The Wii and the death of ‘traditional analysis’
Thursday, August 30th, 2007 at 8:48am by Jack
What to make of analysts these days and their … analysis. More and more, I am seeing myself shrugging off what they say and seeing the light.
Why? Because more and more, I see them as (mostly) men who are used to the status quo, and base their analysis on old models. Have I quoted many an analyst in the past to bolster the case for Nintendo? I have, and I am ashamed. No longer though.
Now, when I see an analyst like Kotaku’s resident quote machine Michael Pachter spew forth his analysis, it reminds me of someone randomly assembling words from the Scrabble tiles they’ve removed from that little cloth bag the game comes with. If the Blue Ocean is deep, then analysts like Pachter are the scummy flotsam and jetsam film that floats and sees only the surface. Truly, in this “next generation” the analysts are are clueless about what’s going to happen six months down the line as we plebeians are.
So then, what are we to make of this Bloomberg article, delivered deftly to my doorstep this morning by savvy blogger Blake Snow?
“This Christmas, Wii will win,’” said Pelham Smithers, a London- based analyst with Pali International Ltd., who has a 12-month price target of 50,000 yen on Nintendo stock. “But not to the same extent they’ve been winning. Next year, the playing field will level even more.’”
Quick show of hands. Does anyone, anywhere out there in the ether, have any evidence they can bring forth today that shows Nintendo’s momentum slowing? Any reason why people would suddenly stop buying at the rate their buying? I couldn’t earlier this morning, so I thought I’d ask all of you. Side note: I wonder what Smithers was saying one year ago today about Nintendo. I’m just curious, is all.
Is there a Wii game drought coming? Common Internet knowledge, which is about a reliable as a car with three wheels, says there are no games for the Wii, so perhaps this is why someone like Smithers would think this. Maybe this manufactured and completely imaginary “casual gamers” sect of the population will suddenly become tired and go somewhere else. Where will they go? To Scene It on Xbox 360? To Playstation Home, perhaps? No, I think that, when WiiFit’s press begins to come to a boil with the launch of the balance board in Japan later this year, you will see the buzz become unbearable yet again. The “casuals” — whatever that term means — are a lock. In fact, when someone says “casual gamers” from now on as if it’s the plague or the death of gaming incarnate, simply say to yourself, “this person is an idiot. What they really mean to say is not “casual gamers,” but “core gamers.” As in the majority. If we were being completely literal, if the casual, er core gamers were to “get bored and go away,” then there would be no video games.
So maybe the slow down will arrive when whatever hardcore gamers are left in Nintendo’s corner ditch it an go elsewhere (it’s the kiddie system, remember?). Again, hogwash. A manufactured dilemma created by those who feel threatened about new things rocking the boat. Resident Evil 4, Strikers Charged, Metroid Prime 3, heck even Tiger Woods ‘07 and Madden — these are all hardcore games; intricate, deep games or whatever you want to call them, for a system that apparently has none. I could list more, but the Internet has taught me that bite sized chunks are best.
So label me confused about this whole bubble may burst mentality. People are incessantly citing guesses today as to why the Wii will fail, while at the same time they conveniently ignore facts and historical trends. It is illogical. Look to the DS, my young padawans, for the future has already been written on its tiny, touch-friendly screens.
Oh, and have fun out there.
August 30th, 2007 at 9:58 am
People always say Halo 3 and GTA 4 will kill Wii.
August 30th, 2007 at 10:14 am
I don’t see Nintendo’s sales slowing, but unless they can increase production, it’s not going to go up, either. On the other hand, Sony and Microsoft have tons of product just sitting on shelves. We snicker about that now, but it means that their sales have more room to grow during the holiday season. So while Nintendo’s total number of units won’t go down, their percentage share of the sales could.
August 30th, 2007 at 11:23 am
Actually, i don´t mind what analysts says, they were all wrong with their assumptions before Wii´s release, it was suposed to be DOA but we know is clearly not.
But when game journalists keep going with that “Wii Fad” s**t, dude that really piss me off, now even more when the software is starting to flow.
Still waiting for the bubble to burst
.
August 30th, 2007 at 11:27 am
Here is the problem with homeboy’s prediction… The Wii has people excited about video games again. Xbox 360 and PS3 have their audiences, and Wii is for them too, along with everyone else. Everyone wants a Wii. They should get one, they’re fun as heck.
August 30th, 2007 at 1:04 pm
Nintendo said that If they failed this gen they were out of the business but IF they were successful it would the industry completely and “disrupt” as they like to say.
It did happen. It took game companies by surprise and they are running behind Nintendo’s back to make the profits they haven’t been making with Microsoft (not even mention the Ps3…lol).
