Analyst: "Next year is big, no matter what"

  • By Curt Feldman, GameSpot
  • Posted Mar 10, 2006 4:44 pm PT

GameSpot News asks industry analyst Michael Pachter to look ahead, past the foul finances of late '05 and early '06. Our video interview gives you a look inside the crystal ball he keeps at his desk in Los Angeles.

Transition years are supposed to be rough, but few publishers, or investors, expected the revenue slumps of the past six months.

News Interview

Michael Pachter joins GameSpot News' Curt Feldman in the studio.

A couple of uncomfortable benchmarks from late 2005 include these two factoids: November 2005 console-software sales of $696 million, down from $849 million during the same period the previous year and December sales that were 4 percent below figures reported the previous December.

This year, the data is showing the same negative numbers. As reported previously by GameSpot, NPD's January sales stats saw US console-software sales of $357 million, down more than 5 percent from the prior January haul of $377 million.

To find the most recent month that saw a year-on-year revenue increase, you'd need to go back in time to August, 2005, when Madden sold record numbers.

But what lies ahead? "I think 2006 is going to be a mess," Wedbush Morgan senior analyst Michael Pachter told a game conference audience this week in San Francisco.

That comment was followed by a ripple of laughter. But the crowd of about 175 quieted down considerably when he continued, saying, "a lot of people in this room are going to lose their job," based on the losses that are bound to be posted, according to Pachter.

But even Pachter sees a break in the weather. Looking ahead, past the release dates of both the Revolution and the PlayStation 3, he sees an industry that is bound for growth. "Next year is big, no matter what," he said.

GameSpot News invited Pachter to join us in the studio where we asked him to further explain his thinking--and how he sees the future panning out. Watch the interview above to see what he thinks.

83 Comments

  • gatsbythepig

    Posted Apr 8, 2006 5:34 pm PT




    my face

  • brerrabbit23

    Posted Mar 17, 2006 12:38 pm PT

    stop quoting michael pachter

  • barnold81

    Posted Mar 14, 2006 1:34 pm PT

    The only reason I'd be buying a next generation console would be for the innovation, and for the fact that I'm basically forced to. I think consumers feel like they're not getting a good return on their investments on the current gen (i.e. really good titles are not being released lately). That would certainly explain a decline in sales. It's been a long time since there's been a title released that I felt like I must buy. The last one was probably Resident Evil 4 when it was released January 2005 for the Gamecube.

    The focus needs to be not so much on pure technological power, but innovation. If the games are essentially the same, and just look prettier, what's the point of buying the machine? Nintendo is the only one pursuing this innovation strategy / value proposition, in my opinion. Unfortunately, the value of their new controller is only as good as the support in game design from third party developers. I predict that the games that will fully utilize the controller's design and capabilities will be developed primarily by Nintendo. Whether they win the next gen battle or not, I couldn't say. I was disappointed that nothing was really said about Nintendo in the analyst interview.

    I agree with the analyst about Microsoft though. Generally, I won't pick a next gen console until I've seen what the other companies (Nintendo and Sony) have to offer. If I behaved otherwise, I'd have to be pretty confident in the product I'm buying. You'd think that Microsoft would learn from studying Sega's mistake with the Dreamcast.

  • FuguNabe

    Posted Mar 13, 2006 8:46 pm PT

    Oh dear... talk about obvious. Pure genius these analyst. I think the consumers figured this out long before the analyst. Buncha morons. What a waste of college years. My ass farted out these thoughts long ago. Maybe I should become an analyst and get paid for stating the obvious..... duh (kidding I'm probably making more $$$ than these analyst anyhow... mwahahaha...).....

  • andrewtyen

    Posted Mar 13, 2006 6:32 pm PT

    isn't that obvious

  • bonso

    Posted Mar 13, 2006 9:11 am PT

    LOL, love reading fanboys and haters take on the "analyst" interview.

  • Briantb_2008

    Posted Mar 13, 2006 8:50 am PT

    I plan on buying alot of games next year mostly PC, and PS3. but I will probaly be buying up Ps2 games sense most of there prices will be on the decline by then.

  • BallGame

    Posted Mar 13, 2006 8:11 am PT

    I love the video Interview for news!

  • soulessjay

    Posted Mar 13, 2006 5:48 am PT

    cool

  • chrisdojo

    Posted Mar 13, 2006 5:13 am PT

    next year will be big because the Revolution is going to own the rest of this year when it comes out, and next year.

