Pachter: “This is the last real console cycle”

michael pachter

Wedbush Securities analyst Michael Pachter has signalled the end of the console era as we know it, reasoning that the “console installed base is as big as it’s ever going to get.”

He believes that the PlayStation 4, Xbox One and Wii U won’t eclipse the installed base achieved by PlayStation 3, Xbox 360 and Wii, the result being that this will be “the last real console cycle.”

“The console installed base is as big as it’s ever going to get,” Pachter stated at DICE Europe. “[This] generation is not going to be bigger than the last generation. We’re going to be about the same.
“The Wii U is going to sell 20 million units compared to 100 million for the Wii. The PlayStation 4 is going to sell 120 million or 130 million – that’s great. The Xbox One will sell 100 million to 110 million – that’s great. Add it all together and it’s 260 million units, maybe, and the last cycle was 270 million.”

With more consumers worldwide playing games than ever before, Pachter sees the requirement of purchasing a console as a factor that is limiting the games industry’s growth.

“This is the last real console cycle,” Pachter continued. “I don’t mean that Microsoft, Sony and Nintendo will go bankrupt and shut down – they will not. Each of them will make another console, some people will buy them, and the next console cycle will be to this console cycle what the 3DS is to the DS. The 3DS is selling about 15 million units a year, the DS had five consecutive years where it sold more than 26 million. So about half as big.

“So when I say that this console cycle is the last console cycle, the reason is that console games shouldn’t require a console. And I’m not talking about the cloud.”

In their place, Pachter believes that it will become standard that consumers own a device – complete with CPU, GPU, storage, controller and display – that connects with their television. With hardware now sophisticated enough, more affordable devices such as Apple TV or Fire TV will become the norm in living rooms, removing the requirement and larger costs associated with purchasing a console.

“What happens when you lower the entry so nobody has to buy a console?” Pachter asked. “If Activision sells 20 million copies of Call of Duty to people with a console, how many people would buy it who don’t have a console? I’m guessing 20 million more. To make it easier for the Europeans in the room, how many more people would play FIFA if a console wasn’t required? Another 20 million.

“How many people would play Grand Theft Auto if you didn’t need a console? 100 million. It’s crazy numbers. This just makes so much sense. It is going to happen.”

“There’s a market of probably several million people who would never buy a console to play the game, but would absolutely buy the game.”

This would see consumers required to subscribe to services such as EA Access, allowing them to transition their spending habits to models similar to streaming services such as Netflix.

“There’s plenty of 30 or 40-somethings who would like to play FIFA or Call of Duty, but they can’t,” he continued. “They’re not going to buy a console for one game, and I’d say that’s true of every single [console] game made. There’s a market of probably several million people who would never buy a console to play the game, but would absolutely buy the game.

He closed, “I think the traditional gamer market – which has high standards – does broaden. But the only way you actually see a step function change in that is to pull the console out of the equation, and make it open to people who can’t afford or won’t buy a console.

“I think this shift to full-game digital downloads, where everybody has the opportunity to play a game without having to invest $399 is a huge opportunity. It’s an opportunity for everyone in the value chain, except the retailer and maybe the console manufacturer.”

[Thanks Games Industry International]
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