are now smart enough to say "I'll wait for the actual game to come out before I get the unit". It's taken years but, we've finally stopped buying nintendo based solely on a screenshot of a zelda or mario title that may or may not arrive some time in the next 10 years.

    I'll be sad to see you fade nintendo but, it's about time you either put up or shut up quite frankly.

  • Crazy_Colt #44 7 months ago

    stand-by "analyst" Pachter

    more like "that annoying asswipe that makes a buck of obvious and making retarded predictions"
    what a pawn.

    now what?
    .
    He's gloating over Nintedo's ONE bad year after decades of successes !?

    "nya nya na nyana, i told ya, but u didant listan , u gotta go hoard HD core! for shizzle"
    ----

    if you're such a genius, why dont you make a living off investing somewhere, instead of insulting our intelligence

    .
    seriously, did this guy ever predict something that wasnt obvious already?

  • Schmoke-n-a-pancake #45 7 months ago

    Although Nintendo's troubles are hugely overstated, and Patcher's comments are drivel, I do hope the Wii U gets rebranded and redesigned.

    There are some very fundamental things that Nintendo need to accomplish with that machine that haven't been evidenced yet.

    They need to secure EVERY cross platform title, whether it be GTA5, Metal Gear Solid: Rising, proper FIFA, Arkham City, everything that's going to be on both the Sony and Microsoft machines needs to be on the Nintendo on an at least parity performance.

    They also need a major Mario title from the get go, and the promise of a new Zelda within a year to 18 months. Revisiting many of the lost franchises: Pilotwings, Wave Race, Starfox, F Zero, would be a good move, but we need to see new IP too.

    Then they need to have an online set up that's comparable to an XBL or iOS. What they've done to date has been archaic. As superficial as they may be, things like Facebook, Twitter and YouTube integration are fundamental for targeting the mass market. They are supremely well known brands that will make buyers comfortable.

    Lastly, they need to abandon the Wii branding. It will create confusion as the DS/3DS has, and it will create an image which doesn't cut it in 2012/13 as it did in 2006.

    That touch screen pad needs to start looking far glossier than it does too.

    Hopefully Nintendo can at least accomplish some of this. I'd like to be a potential buyer by the time release date arrives, but as yet, I'm fairly underwhelmed by what I've seen.

  • RawNinjaKid #46 7 months ago

    One major thing they do need is to invest and create a better online infrastructure for digital sales. (and of course online play as well!!)

    A XBL or PS+ monthly fee type service (I prefer the latter) would create a variable constant revenue stream from consumers and increase brand loyalty.

    Very important I think.
    Edited by RawNinjaKid at 29/10/11 @ 01:05

  • sevenforce #47 7 months ago

    Dear Mr. Pachter. Please. Stop. Talking... cheers bye...

  • Farzlepot #48 7 months ago

    I think the biggest problem facing Nintendo over the next couple of years is the very market they've been targeting.

    So-called 'casuals' are not especially loyal customers, and don't tend to spend a lot on gaming. This is evidenced in part by the Wii's woeful game attach rate. If the Wii that they use every now and then for Wii Sports is fine for them, they aren't going to rush out and buy a Wii U. They aren't early adopters. HD isn't going to matter to them - if it did, they'd have bought one of the HD consoles to begin with.

    Secondly, a lot of so-called 'hardcore' gamers, who do exhibit brand loyalty and do spend a lot of money on what constitutes their hobby, aren't necessarily going to be keen on rushing out to buy the Wii U either. I've heard a lot of people complaining that they felt neglected by Nintendo this generation, and many have switched to competitor consoles. With that in mind I reckon they are more likely to hold out for a Sony or Microsoft console (as an owner of both, I envisage Sony having a more commanding lead than MS next generation - my Xbox hasn't seen a decent exclusive in ages, but Sony haven't yet 'pulled a Nintendo' on me.

    The 3DS faces similar problems, with the addition of strong competition from iPods, phones and - for the more hardcore - Sony.

    Nintendo have a knack of pulling through when others would have failed (lol Sega), but they are definitely facing problems now.

  • reeferchief #49 7 months ago

    "The Wii U will either succeed early, forcing Microsoft and Sony to accelerate the launches of their respective next generation consoles, or will sell only modestly, allowing Nintendo's competitors to launch later."

    You're telling me people get paid for these pearls of wisdom? Where do I sign up?