  • faridmon

    Posted Mar 13, 2006 4:34 am PT

    beside is analysIs every time get right? they said last year that PSP will be number one and................the DS is outselling PSP. they,re doing good job so far.
    and what did they say about the revolution?

  • faridmon

    Posted Mar 13, 2006 4:25 am PT

    yeah i agree kaziechameleon, the playstation2 had good games but gamecube games had the uniqueness in thierbear hand,it just the stupid people who just saying playstation, playstation... and just that.
    i live in england, there so stupid, they dont even what is gamecube, today when i was in school the are just talkin about fifa street 2 ( just for playstation) and bournout, and when i say the Xbox 360 had the better garphic than PS2, they just cant stop saying PS2, jerks, then the other guy came and just said i pre ordered the godfather game, WHAT THE HELL? they even dont know it will suck or no (because the EA games are not 100% perfect games u know, just look at golden eye rogue agent........ i waited long for that game) too many jerks in UK.

  • CarminaZero

    Posted Mar 13, 2006 4:01 am PT

    may be that's true

  • nemes1s3000

    Posted Mar 12, 2006 11:28 pm PT

    All the better if it's just a one payment of $500 -- give us one console that everyone can use and be satisfied, don't give us choices, a-la-360.

  • GenesisEX

    Posted Mar 12, 2006 8:19 pm PT

    Hmm...isn't this the same cat that stated only positive points and near god-like dominance for the PSP?!? You're doing...you're doin' good...

  • Mr_Unknown

    Posted Mar 12, 2006 7:03 pm PT

    Hey Gamespot - do more of these please. It's nice to get some business-news interviews like this. I think there a lot of people like me who are interested in the business side of gaming and you guys are in a great position to be a major source for this kind of stuff.
    Good job - more please.

  • x-wing20

    Posted Mar 12, 2006 6:27 pm PT

    Maybe if gas prices go down

  • xs101uk

    Posted Mar 12, 2006 5:56 pm PT

    Unfortunately, dryden555 you forget that the Japanese and European markets are quite formidable now as we've seen the PSP get mopped up by the Nintendo DS. The shortage of 360s in Europe was beyond nightmarish for any marketer and the loss of sales from that will mean that those people who wanted to get a 360 felt slighted and will probably consider the choice of a PS3 and Revolution. The Japanese market has shown that despite the bundles of 360s available not many were purchased. Consumers, will always remember if a company threw its weight behind a project and came out short with its products.

    All of this is pure speculation and only once the Rev and PS3 pop up will we see if the global market will turn or not.

  • dryden555

    Posted Mar 12, 2006 2:10 pm PT

    This analyst is all wet. Once 360's are readily available to buy, no one will care about the previous shortage. They'll happily buy one. The success of the Xbox in the USA means that Microsoft can certainly suceed in the longer run.

  • Merl57

    Posted Mar 12, 2006 12:31 pm PT

    Um monkey I kinda agree and don't. For one thing who cares what the other analyists think. If this guys has a point and has done the research who are we to say he is wrong. The fact is NO ONE KNOWS, its all specualation. There are a lot of good games coming out, but people are playing games they just arn't buying them. People buy games there friends get, and people have a lot of expenses to pay for with jobs, school, and living, who wants to shell out lots of gold, i mean money for all that. I think that the sales also suck becuase people are curious about the other two next gen systems coming out why would you buy one now and not have the moeny for another later if you like it better?

  • SavoyPrime

    Posted Mar 12, 2006 6:42 am PT

    It sucks that people might have to lose their jobs. Hopefully the industry can get some momentum building.

  • elythemonkey

    Posted Mar 12, 2006 5:42 am PT

    I don't think this analyst is on the same page. He says that the 360 launch was a mistakie because of the shortage and lack og good games. Yet, the PS2 had a shortage when it lauched and also had bad games. This guy is supposed to be an analsst and look for these types of pattern. Another thing that he is totally off is in game sales figures being low this year. Look at the massive amounts of people lineing up for a DS lite in Japan, that will likely transfer on here, resulting in hardware and software DS sales. Another reason is the some good games coming for the 360 this year, LOTR2:BFME, Oblivion, Prey, (OMG ) Gears of Wars, Final Fantasy online and many more. This 360 list will carry the weight of game console sales.
    Finally on Sony and Nintendo. What's to say that the PS3 will be around $500 dollars IFFFF it lauches this year in the US. All the other analyst suggest the price tag to be around $700 and the chances of having mass shortages is very likely. Nintendo, being the most secretive, i can only wish them luck. I love Nintendo but it seems that they are going into a gun fight, with just a knife, sharp yes, but non the less, just a knife.

