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.