  • ubergine #50 7 months ago

    I hope Nintendo take a beating. I liked them far better as the underdog in the n64-GameCube days. At first I was happy with their success with Wii, but they completely failed to make good on it. Their online is infantile, their pricing is conceited, they did not ramp up output of content despite having an astonishing pool of cash, they could not provide an environment to court enough worthwhile third parties and they seem to think putting out one great game every year or two a platform makes. Nintendo's approach to business is dogmatic and antiquated and they have squandered the core goodwill they gathered in the GameCube era by appearing to downsize first and second party production even as their financial ability to do the opposite soared. The Wii was not managed to have a future, even as they dragged out the lifespan of this flash-in-the-pan fad.

    They have a lot of growing up to do as a company to get my interest again.

  • trugs26 #51 7 months ago

    Who does Michael Pachter think he is? And why do websites insist on publishing his claims? He's the worst "analyst" I've ever seen. /facepalm every time I read what he has to say.

  • ubergine #52 7 months ago

    Isn't he a dude who makes recommendations to people about what shares to buy? Based on his educated guesses of corporate decision making and performance and market trends in the context of. onletung businesses? So he might say something like "The people who bought Brain Training are now buying Angry Birds, so sell Nintendo shares and buy Apple."
    I've never read his pamphlet, just always figured that's what he's for.

  • Grayvern #53 7 months ago

    Ah, Michael McNamara was right to treat his employees like slaves, business reality ,Pachter.

    The problem is analysts influence the market with their ramblings creating self fulfilling prophecies, do you want to live in the grim darkness of the near future Pachter and the like will create?

    Treated essentially as a mechanicum servitor.

    Although to be fair greater men than he have fallen to hegemonic pressure.
    Edited by Grayvern at 29/10/11 @ 17:22

  • captain-future #54 7 months ago

    Ah Pachter is a funny man. He's right about 50% of the time, but for his credit he is (then was) dead right about Wii HD.

  • arbok #55 7 months ago

    I think you're all really a bit harsh on Michael Pachter. For an analyst he certainly plays a lot of games and enjoys talking about them. If he didn't have the title of 'analyst' he would just be a regular joe talking about games and all you people wouldn't trash him. It's only because he calls himself an analyst that you think everything he says must be true and when its not he's not doing his job correctly. It's just one dude's opinion. I don't see you guys getting worked up over the other two people's comments in the article.

  • Turfschipper #56 7 months ago

    Goodluck with your new fanbase: ugly housewifes and their non spending babys.

  • Kami #57 7 months ago

    Arbok, let's break his piece down. I'm wearing rubber gloves people, so I won't catch anything from this dissection. I always use protection.

    "Nintendo started out this cycle with a dominant handheld position and made a conscious decision not to compete with Xbox 360 and PS3 on graphics. They expanded their handheld dominance, and their decision not to compete with Xbox 360 and PS3 worked, and five years later, they are dominant on both console and handheld. However, their momentum has stalled, as iPods and smartphones proliferate, and as the 'high definition' consoles have overtaken the Wii."

    Let's break this chunk down.

    1) With the amount of Wii sales, one may argue by NOT competing directly that Nintendo achieved dominance. Just because we as gamers talk more about 360 and PS3 games, it doesn't make the Wii any less of a games console - that's what it is, by definition of what it does. It's a medium through which games are played. Nintendo have sold in excess of 90 million Wii consoles, whereas the 360 has sold 55 million and the PS3 just shy of 52 million. That's true as of July this year by the way.

    A good analyst would argue that this is clearly the sign of saturation, and sales naturally slow down as you approach saturation point. There aren't many reasons for people to buy a Wii if they already own one, after all.

    If anything, Nintendo are close to breaking records here - it took the PS2 5 years and 9 months to reach 100 million units shipped (Sony do love that word) - the 90 million + are what we know are recorded sales - the Wii isn't 5 years old yet (that happens in a few weeks) and it's on the threshold of breaking sales records.

    You can argue that's a sign of market dominance. Sure, we as gamers would like more games - but don't take away from that that the Wii has failed. It hasn't. It's made Nintendo very rich, with massive surpluses in reserve and hurled them back to the most dominant force in the industry.

    2) Momentum has stalled. I love seeing this, sales slow down naturally over time. Remember the last time we were at this stage of a consoles lifespan? That's right, we were more interested in the next-generation consoles on parade than most of what we were actually playing.