  • mickbradley

    Posted Mar 12, 2006 5:08 am PT

    You people are all very boring and sad, do what ya want an stop pontifcating about how kool ya chosen brand is, what is this frikkin coke vs pepsi, zzzzzzzzzzzz

  • metdevthegamer

    Posted Mar 12, 2006 12:35 am PT

    Yeah, after the PS3 and Revolution come out I suppose we would see potential growth in video game sales. Even so, Twilight Princess and a few other titles will also present a big cash flow for this year.

  • carl2tan

    Posted Mar 11, 2006 11:41 pm PT

    500$ PS3, I dont know. . 800$ PS3, no way in hell

  • biofreak12

    Posted Mar 11, 2006 9:38 pm PT

    Anti MS propaganda... ZzZz ms will come with HD player before ps3 is even released and will cost less than PS3... this guys has no clue i guess

  • VyseN1

    Posted Mar 11, 2006 5:57 pm PT

    Funny how he was never asked if there is going to be a PS3 shortage, and what would that mean. Did he forgot about the massive PS2 shortage, because despite that the PS2 did well.

  • nemes1s3000

    Posted Mar 11, 2006 2:36 pm PT

    He used some good quotes against Billy Gates haha. Oh yes, awesome work Curt.

  • lageasy311

    Posted Mar 11, 2006 11:00 am PT

    Ohh my god a 22 million dollar lost out of 357 million I'm so sorry you can't afford that new mansion you douche bag companys

  • SnuffDaddyNZ

    Posted Mar 11, 2006 10:44 am PT

    Don't underestimate the Ping Pong game. The Ping Pong game is going to be a MASSIVE seller.

    Probably not going to be the next Deer Hunter and spawn numerous sequels, but it will definetly be a huge hit.

    Microsoft has done something smart here, they've identified their target group, the "non-gamer". To attract that group to their console they are bringing out a game which you won't be playing on any other console.

    Then, they'll wanna start selling similar products through their Live Arcade. I'm sure that the same people that would be interested in Ping Pong would most likely be interested in Card/Board/Casino/Puzzle games.

    Microsoft will hook those people on those Live Arcade games, and then in the next 18 months you'll start seeing the same games repackaged for retail release, that is to say you buy a disc with all the games on it for x amount of dollars. One thing I know for sure is that the "non-gamer" audience LOVES value for money, you know, they'll buy the 50-in-1 games collections which are nothing more than shareware/public domain stuff. I know this for a fact because my dads one of them and so is his sister. She'll buy the 50-in-1 games collection, and he goes out and buys the 10-in-1 DVD Movie disc for $9.99 (thats five bucks for the Americans out there).

  • StillWingless

    Posted Mar 11, 2006 9:22 am PT

    i hate to hear that this year's gonna be tough for the gaming business world, but it can't be helped, what with generation changes and a crap economy to begin with. everything rebounds though. it'll even out.

  • asenzel

    Posted Mar 11, 2006 7:48 am PT

    I've just made out a list of my gaming history. From my dad's coleco when the NES was the next-gen system all the way through to now. Every new system I've owed (Coleco->NES->SNES->PS->PS2->PS3 soon) has lasted me five years. Since I got my PS2 in 2002, by this logic the PS3 is not due to be owned until 2007. Which at this rate will be just about right. As much as I'd like to, there is no way I'll get a PS3 at launch...unless I can make a quick buck on it at Christmas, like so many others did with the 360. 2007 is going to be the year for PS3 to show what it'll be capable of for the next 5 years.

  • Safe_Bet

    Posted Mar 11, 2006 7:11 am PT

    I know analyst blam the gen-transition for the slump in sales, but imo it was also cause by the totally "lukewarm" line-up of games that have been released since the middle of last year. I know I quit buying new games long before Christmas due to basically nothing but semi-crappy games being released. SOCOM 3 sucked, Battlefield 2: Modern Combat sucked, Burnout Revenge sucked online (I only bought the game to play online), etc. Metal Gear Solid 3: Subsistence will be the first new game I have bought since November....

