If you read about videogames on the internet then you've probably heard of Michael Pachter.
That's because when something happens in the games industry, people ring him up or send him an email. He's one of our pre-eminent talking heads.
In his role as analyst for investment banking company Wedbush Morgan Securities, he also writes numerous reports on companies like Electronic Arts and Activision Blizzard, advising investors on whether it's worth taking a punt on them.
As part of his research he also gets to sit in meeting rooms (probably not the windowless variety) with executives like John Riccitiello and listen to them outline why their company is worth investing in, which means he gets to find out about what's actually going on way earlier than most of us do, too.
But who is Michael Pachter? What does he do every day? Who cares?
Eurogamer decided to find out.
Eurogamer: What is it you actually do?
Michael Pachter: My job is primarily to advise investors, and by investors I mean big mutual funds and hedge funds. Our smaller accounts maybe have $100m under management and then all the way up obviously to several hundred billion. The average average is easily $1bn. I talk to guys who manage billions of dollars, and my job is to help them make better investment decisions.
Eurogamer: When do you go home?
Michael Pachter: I left at 4pm yesterday, maybe slightly after. I got home at around 5, and after dinner and helping my kids with homework I went upstairs from 6.30 and finished my Dreamworks note and hit the send button to my boss to approve. And then I watched American Idol and went to bed.
I typically work two out of three weekends. And I probably work about three hours on a weekend. All my NPD previews are done on the weekend. I write an industry report every year a couple of hundred pages long and takes me the equivalent of about 200 hours to write.
So I stay busy.
And I travel. Probably 60 nights a year I'm gone from home. I probably see an average of about seven clients a day on the 60 days I'm gone. I probably have 400 client visits a year. And out of that, 100 I'll see more than once. So I see 300 different people a year and I have about 500 people who call me. I talk to a lot of people and we have a lot of people pay us.
And obviously I've got to go to conferences and things, but fortunately in the videogame world there really aren't that many meaningful ones. I have to go to E3, but I live in LA. Really I don't have to go to gamescom in Germany. I went to the Tokyo Games Show once and realised it was a complete waste of my time.
I've never been to a PAX. I'm sure it's fun, but it's a fan thing. I do go to GDC and San Francisco is an hour flight and very easy for me to do. And I do like that show, but I don't go to GDC Austin or GDC Europe because you go once and how many geeks can you deal with? I go to the Consumer Electronics Show. Five or six of my 60 nights are going to games shows and the rest are seeing clients.
And then I write a lot; I write a lot of notes and I'm certain that my notes have more content than anybody else that covers this space, which is again how I stay visible to the press.
It's crazy to me; there's an old saying, and I'm not sure who said this, that "emulation is the sincerest form of flattery". And it shocks me that nobody emulates me. It blows me away that there are no analysts that say, "Oh that guy's in the press all the time, oh he writes a whole lot." The last industry report I've seen from my competitors was 2004.
Eurogamer: Maybe nobody can keep up.
Michael Pachter: I don't know why! I mean it's not that hard. But they're just too lazy. They don't try hard enough. That's when I get particularly perturbed when people say I'm talking out of my ass.
I don't mind if someone says I disagree with you, that's totally fair, but to say, "Oh, he doesn't know anything about this." Yeah, like you're a f***ing expert on DRM. First of all I don't care about DRM, but it cracks me up that these guys think I'm paid handsomely because I'm such a pretty face. Work-wise it's a great job other than the fact there's a lot of hours.
Eurogamer: Do you personally tip off investors?
Michael Pachter: Well I do, but it's a better distribution to have sales people; 30 sales people can each call 30 clients faster than I can call 900 people. But I do talk to the clients that want follow-up.
This Infinity Ward thing has been such a crack-up. People are so needy; there are so many guys who are like, "Oh what does it mean? What is the next Call of Duty going to do?" I've been pretty clear that I think the brand has a lot of equity and there are a lot of consumers who have no fricking clue who Infinity Ward is.
Yes there are also a sizeable minority of gamers who do know who they are. But even then, are they all going to stop buying Modern Warfare forever just because Jason and Vince aren't there any more? I doubt it. And I don't think it makes much difference if the whole team turns over, because look what happened to World at War made by Treyarch - people bought that game. So if Activision puts Treyarch in charge of Infinity Ward's studio and makes sure they're supervised correctly, are they really going to screw it up that badly?
