The mind of a video game analyst
by Justin Murray 
{ Dec 21st 2006 at 9:55PM }
Analysts are the life-blood of investors. We need some kind of opinion of where a company may be going; if we don't get it, we feel uneasy about a company's future. Michael Pachter is one of those people.
In an interview with N'Gai Croal, Pachter primarily discusses his bullish Xbox 360 predictions and how they've essentially fallen flat. He cites the bigger impact the lack of HD sets in homes had as well as miscalculated the price-insensitivity of the hardcore crowd. He thinks a simple price cut won't solve the matters (at least until his magical $150 mark is hit). Pachter further states he expects the PS3 to sell at the same rate as the 360 did since launch.
Given Pachter's history, we're beginning to wonder if he is on a stretch of bad luck, or shouldn't be listened to at all. He did predict the PS3 would outsell the Wii (then called Revolution) by up-to 60% this year as well as predicted 2006 to be a slow year for gaming (deemed wrong by his future prediction to buy GameStop stock); neither prediction came out close. We guess it is true; analysts are people paid to have an opinion.
Reader Comments (Page 1 of 1)
DesignerKid @ Dec 21st 2006 10:11PM
He is absolutely a quack. I've been following him for years and constantly wonder why he still has a job. Or why anyone else takes his advice for that matter... Clearly has no insight into games, or gamers. He simply toes the company lines, except for Nintendo.
But then again no gave them a chance with the DS, and many still don't with the Wii despite the DS's success. That's not entirely surprising because it's still too early to tell but will anyone be surprised if Nintendo ends up back on top? I certainly won't (It's not a prediction but stranger things have happened).
ashton @ Dec 21st 2006 11:20PM
sometimes when you're the only fish in the pond you get heard. i personally can't name any other analysts that cover games.
i wonder if the "wisdom" of the joystiq crowd can outperform our video game "analyst" Mr. Pachter. Here's a challenge for 2007. Have 10 predictions that you know are made by Pachter-then have readers of joystiq vote on each one (whether it will be true or not and/or whether the numbers he provides are within a certain range). I know where I would put my money.
maxpl @ Dec 21st 2006 10:20PM
the guy is obviously an idiot and should find a new job.
link us to his blog so we can trash him.
DesignerKid @ Dec 21st 2006 11:52PM
Ashton, certainly a challenge I would be willing to take however I never suggested I was any better, simply that historically speaking, for as long as I can remember, he hasn't been accurate. At all.
regarding other analysts, while I too can't name too many outside of Pachter that's because he works for a large firm and that's often what the major publications pick up. That doesn't mean he's good, or right, just that he gets coverage (kinda like EA games...)
driven2sin @ Dec 22nd 2006 12:15AM
prediction... Diablo 3 will never come out but continue to !!!@@RULE@@!!!....
NeoteriX @ Dec 22nd 2006 12:49AM
If predicting the videogame industry were easy, we would have...
A Nintendo 64 on disc format,
A PS3 launch with enough systems,
An Xbox/Dreamcast that launched with a normal sized controller
Any other system that uses UMD,
the list goes on folks.
Doomstalk @ Dec 22nd 2006 1:19AM
Predictions are bound to be wrong. The best you can do is give an analysis along with some odds. Here's my attempt:
I honestly don't think the 360 is doing that badly. Initially it was light on worthwhile exclusives, and I think that hurt its adoption rate with "hardcore" gamers. Now it's got a couple games worth buying the system for (Oblivion, Dead Rising, Gears of War, etc.), but it's just come up against a pair of new systems. Whatever buzz the PS3 might've lost went almost entirely to the Wii rather than the Xbox 360. Sales were pretty decent when you take that into consideration.
After the Wii hype dies down a little, and a few more promising titles hit (Lost Planet, Mass Effect, Blue Dragon), I expect we'll see healthy sales.
Unless Sony can somehow get PS3 manufacturing back on track, though, I'm afraid they're going to lose sales momentum and, worse yet, developer support/exclusives. They aren't getting hardware out there anywhere near fast enough to hit the profitable mark for developers, let alone catching up with the 360 worldwide. If supplies keep coming out at their current trickle, Sony may face an insurmountable gap. No matter how much brand loyalty/recognition they might have, it's obvious they won't win without the hardware.
The Wii is hard to predict. It's obvious that people are intrigued- enough so that they've sold over a million units, and people are still lining up in the freezing cold to get one. If Nintendo can keep momentum running high, I think they've got a monster hit on their hands. The precedent is certainly there with the DS. Despite the power of the PSP and Sony's heavy push behind it, Nintendo is clobbering them. Furthermore, a lot of their success comes from making inroads into non-traditional gaming demographics, and reaching out to casual gamers. The Wii seems to be doing the same, and if they can keep it up, the fortunes of the PS3 and 360 will be irrelevant- they'll have essentially a market of their own.
Jeff @ Dec 22nd 2006 7:55AM
Michael Pachter is most definitely *not* the only analyst covering games. He's not even wrong more often than most. All of the major investment houses have at least one person covering games (they have to; it's a large entertainment industry) and they're all probably lucky if they're accurate 50% of the time.
The problem with analysts - in really any industry - is that they don't usually have any real interest in the industry they're covering. I'm sure there are plenty of people commenting on this blog here that have more actual experience in the industry than Michael Pachter does. I'm sure nearly all of us own more game consoles than Michael Pachter does and know more other people who own game consoles too. Michael Pachter probably goes home to his wife and kids, like most Americans do, eats his dinner, watches some TV and goes to bed. On weekends, he plays golf (the real life kind) with his middle-aged buddies and works on his house. I highly doubt he is a "gamer".
Now, hardcore gamers can have just as skewed a viewpoint of the gaming world as non-gamers do. But I think that detachment that most analysts have means they're on the outside looking in, relying on Excel spreadsheets and market research to make their predictions. This is not a recipe for accuracy or insight. (The other problem is analysts don't usually cover only one industry, so their attention is split - they don't really have the time to totally immerse themselves in one industry.)
One thing you need to realize about analysts is that they only need to be right 51% of the time over a period of years to make a lot of people a lot of money. When you're an institutional investor throwing around $10 billion in investments over a decade, all you need to be is right slightly more often than not to have a big payout. So it's unrealistic to expect analysts to look into their crystal balls and predict the future with complete accuracy.
Still, I am sure there are people here that could do a better job, because we're closer to the material.
NintendoFanbot @ Feb 9th 2007 11:07PM
Here's MY personal industry analyst:
THIRD GENERATION CONSOLE CURSE
The rule that no company can hold the industry more than 3 times consecutively. It happened to Atari, it happened to Nintendo, and it COULD happen to Sony. If Nintendo happened to trounce 360 due to massive Japan gains that would be icing but either Wii or 360 is good. :P
*cue epic music
damian @ Feb 21st 2007 10:42AM
man i am still in love with my coleco vision and the shooting of a square box
with the really stupid gun.we bought the first x box just to play halo at home all day and all night. Wii ps1 ps2 ps3 xbox who dare say any thing bad about scientists building fun games .