    I've said it in the past but, hell, let's go again. SHOCK HORROR! Someone call the Daily Mail, a technological aspect of a machine may have somehow run its course and become boring. Let's all be terribly horrified and proceed to kick them whilst they're down.

    Also, let's be clear about this. The growing smartphone market is as dangerous for Sony as it is for Nintendo - that's the facts here, you can't somehow claim one machine will suffer over another. If the 3DS is struggling versus the smartphone industry, then Sony themselves will also suffer - seeing as it is twice the price, closer to the cost of high-end smartphones and of course, the iPad. You have to accept that such a thing would apply equally, across the board.

    Except we know this isn't true. Wii sales have stalled - the closer it gets to 100 million, the more realistic a slowdown becomes. The 3DS is selling more or less in like with DS sales, and that's hardly a bad thing either - the DS went on to become a serious force in the handheld market, but it was also by no means a smooth birth. And Sony and Microsoft sales will teeter out around these high figures, and Sony will see good sales with the Vita is my prediction. It's the PSP2. With that much power, the technologically horny amongst us will ensure it is a success.


    "I called for the Wii HD in 2009 and again in 2010 because I saw all of this coming, and had enough respect for Nintendo management that I presumed they had to see things the same way that I did. It is clear that they didn't share my view, and this week's earnings report and sharply lower forecast are the consequence of their decision to stay the course in the blue ocean rather than compete in the red ocean.
    "Unfortunately," he added, "this week's results show that Nintendo's blue ocean is no longer blue; the sharks are not only circling, they are devouring Nintendo's market share at will."

    3) Wii U is, essentially, Wii HD. Except it's a new console, with a new controller (a controller I happen to think may once again prove to be a clever move, Nintendo have a long track record of influencing the designs of our controllers - I see no reason yet to doubt this is any different). Technically, he was right, but in another regard, we saw this coming in 2008. We knew the next Nintendo console would be HD, and that the Wii was unlikely to get an HD variant to keep costs low. This is what many of us like to call "Stating The Obvious".

    4) Taking credit for Nintendo's lower sales huh? Wow, I'm sure Pachter would LOVE to believe his own hype, but I call BS. An analyst doesn't technically have the power to force a market to change - the idea is to PREDICT changes, not state the obvious or repeat what has already happened. This man has a pretty high opinion of himself and believes his own hype - like many a man, this makes him very annoying.

    5) And finally, the sharks circling thing.

    Okay, let's face facts here. Nintendo has posted a current fiscal loss of $926.3 million. (Corrected)

    That is bad... or is it?

    Compare it to the losses that Sony have made. In May this year Sony posted a $3.2 billion loss. The year beforehand it was a $439 million and the year before that $1.1 billion (all well documented).

    Microsoft at least have a lot more going on to draw profits from (also helps that it's not based in Japan right now I guess), but last year their X-Box division still posted a $172 million loss. And Microsoft have already gone on record to note that the X-Box Live service is run at an operational loss - and that they may never make any money from the 360 at all.

    And yet, all three companies have reserves, have other areas to recuperate their losses from, and will all release new consoles. Nintendo next year, Sony and Microsoft - who knows?

    By analysing all of this data, I conclude that Nintendo are in the same position Sony and Microsoft are in - they've made a loss, but it's nothing compared to the profits they've already made, and banked, and their reserves which continue to accrue interest as well.

    And we all knew the next Wii was going to be earlier than the PS4 or Next-Box, and HD, and probably not come with the Wiimote controller. We've kind of been saying this since 2007, when the Wii was a year old. It was just... kind of obvious.

    ...

    And none of this is hard to find out or verify. Most of this I found out by using... shock horror... *pauses to make a deep and menacing voice*...

    GOOGLE! *crash of lightning*

    So I can bash this guys analysis down by typing "Sony losses 2010" and "X-Box Losses 2010" or "Worldwide Wii Sales" or "Lifetime PS2 Sales" into a search engine and reading the news reports sites about it.

    THAT is what makes Pachter a bad analyst.

    And that's what makes me a gigantic asshole, I know, but I'm at peace with that reality. It's not something I'm proud of but I do hate marketing and PR bullshit, it just makes me mad enough to want to rip it apart piece by piece.