In my obviously-knowing-nothing-about-games opinion: the plot of Modern Warfare 2 was the dumbest thing I've ever seen; my jaw was dropping while I was playing. I felt worse shooting American troops than I did Russian civilians. What cracks me up is that I read all the "No Russian" criticism about being put in the role of a terrorist, but being in the role of a guy gunning down American troops is worse. Not to say killing civilians is a good thing.
I didn't get [the ending] at all. I actually talked to Jason and Vince about it and said, "I have to say guys, that was the dumbest plot ever!" They said, "We had it all planned out but now we don't know what's going to happen because it ain't going to be us!" I don't get why that game was so popular. So to say that you lost these two guys who made the dumbest story of all time - maybe that's a good thing! It's pretty funny.
Eurogamer: Will Respawn Entertainment do well?
Michael Pachter: Well, who knows what they're going to do? In a way they only really know how to do one kind of game, and they do it well. Even though they're holding open the possibility they might do some kind of other type of game, the idea that they've already poached  people from Infinity Ward suggests strongly to me that they're going to do a military-style shooter.
If I were a betting man I'd say they would take Halo on. Just a guess. I promise you, I asked them point-blank and they said, "We don't know." And I believe them, I really do. They said, "We're going to wait until we hire a team, we have everybody in a room and we're going to sit around and brainstorm and come up with great ideas for games."
I believe that is their current intention. But as a gambling man I'd say if you put together guys who have only ever made shooters and you want to take the military shooter to the next evolution - because now that Battlefield and Medal of Honor and Modern Warfare are out there, why would you want to do a fourth? - why not go space? Honestly, no one does it well.
I guess there are games like Red Faction, but it's really Halo and nothing else. And the idea that their timing is very likely two full years from now is perfect, because we're going to have Halo: Reach come out in the fall and then we will have nothing the following year. I just think that would be the kind of game that would make a lot of sense. That would be my big prediction. And I can honestly tell you that won't affect the stock of any company I cover. I'm just saying it because it's fun to say. It's logic.
And how do I think they'll do? I can't recall them ever getting a score under 85 per cent. So they'll put out a game that gets 85-to-95 per cent and it will sell really well because it will be in a genre they understand and it will have EA's marketing muscle behind it. "Really well" as in 6m-10m units, not like 20m - nothing is going to sell 20m again except probably GTA. But they'll do fine, and good for them and good for EA.
This lawsuit that was just filed, I haven't read it yet, but that just makes Activision look bad again. And EA is trying to spin it; EA who just fired 2600 people is trying to spin itself as the great employer. And Activision, which all they allegedly did was withhold royalties from 39 employees, is the new evil empire. But that's fun. I actually asked Vince and Jason, first question I asked them, "How does it feel now that you've left the evil empire to be working for the former evil empire?" They laughed and said EA was great.
Eurogamer: Do you ever get it completely wrong?
Michael Pachter: All the time. All the time. But who cares? I'm glad you asked that question. It's not my job to induce investors to do something, to compel them to action. That's not my job. My job is to make them better informed so they can make better-informed decisions. It would be naive of me and extremely arrogant of me to believe that I'm the only person that they would ever speak to and I'm the only source of data they would ever have.
My worst call probably in the last five years was heading into holiday. I said that GameStop was going to crush the quarter; that they were going to kill it and that expectations were too low. I thought the driver would be things like Call of Duty, as [GameStop] get a lot more copies. What I didn't anticipate was that Walmart was going to compete on price on hardware, and I was really surprised when Walmart stole a bunch of market share from GameStop and killed them. I was what we call 'pounding the table' saying, "You have to buy GameStop," in front of earnings. And it was a horrible call. But I don't feel like anybody lost their house because of what I told them.
Eurogamer: When the notes you write are turned into news and the company in question is forced to issue a statement or to respond, do you get in trouble?
Michael Pachter: I really don't care. It depends on what the context is. The only time I ever really got embarrassed was on a Bonus Round of [GameTrailers TV] with Geoff Keighley about the PSPgo price. He said, "What do you think of the $249 price?" I said, "It's really high." He said, "So you think Sony's ripping off the consumer?" And I said, "Yeah, yeah, they're ripping off the consumer." And it was in the headlines: "Pachter says Sony ripping off consumer." Sony called me and said, "How dare you say that?!" I directed them to the video and said, "You know, actually Geoff Keighley said it and I said yes." But I still felt like I needed to apologise because it felt a bit harsh.
