Expect Wii HD 'upgrade' in '10, no new consoles until '13 - Analyst

Wedbush Morgan's Michael Pachter tells investors to expect a high-definition version of Nintendo's console next year, but believes publisher investment will put off next hardware generation.


Although Sony's PlayStation 2 is holding up remarkably well nine years on, game-console life cycles traditionally last around four to five years. However, if one of the leading US game-industry analysts is to be believed, the current crop of consoles won't be succeeded as soon as their forbearers.

The Pachter Speaks.
The Pachter Speaks.

Although the Xbox 360 was released in 2005 and the Wii and PlayStation 3 arrived in 2006, Wedbush Morgan Securities' Michael Pachter said that we shouldn't expect truly new consoles in 2010 or 2011. "We do not expect the 'next' generation to begin before 2013, if at all," he said. The latter part of his comment may be in reference to new technologies that may disrupt the console model, such as the OnLive cloud-computing game network revealed at this year's Game Developers Conference.

"We remain convinced that the publishers will resist the introduction of any video game hardware technology that requires a refresh of software, as the publishers have as yet to capitalize on the immense investments made in being competitive in the current cycle," Pachter continued.

"We therefore think it is likely that the 'next' generation will begin after 2013, meaning that software sales are likely to grow by a compounded annual rate of 6-10 percent for another five years. Because R&D costs are likely to flatten out with the benefits of a learning curve, we expect earnings leverage as the publishers are able to exploit R&D investments. In brief, we think that investors have it wrong so far this cycle, and think that investment in video game publishers will bear fruit for many years."

One thing Pachter does expect next year, though, is "the long-rumored high-definition Wii, which is likely to upgrade the Wii to current console technology." Last year, similar rumors circulated about a HD Wii, but those pegged the device as arriving in 2011.

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