Industry watchers, “some” game companies and magazines are still pretty much lost since they get money thrown at their faces to look the other way from reality, with promotional stuff, parties, expensive advertisement contracts, but that doesn’t mean it isn’t happening.
August 30th, 2007 at 1:24 pm
“Quick show of hands. Does anyone, anywhere out there in the ether, have any evidence they can bring forth today that shows Nintendo’s momentum slowing? Any reason why people would suddenly stop buying at the rate their buying?”
[raises hand]
Me, me, me! Pick me!!
First of all, Smithers didn’t say that Nintendo’s momentum would slow down or that people would suddenly stop buying, he said “Wii will win but not at the same extent”, and that “the playing field will level even more”.
But the answer to your question, Jack, can only be seen if you look beyond the gaming industry right now. The bubble DID burst, but not the Wii bubble, the Real Estate bubble! And what does that have to do with Wii sales, you say? Well, the consumer sector that has increased these sales being the “casual gamer” sector, it means that the increased sales rely on people having lots of disposable income. That extra money goes away when the recession hits this Holiday Season (and there will be one, you can count on that), which means people will be thinking less and less on spending money on video games. Only the “hardcore” gamers will continue spending on games at almost the same rate.
But this means, like Smithers mentioned that Nintendo will still win over the other two competitors: if casual gamers spend any money on video games, it will be on the cheapest system, especially if they have no encouragement to buy casual games for 360 or PS3 (they won’t own one). They will be less likely to buy a 360 or PS3 next year than this year, too.
So, Smithers quote is right, and it isn’t that much of a stretch, either.
August 30th, 2007 at 1:31 pm
And yet gas prices go up and up, and people’s driving actually increases. I’m not so sure we can be so sure of such things, Invis.
August 30th, 2007 at 2:05 pm
Just wait, Jack…
The recession hasn’t hit yet! There is usually a flurry of consumerism before the big one hits… so you will see an increase in video game sales, too, before the Holiday Season. But it is all temporary…
August 30th, 2007 at 6:08 pm
http://www.gamasutra.com/php-bin/news_index.php?story=15256
Pachter strikes again. “oh, the PS3 didnt outsell the 360, oops guess i was wrong”. “oh, the Wii sales went up instead of down like i predicted? oops again. Looks like im a pompous windbag with no clue whats coming the future”.
@ InvisibleMan : So according to VG charts, Wii = 41.6%, 360 = 41.4%, and PS3 = 17% of next gen hardware. so you think Wii’s share will be less than that in January? Just trying to be clear as to what you mean by not winning by as much.
August 30th, 2007 at 8:08 pm
Actually, if the Wii has any potential to fail… it won’t be because of Nintendo. It’ll be the third parties not ‘getting’ the system. If the most that the third party devs are capable of coming up with are mini-game compliations, then the Wii will eventually lose steam. Nintendo, for all their strengths, is not capable of creating enough high quality software to sustain the behemoth that is Wii.
While the DS has basically shown that it is more than possible for the third parties to really *get* the system, there still is that risk that it won’t happen this time around. Nintendo’s set everything up properly. They’ve managed to get their install base to where it needs to be for the third parties to be interested. They’ve managed to show the capabilities of the system off with their first party games to point those same third parties towards the light… but ultimately, if those devs don’t understand the potential of the system… If all they are capable of seeing is quick cash with low quality mini-games… the system will fail. To a degree, it’s somewhat out of Nintendo’s hands now, and it’ll become increasingly out of Nintedo’s hands as time goes on. They can keep adding new things via perhiperals, but after a certain point they can only trust in the third parties to use them properly. I think though, looking at the development of the DS library… that we’re seeing a lot of the same things. Touch Screen usage was really hideously tacked on, often unnecessarily, through the first year or two of development. We’re seeing the same with the motion controls. If the Wii follows the same trend as the DS, we won’t really get a good sense of whether or not the third parties are going to really understand how to use it well for at least another 6 months, though probably closer to a year. Disruption not only takes time to get used to, it isn’t always properly understood in this industry.
I’m not saying Nintendo is doomed, that’d be extremely premature. Honestly, there’s a better chance of this momentum continuing than falling off. But there still is that chance. And it’s not as small a one as I’d like. I really hate counting on people that have shown a strong tendancy towards not being able to innovate to drive an innovative product. It always makes me worry. For this to *really* work, we need more people like Miyamoto and Will Wright, and less like Mark Rein and CliffyB. Sadly, I think that for the most part, we have more of the latter type than the former right now. And that’s going to have to change for this to really hit the heights that it should.
Of course, even without that shift in developers… the Wii is still probably going to outpace everything else, it’s just not going to shatter them like it’s more than capable of. The Wii has the potential to hit DS like sales numbers. Probably not quite as high, but close enough to not matter overly much. If it hits those numbers though, nothing that Microsoft or Sony is capable of is going to make the slightest bit of impact.