With publishers I couldn't care less about Activision or EA because I don't say things that are inflammatory. Take-Two tried to make me feel guilty when I said I thought Bully was a stupid game and wouldn't sell well. They called me up to say, "How dare you say that?!" I go, "It's my opinion. It looks completely stupid to me." I go, "Who wants to be a 16-year-old loser kid who's picked on by other kids?" I really thought it was the dumbest idea I had seen for a game. And when it sold well they sent me an email like, "See, I told you, you were wrong." And I'm like, "Yep, wrong all the time. As in, f*** you, I don't give a s***."
I get asked a question, "Do you think there will be console exclusives in the future?" And I say, "No, I don't." I get lots of people saying, "Oh what an idiot - he doesn't even know The Agent's coming out!" It's not like I don't know about The Agent; of course I know that game is coming out. I also know the story of why the Agent is coming out exclusively on the PS3.
Or if I get asked point blank if I thought Gears of War would have sold better multi-platform. I'm like, "Yes! And I think Epic regrets it." And Mark Rein pops up and, "Oh we never regret anything we do." Mark Rein and I are friends. You know what? If I could demonstrate to the Epic guys that they would have made more money multi-platform, all-in including the funding they got from Microsoft, they would say, "Shoot, we regret that." In my opinion they would have made more money multi-platform. But who cares if I'm wrong? We'll never know.
I can't remember ever saying anything like - and I'm saying this as a joke - "Bobby Kotick is an idiot". I don't say stuff like that. If I said "Bobby Kotick is an idiot" and you printed it and Activision called me and was mad, I would be apologetic because it would be the wrong thing to say.
I don't say things like "Activision is greedy". Activision is blowing it with the Infinity Ward guys, but Activision is managing a business and they made a conscious decision that it was better for those guys to leave than to keep them and have them be unhappy. That's a business decision. And the other thing is I don't hold anybody on a pedestal; I truly do believe everybody is replaceable. Everybody.
Eurogamer: What happened with The Agent?
Michael Pachter: When Microsoft paid Take-Two to make GTA IV non-exclusive... In other words, GTA IV was going to be a PS3 exclusive, but Microsoft paid Rockstar and Take-Two to make it a non-exclusive, and they paid them a lot. The number I've heard, and I'm sure this is right, is $75m, and that probably includes the funding for the first DLC packs too. It's more than the $50m that people talk about.
And Sony - I'm not sure if they had a firm agreement but they may have had a handshake - said to Take-Two, "You've got to give us something else." And the "something else" was a zombie game that Rockstar wanted to work on. But while Rockstar was in the planning phase, Dead Rising came out and Left 4 Dead was announced. Rockstar realised they were up against a saturated market and Valve, and, "What can we possibly do that will be any better than what Valve's done?" They started again and that's when they came up with the idea of The Agent, which nobody actually knows what it is. That is the back story.
There's stuff that's in the pipeline now, of course, but a publisher would be foolish to sign an exclusive deal. A developer could do it. I've told the Insomniac guys repeatedly. They don't own the Ratchet & Clank IP or the Resistance IP but they're such good developers. I'm like, "Why aren't you guys doing multi-platform? Your games would sell." As if those guys couldn't create something - of course they could. It's not like Sony came up with the art and graphics on Ratchet & Clank. The Insomniac guys are nuts not to do multi-platform. But they like their deal with Sony, so they'll keep doing exclusives. LittleBigPlanet guys, Media Molecule, I feel the same way. What were they thinking selling to Sony? They must be Liberal Democrats!
Eurogamer: Let's talk about E3. Who would you rather be: Nintendo, Microsoft or Sony?
Michael Pachter: It really depends on this 3DS and how good it is, because I don't think Nintendo has anything else. Nintendo is on the verge of - certainly not dropping into third place or anything - losing its dominance, because I really truly believe that Sony Move is the Wii HD. I really believe it. That's been my quote: I told everyone a Wii HD was coming this year, it just happens to say PS3 on the box. It is the Wii HD.
That's a very easy upsell for Sony to say, "If you have a Wii and you really want to play high-def games on your new big high-def TV, we've got 'em." Sony is a winner and Nintendo is a loser on the console side, because the Wii Vitality Sensor isn't going to excite anybody. But the 3DS will. If you look at Nintendo's line-up, everything we care about is either out or known by now.
