Pachter: “Nintendo is in disarray”

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Wedbush Morgan Securities videogame analyst Michael Pachter has defended his comments made during a keynote at the 2012 Ayzenberg A-List Summit in San Francisco.

“I think Nintendo is in disarray”, Pachter had decried. “I think they’ve completely blown the Wii U by not telling people what the price is going to be. It’s going to launch at $249 because it has to.

“I think they’re dead anyway because Xbox with Kinect will be priced below that by the time they launch. Wii was a bubble, and that bubble has burst”.

Such comments were immediately subject to criticism amongst NeoGAF members, readily stating that he was out of touch with his remark. This then led to Pachter taking to the forum to clarify his thoughts further.

“My speech was about the potential for growth of social gaming”, Pachter took to NeoGAF himself to explain. “I am pretty sure it was taped and posted on

“The Wii U comment was in response to a question about the potential for the Wii U. I believe (and please feel free to disagree) that a large portion of the Wii audience comprised casual gamers–those who bought one or two games a year the first two years, then put the Wii aside–and that those casual gamers moved on to another platform. The ‘other’ platform may have been Facebook games, smart phone games, tablet games, or one of the other consoles, but once they moved on, they are not likely to come back”.

He continues, “At the same time, I believe (again, please feel free to disagree) that the growth of smart phones and tablets has attracted many potential dedicated handheld game customers, and these people also are unlikely to come back to either Nintendo 3DS or PS Vita”.

Due to this, Pachter reasons that, due to varying factors, for both the Nintendo 3DS and Wii U, Nintendo’s addressable market has been cut in half by competitors.

“Summing this up, I think the addressable market for the Wii U is around half of the market for the Wii, and I think Microsoft and Sony will compete for a portion of that market if the Wii U is priced too high”, Pachter discusses. “I think that the dedicated handheld market is permanently impacted by smart phones and tablets, and think that Nintendo’s addressable market is probably also half of its former market.”

He then claimed, “Nintendo is in disarray because they waited too long to launch the Wii U. I know that this sounds like (and is) sour grapes because they didn’t launch the Wii HD in 2009 or 2010 as I ‘predicted’. They should have, and because they didn’t, the decline in Wii and DS hardware and software sales drove them into generating LOSSES.

“For those of you who aren’t financial analysts, losses mean that the company is worth less than it was before. Nintendo stock has dropped by over 80% in the last few years, and the market has appreciated over the same period. I’m paid to advise investors, and none have made a profit owning Nintendo stock. I don’t think that many will make a profit over the next few years, because I don’t think Nintendo’s strategy will return them to profitability”.

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