August 30th, 2007 at 8:44 pm
I think you’re fighting a strawman here Jack. Also, I think you’ve misinterpretted ‘field leveling’ as ‘momentum slowing’. And the gas comment seems of dubious usefulness (we can’t be sure of ‘these things’… but rest assured on Nintendo’s future success… is that right?)
and as far as a slowdown due to lower wealth in the US… that will probably hurt the consoles who sell at higher price ranges. and cars. in other words, I have no idea but a lower price always looks better in a recession, as people look for substitutes.
Oh, and not everyone who disagrees with you is an idiot, hypocrite, liar, etc… Your fanboyism is apparent is the vitriol of your articles. It’s the same conceit the PS2ers lorded over me years ago, when Nintendo fans and Cub’s fans alike were considered cute and happy and harmless. Sigh… simpler times.
August 30th, 2007 at 8:58 pm
Smithers was actually one of the more breathless enthusiasts for the Wii before it was called the Wii. Check this out:
http://www.moneyweek.com/file/6496/in-2006japanese-tech-stocks-will-be-hot-hot-hot.html
Of course, he parroted the same conventional wisdom that the PS3 would give Blu-Ray a big head start, but then again, that is exactly what happened despite the mediocre sales of the PS3 itself.
August 30th, 2007 at 9:57 pm
first, you all giving the analyst the benefit are off base yourself.
he says playing field will level, but there are only 2 ways it can level. for either competitor to close in on wii instead of fall further behind, 1 or 2 things would have to happen.
first, wii would have to slow in sales, as jack pointed out. but there is no indication of that happening, and it sounds like this analyst didnt bring up any either, therefore he isnt analysing trends, or any raw data at all. he is putting forth a feeling. but games are guaranteed to come from first party next year for casual and dedicated gamers alike, i believe 6 already semi-confirmed to confirmed from nintendo, and 3rd parties coming out with some games also.
in fact the momentum nintendo has is that more games are coming to wii each month now then both other systems, giving everybody something to play, unlike the limited selection of titles for the other systems. wii ware starting next year will also help, as well as vc titles which are selling decently keeping people playing.
so the games are coming, and most people havent even announced their next year lineup for any system except the games ps3/360 companies mentioned in 2006.
the other thing that can happen is the ps3 and/or 360 increase sales. but they have slow times of game release just like nintendo does, and they show nothing that could increase their sales after the holiday. how much they catch up during the holiday is irrelivent, its how they keep that going after the holiday, but how will they do that?
nintendo will lower the price by $50 as soon as the momentum slows, allowing any people with less money to afford the system better, because even people in apartments still buy entertainment, and wii still will come with a game and feel worth it like it does now. 360 and ps3 have lowers their prices, but their sales are still only to the same audience it has always been to, so they have no ability to speed up, and with anything on a large economic scale, what affects wii affects ps3/360 to some degree, slowing their sales, allowing wii to keep a healthy increasing lead.
anyways, this analyst is wrong, and citing an unhealthy housig market is dubious because thats not what he cited, as he is in UK, and this housing bubble burst isnt guaranteed to affect only one company more as dedicated gamers have houses also, thereby making it too unpredictable a factor to use as an indicator for hurting one but not so much the other. and even if it did it would indicate jacks use of a leveling field, which you claimed was wrong..
in fact a study released awhile back showed wii appealing to peope making over $100k a year, which can afford wii and games throughout any bursting bubble.
August 31st, 2007 at 1:50 pm
Eolirin I don’t see that as a problem. given enough time, and with the wii user base increasing month by month I think the wii will definitely get good 3rd party support. but there is a barrier to program wii. the programming for 3D motion input is quite complicated. it does make you wonder its beyond the scope of some 3rd parties and they just give up. if they could put the time in like Retro did with prime 3, there’s going to be some great games on wii. give it some time, i’m sure another year or 2 from now from trial and error there will be some original games of the wii that are extraordinary from 3rd parties.
September 1st, 2007 at 6:00 am
Jack, I think you’re being too hard on these analysts, especially Pachter. I’ve watched many episodes of The Bonus Round on GameTrailers.com that have had Pachter on. He has specifically stated that nobody should take any stock in what he’s saying unless he’s saying buy stock “A” or sell stock “B”. He’s said that he’s constantly being asked what do you think this and that and that he’s just making educated guesses and that these guesses get printed in the newspapers and on sites like Kotaku.
So don’t blame the analysts, they are paid to analyze businesses profits, earning, esitmates and guess how this will be affected by market conditions. Asking them questions regarding anything else, like what effect the Wii’s waggle will have on the industry is just as good a guess as you or I would have.