People are going to like Microsoft more than we expect. Microsoft isn't concerned about the gaming community with Natal, they're concerned about the gaming community's mothers and girlfriends. I really do think the gaming press has completely missed the mark on this one, that Natal is not intended for you to get up there and pretend you're holding a rifle and playing Call of Duty. It's intended for your mum to use the frickin' 360 to download a movie or watch Netflix and to make it less intimidating. The cool thing about Natal is the voice command. "Xbox on." I mean, that's cool. People will really like it when they see it and they begin to appreciate what it is.
But I will say Sony up, Microsoft neutral and Nintendo down on the console side.
If the 3DS is anything like those little 3D point-and-click cameras, because that screen technology is pretty cool and I'm sure it is that, it will really get people excited. Question is: what does it cost? If they get $189 for a DSi XL, do they think they're going to get $300 for a 3DS? I don't know. Maybe they will, but that's a tough purchase for me. The 3DS is coming along at a really good time for them. I don't think it's good for the DSi XL. If they launch the thing [the 3DS] prior to holiday, I can't imagine why anybody would buy a DSi XL this holiday.
Longer term, Nintendo does really start to look bad as Apple really starts to push the iPod Touch as a gaming device, and that's happening this holiday. Again, the gaming press hasn't figured it out. The gaming press doesn't really understand the 12-year-old customer, nor do you guys care. Who plays DS games? Them, not us. Nintendo's got problems this year but the 3DS will make them look great at E3.
That's the manufacturer side. On the publisher side: Microsoft looks really good, they have a lot of content this year. People get psyched about Halo and Alan Wake will have just come out... Fable III. They have good content. I'm not sure who else anybody cares about. It's all sequels: this year's Call of Duty, etc. We've had a front-end-loaded year. We might see the Call of Duty action-adventure game but I don't think anybody is going to get excited about that.
This is more a hardware show than in the past.
Eurogamer: Is Microsoft going to unveil an Xbox 360 Slim?
Michael Pachter: I'm certain that that is happening, I'm just not certain when. They told me a year ago, when I got my private Natal demo - a week before E3... I said something like, "Is this going to cost a lot of money? The big problem is retro-fitting every 360 and how are you going to get people to buy it?"
They said, and they said with great confidence, "We are going to pack it in every single Xbox 360." A bundle? They said, "No, we are going to force people to buy it with every single Xbox 360." And I said, "Oh that's brilliant. That's a great idea. If you could do it at a competitive price then the first year you'll have eight million of them, the second year 16 million and after a couple of years it'll be so ubiquitous everybody will make software for it. That's smart."
I've never heard them say that since. They didn't say it at E3, they've never said it since. I don't know if they still plan to do that or not. If they plan to do that, it makes sense to have... A current 360 costs them about $250 to make and the Arcade probably costs them $210 and they sell it for $200, so they're right at break-even on the Arcade and making money on other SKUs.
If they can knock another $20 or $30 off the cost by using smaller components and smaller fans and cooler running components, get that cost down to $200 or $210 and then the Natal camera probably cost them $50 to make - they can actually bundle that whole thing and sell it at $299. That's a pretty compelling offering. A lot of 360 owners will - especially guys who have the original - consider buying a new one. It will help them sell 360s.
I am certain that they're working on a thinner model just to save money. They'd like to bundle Natal if they have the guts to pull it off and announce it at E3.
Eurogamer: What's Apple up to?
Michael Pachter: The iPad, even though it looks like a super-large iPhone, actually has a pretty powerful processor. So the iPad is a PC. The quality of games you could offer on that are pretty amazing. The problem is, I can play Tetris on my laptop now, so I don't really need to go buy another dedicated device to do that. Apple is not quite as ambitious as others think; they don't think they have to dominate gaming tomorrow. They'll work handhelds first. And then as all the kids who get iPod Touches graduate to iPhones and then to iPads, then they'll start trying to encourage game development.
Problem is, Steve Jobs - who is certainly one of the greatest geniuses of our lifetime - has this odd phobia of buttons. Great. Guess what? We're not going to be able to play flight sim games with no buttons. You have to provide the gamer the tools he needs to play the game. Nintendo carries it to the extreme with the Wii zapper and steering wheel and all that stuff. The controls have to fit the game. And the iPad can't do that.
Michael Pachter is an analyst for Wedbush Morgan Securities.