  • firefruze

    Posted Mar 11, 2006 7:05 am PT

    I wonder if revolution will be a factor this year...... I hope so because deep down in my heart I'm still a nintendo fan, why did you heart me so nintendo lol

  • alimn1984

    Posted Mar 11, 2006 6:42 am PT

    With out Shenmue III next year will be not big...

    Even if Shenmue Online releases this Q

  • atomD21

    Posted Mar 11, 2006 6:18 am PT

    Well, I think he's right that 2006 will still see a decline overall, and that the industry won't really pick back up until all three next gen systems are out. Howerver, I disagree with his pricing on the PS3. Yeas, Sony can't afford to have it out at $800, but I don't think Sony can afford to take the hit if they sell it for $400-$500, especially with a Bluray drive. I still can't figure out why rereleasing old movies is going to make me want to run out and spend thousands of dollars on high end AV equipment. Has anyone figured this out? Anyway, I think that the 360 needs some must have titles, and fast, or MS will be pulling up the rear this upcoming gen. Pretty looking ports won't do it.

  • spetznazkye

    Posted Mar 11, 2006 5:22 am PT

    micosoft are owned!!

  • Bunnyslippers

    Posted Mar 11, 2006 4:36 am PT

    Why is he saying 'we need more sequels'. Everybody wants new IP but he wants games to have more sequals. New IP are good and don't need sequals. Ico didn't actually have a sequal. Shadow of the Collosus happens to be in the same world/universe. Or is he saying companies need to make more sequels to make more money. Milking a succes as much as possible.

  • xs101uk

    Posted Mar 11, 2006 3:54 am PT

    Wow. That was a good interview! I like how Michael kept it simple and concise and put it in laymens terms. I think he's spot on about next year being a big one especially with the prospect of the PS3 and Revolution coming out with the competition led by Microsoft throwing out more shipments of the 360.

    I enjoyed this. I hope they continue this line of interviews where they ask analysts and professionals about the Gaming and Hardware Industry.

    Kudos to Curt and Gamespot for this. Keep it up!

  • K0DE

    Posted Mar 11, 2006 3:46 am PT

    Very interesting. More content like this please.

  • Aushan

    Posted Mar 11, 2006 3:08 am PT

    "Next year is big, no matter what" umm, duh

  • Silencer786

    Posted Mar 11, 2006 2:12 am PT

    isnt that guy who said next gen wont begin until ps3 comes out?

  • Reetesh

    Posted Mar 11, 2006 2:03 am PT

    Cant wait for Next it will be the First cfresh year when all the consoles will be on the Market

  • decebal

    Posted Mar 11, 2006 1:38 am PT

    Unreal 2k7, Legend of Zelda, Twilight princess...

  • danchambos

    Posted Mar 11, 2006 1:18 am PT

    DUCK U GUYS XBOX 360 MAN! WAVE OF THE FUTURE!

    -Dan Chambos

  • Vulcan300

    Posted Mar 11, 2006 12:31 am PT

    according to the guy in the intervew i am thinking about buying a HDTV .... OK?

  • ymcop

    Posted Mar 11, 2006 12:27 am PT

    I hope the will not give another "GOLD" consoles "<

    so I think the tittle should be this : " Ymcop: "Money is big, no matter what"."