    Petty, I know, but I'm in pain, it's 2:38am, I haven't slept in 30 hours and I'm a bit tired of this mans obvious-ness.

    Wall of text crits you for 999,999 Damage (999,999 Overkill).

    Sorry people. As way of apology, here's a link to a video of a cute kitten.
    Edited by Kami at 31/10/11 @ 08:37

  • metroid455 #58 7 months ago

    I don't think things for Nintendo are as bleak as this guys says but I agree that the next 12 to 18 months are going to be an uphill battle for Nintendo. the 3DS needs software and it needs it now its as simple as that

    As for the Wii U who knows at this stage but unless it has some heavy hitters ready on launch then its going to struggle but hopefully they've learned from their mistakes with the 3DS launch, fingers crossed (^^)

  • metroid455 #59 7 months ago

    @Mr.Spo great post mate

  • KennyPowers #60 7 months ago

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  • RawNinjaKid #61 7 months ago

    @Kami

    Nintendo made a loss of 70 billion yen loss (-£579.3 million / -$926.3 million); THIS semi-year period.

    The annual loss that is predicated is actually much less at 20 billion yen (-$264 million). MUCH LESS. It's just that Nintendo NEVER make a annual loss that makes this a big deal.

    And yes, I agree both Sony and MSFT have invested so heavily this generation that they will never make it back this generation. And NOW they see Nintendo's HD next generation console coming; and they will have to respond to it, i.e further investment!!
    Edited by RawNinjaKid at 30/10/11 @ 18:09

  • Kami #62 7 months ago

    Cheers for that clarification RawNinja.

    Point stands though it's a drop in the ocean compared to the losses Sony are posting (and will make trying to achieve market penetration with the Vita - it will sell at a loss!), and how much money Microsoft are willing to throw at the X-Box division to keep it working in the market.

    It's the first loss Nintendo have posted, and you have this years natural - and not so natural - disasters, an inflated yen, a global economic downturn and the fact they're also trying to release the Wii U in the next year or so to take into account. That adds up, so yeah, $264 million is the predicted loss (it may be more, it may be less) but despite that sounding like a lot of money... it really isn't. Not compared to its rivals, in any case.

    It's one year of losses at a time when the economic landscape is in turmoil. If Nintendo had posted losses year on year for the Wii, then Pachter may be right - but one year of losses compared to the hundreds and hundreds of millions that the Wii and DS have pulled in the past four years? I'd say this isn't a sign yet that Nintendo are in any financial trouble.

    That said, I will go on record here and say that despite the obvious reality that Wii U and its games will see an "official" unveiling at E3, we could of course use a little more information now. I'm fairly certain that it would help them in terms of shareholder value - uncertainty is never a healthy diagnosis for shareholders, whereas having more concrete things like specs, games in the works and an actual finalised design would give them more confidence.

    You can't base a projection on a fiscal quarters losses. Not when for years beforehand Nintendo have been so profitable, despite not being the "dominant" force in the industry.

    It's quite apparent Pachter is very bad at his job. Yes, we're all armchair analysts. It's just a bloody pity that most of us are better at it than he is - and time after time, we keep showing this up and pointing it out.

    So it amazes me he even gets a mention... let alone his comment being used in the header. Seriously?!

    Come on EG. You can do so much better than this guy, surely?
    Edited by Kami at 31/10/11 @ 08:42

  • Downside #63 7 months ago

    Wii and its wiimote was clever... The wii u doesn't bring enough different to the table. Kids grow up and want to play COD.. Bye bye wii, hello Xbox

    3ds? A bigger ds? Could have saved a packet and just cranked out more ds software. Ooo 3d... Oooo not a big system seller is it, or they wouldn't have to slash the price

    Nintendo losing their way a bit..

  • Kamata #64 6 months ago

    Pachter can do one, but I think Ninty are in deep and it wont be as easy as some of you think for them to turn it around....They are currently struggling with the 3DS before their biggest competitor has even come to market. Vita will destroy it.
    3D simply isnt catching on, its a gimmick.

    As for the Wii U, the console immediately alienates the audience that brought Ninty such success with the Wii, the family based gamer. Part of that success was the simplicity of the controller. Now give us that back and hold this giant slab of plastic grandma.

    I am still holding judgement on the Wii U cos it looks very capable, but they will certainly have to work hard at marketing it for the family, let alone the core gamer and do so before MS and Sony come with their next platforms.