Pachter: Nintendo Will Remain In The Console Business “Until They Fail Completely”

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Outspoken Wedbush Securities analyst Michael Pachter has once again been posed with a question relating to Nintendo’s future direction.

He was quizzed as to whether it would be “financially smarter” for the company to go full mobile, third-party or to continue to move forward with their own hardware – a peculiar question in itself, given that Nintendo are already preparing to reveal the “dedicated game platform.”

While eventually concluding that the company would create hardware “until they fail completely,” Pachter took time to speculate an alternative scenario.

“I think it really depends on what people expect software sales to be on the NX,” Pachter began in his response on Siftd‘s Pachter Factor. “You’re asking me to compare NX to a third-party strategy. If the NX is as successful as the Wii U, it makes more sense for Nintendo to go third-party. If the NX is as successful as the Wii, then it doesn’t make sense.

“Nintendo sold about half of all software ever put out there for the Wii. There were literally 100 million Wiis, probably a software catch rate around 8, so Nintendo literally sold something like 400 million pieces of software for the Wii. That’s a very profitable business. If they have that success with the NX, of course they should do that.”

If Nintendo were to ever consider becoming a third-party publisher, he posed that the difficulty that they would immediately face is in securing market share on Microsoft and Sony’s platforms – a move necessary to allow them to remain profitable.

He continued, “If they go third-party, you’re talking about an install base around 55 million consoles. I think ultimately you will get an install base of 200 million PlayStation 4 and Xbox One, Nintendo will need a 20 percent share on those platforms to replicate the success it had with Wii. That’s possible, but it’s not likely.

“I do think once Nintendo decides one way or another, that will drive future purchase decisions from consumers. If Nintendo says ‘we’re going third-party all the time,’ a lot of Nintendo fanboys will buy an Xbox One or PS4 and I actually think Sony would do some interesting things with Nintendo. Because I think, both being Japanese companies, there’s just a lot of opportunities for those two to work together.

“I actually think you would see some really cool things on PS4. But, we’re speculating for speculation’s sake. I don’t think that’s going to happen, and I’m answering the question because you asked it.

“My bias is Nintendo is going to stay in the console business until they fail completely, and I don’t even think they consider the Wii U a failure. Failing completely means no one buys the console at all.

“Since we don’t know what the NX is, it’s kinda hard to make a forecast on what the sales levels will be. My guess is, it will sell more units than the Wii U. So, better than the Wii U, and that’s enough to keep Nintendo continuing to stay in the console business and as a first-party.”

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After starting out with a Yellow Game Boy and a copy of Donkey Kong Land, Alex once hid in his room to play The Legend of Zelda: Ocarina of Time one Christmas. Now he shares his thoughts on Nintendo Insider, keeping track of everything to do with Nintendo.

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