  • kaziechameleon

    Posted Mar 10, 2006 11:41 pm PT

    ha read that you !%!$^!%'s, jk, lol

  • kaziechameleon

    Posted Mar 10, 2006 11:39 pm PT

    people, people,"Go Playstation 3, your going to win the next gen war, i hope !!! "(orangestar) sorry i hate to say this but shut up fan boy. may the best console win, what does the ps3 offer, a higher price tag with a crappy blue ray player. so the playstation won the last generation, why, because people are stupid, consider the system it sucked(technicaly and innovation wise it was the lamest), the dreamcast was far better, but everyone had to have the really crappy system(technically it blew, look dreamcast had a webrowser, and free internet, sony charges you, and it wasn't built in from the start, kinda like the four controler ports that are kinda standard, yeah sony thought a multi tap was more lucrative)with GTA on it, well me being a man that speaks with his dollars said i don't want your crap console and i denied my self the sometimes great games to grace it, i spoke with my dollars. i got the cube and enjoyed many a great game, i have a good pc on wich i played the far better though still over rated GTA III games. i find that sony is probably the lames console maker. the DREAMCAST: had a awsome launch lineup, a great variety of fun arcade games, some of the best sports games to grace gamers fingers, one of the best fighting games ever, four controler ports, a compact size, built in internet support for multiplayer games and a web browser, undoubtably the best memory cards ever(they had a mini screen and buttons for mini games that would allow you to unlock extra content), confortable ergonomic controlers(if you don't know what that is it means something that is confortable, yeah it conforms to the shape of the human hand, something the boxy retarted ps controlers don't know how to do). the GAME CUBE: small portable, durable, four controller ports, confortable contollers(not the most confortable but twice as confortable as the ps controlers) the a,b,x,y button placement is wonderful, absolutely wonderful. a great lineup of fun games many of wich are quite revolutionary or unique, smash brothers games are the only ones of their kind. and metroid prime redifined the single player fps on the console creating wonderful atmospher and imersion, while resident evil 0,1, and 4 redifined the survival horror genre. this platform also supported more classic console games and action adventure/platformers quite well, things like the sonic collection made retro gamers drule. the XBOX: it had a built in hard drive and looked it, this thing was huge, it also packed, four controler ports, a dvd player, and some wonderful games, exclusives like the fighter DOA 3 made this a console gamers console, and games like halo and farcry instincts and morrowind and knights of the old republic made this the pc gamers console. with a internet support called xbox live, the arguably best internet support, but at a price. the luanch controler was huge and uncomfortable for gamers, but "micro"soft learned releasing the slim. the xbox slim is arguably the most confortable controller with a button arangement that allows for excellent/classic fighting controls for the hit DOA 3, and joystick placement that made this the console to play a FPS on. this system had the fastest load times, the best graphics, and arguably some of , if not all for the most popular games of the last generation. PS2: came out after the dreamcast, had a horrible launch lineup, its three strong games early on in it's life for some reason demolished the dreamcast, some might remember final fantasy( i didn't like any of the ps2 final fantasies, they payled in comparison to the great like 7, and those that came before.) MGS2, a great game, but not the strongest in the series at any rate(twin snakes and MGS3, along with the original MGS1 will out shine it in the halls of gamedum), and a certian GTA 3, a fun game by all acounts, but once you went on a hundered hours of bloody rampages you loos your blud lust and really don't want to finish the boring single player. it also sported two, yeah two controler ports, with the possibility of buying a multi tap for 35 bucks(gotta love gready sony). the early ones had harddrives, but that proved to make pirating easy so that quickly ended. the thing was large, ugly, had a disk tray drive,(note disk tray drives on a child play thing, yeah those broke alot, i mean alot, about half my friends that regularly played ps2 broke their drive atleast once, without ever breaking their wonderful cubes.) the controlers are not only ugly they are uncomfortable any seasoned ergonomicaly inclined person will tell you they blow. and the shoulder buttons stick like mad on brand new controlers, the l1 and r1 buttons stick so freegin much in one game of hockey i had my shoulder button stuck about 10 times. these things nicely have rumble packs to bad that is all i can say, and yeah they retailed for 35 in their time(and for a brief time as much as 50 in some retail outlets) yet they are seamingly cheaply mad with joysticks snaping and buttons sticking. this system sucks in the end it got tuns of developer support because all the american developers wanted some of what the take two had, further encouraging the stupid masses to buy a inferior product that kinda sucked. take a graphical benchmark like techen 5 and compare it to the best of the cube and the box, yeah it looses sadely the funy thing is that the best games on the dreamcast actually looked really good for their time take soul caliber 1 for example, beautiful. the playstation two didn't look that good till two years into it's life cycle, that makes you wonder what that system might have had.(note the best games early on like GTA, and MGS had huge blure effects to cover the visual seams when you compare still frames those games look like the belong on the 64 almost.) so sadly people support bad stuff ignorantly. i personally hope sony leaves the consoles and that sega resufaces, or merges with nintendo/gets bought out. then nintendo will get more adult themed games. (note to all console gamers the pc is the only place you can really play RTS, FPS, RPS, SIMS, and MMO games, suckers, lol)either way i hate their buisness moddle.

  • mikekare79

    Posted Mar 10, 2006 11:26 pm PT

    Yea, Americans can count on the Japanese? I mean, who wants to buy a system that kicks butt that's made in America? (Besides me and any real gamers)

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