Details are coming out about Pachter’s report. From Joystiq we read:

Pachter writes on page nine of the report, “The global recession served to benefit Nintendo at its competitors’ expense,” referencing Microsoft and Sony as having slower console sales this generation due to HDTV functionality built into the systems. He argues that consumers who might purchase the Xbox 360 or PlayStation 3 are more likely to buy the Wii not only because of the lower price point, but because of the subsequent HDTV purchase price. “Expect most consumers to defer purchasing a PS3 or an Xbox 360 until they have purchased an HD monitor,” Pachter explains. 

So why in the world would Nintendo make a Wii HD if the above is true? Does Pachter even read his own reports?

I’m beginning to suspect there are multiple Michael Pachters running around. We’ve seen analysts be wrong. We’ve seen analysts be REALLY wrong. We’ve seen analysts say silly things. But we have NEVER seen an analyst take multiple opposing views on the same issue within the same report. I can’t even get the contradictions straight.

So the global recession will help Wii but hurt 360 and PS3 due to their reliance on HD monitors. Yet, then he declares a Wii HD will be made and launched within next year. Apparently, this Wii HD is supposed to stop the magical and sudden ‘comeback’ of the PS3. But Pachter said the PS3 would be hurt due to the global recession so how is any comeback possible?

Pachter is not talking like an analyst. He is talking like a politician (i.e. taking all sides). I am beginning to wonder if various parties are paying him to say many of these things (such as third parties, who would want a Wii HD to port to, would push Pachter to say ‘Wii HD is coming!’ year after year). What other explanation is there to these self-contradicting statements?

Around seven minutes in she starts applying the Blue Ocean Strategy to a young man trying to get a girlfriend! hahaha. I wonder what would happen if that young man applied some ‘disruption’ towards his male classmates? hahahaha

For those of you who email me and go, “Why you going off topic with this talk of women or personal elements and all?” As you can see in the video, even the business leaders do it! hahahaha

This is a must watch video. It is essentially the best produced video I have seen that sums up the Blue Ocean Strategy.

If Pachter watches it, maybe he will realize why people are laughing when he predicts a Wii HD.

Pachter is at it again in a very funny GAF thread.

This “red ocean/blue ocean” stuff is fun to talk about, but is too limiting. You’re right that Iwata/Miyamoto won’t behave in a predictable manner, but it’s crazy logic to assume that they will behave crazily. It doesn’t make sense to chase the “bleeding edge” of technology (that might be where Red Ocean comes from), as Microsoft did (kind of) and Sony did (definitely), but once the technology is affordable and merely “leading edge”, why wouldn’t Nintendo choose it?

Who says the Wii wasn’t cutting edge in technology? The small size and efficiency of the console (within that price range) along with the new motion controls were cutting edge back in the time they were made. Something like Motion Plus wouldn’t be affordable back in 2006, but it is now in 2009.

Why is Pachter assuming that cutting edge technology must mean faster processors and graphical displays? It can mean other things such as the controller.

’Red Ocean’ doesn’t mean ‘bleeding edge technology’. It means putting features on your product that the competitors are doing. Instead of upgrading the graphics, Nintendo chose to upgrade the interface.

I haven’t done a good job illustrating the Blue Ocean Strategy (like I did with disruption) but here are some examples so Pachter will stop saying it is ‘simple’.

Blue Ocean Strategy is all about value innovation. Here are some charts and examples of the Blue Ocean Strategy in action which is far more complex than just saying ‘red ocean’ and ‘blue ocean’:

In early 2007, I played around with the Blue Ocean Strategy.

I probably should revisit it and attempt to do a more accurate assessment. But you get the general idea. I did little breakdowns for all the video game generations, but this one from the NES matched the Wii. These images came from my Drowning in the Blue Ocean article.

Are these images the epitome of accuracy of value assessment? Likely not. However, it was a try back in early 2007.

I wonder if Pachter realizes that he just dissed the most influential business book of the last decade. Oh well, Pachter is much more entertaining in his current mindset. His analysis is wondering whether an imaginary Wii HD will stop the imaginary PS3 comeback. But the real question you GAFfers need to ask Pachter is where does that Apple video game console play into this (which Pachter confirmed in the last Bonus Round)? Will the Apple video game console stop the Wii HD? Will it help the PlayStation 3 comeback!? I hope Pachter shares his thoughts on this…

(*giggle*)

Hello Mr Malstrom,

Hello Mr. Reader

I’ve been reading your column for a few months now, and find it amusing and highly interesting to see how you look at the gaming industry. Previously you state that you essentially “left” the console gaming scene in the late 1990s, citing disinterest in the types of games that were beginning to dominate.

It wasn’t about the games so much as it was about the mission of gaming. Think of me as one of those guys at the beginning. It was understood, from essentially everyone back then, that gaming had to expand and grow. During the Atari Era, it was amazing to see gaming expand. There were competitors to Atari, sure, but Atari was out innovating them and racing ahead. While they were playing copycat, Atari was putting out games like Asteroids. Then it all crashed. There were computers and all but the big splash came with Super Mario Brothers and the ensuing NES craze.

The NES is extremely fascinating to me. The first half of its lifespan, at least, was truly like the Wii. Everyone wanted it. Hardcore computer games mocked it. If you had the NES, the entire neighborhood would come to your house (sort of like the early Wii days). You had a zillion different types of peripherals to choose from. NES games were a type of ‘shock’ since many had Japanese heritage within them. It was like watching Robotech in 1985. It might seem cheesy today, but back then no one had ever seen anything like that before.

The NES games then began to get ‘too big’. Parents who would play with their children stopped doing so. They just didn’t have the time to invest in learning or exploring the games the same way children did.

Sega was when I first remembered the ‘counter-culture’ marketing start being used for gaming. Before then, games were meant to be for the family or to be something to make your neighbor jealous that he didn’t have! (which happened frequently hehe). Sega intentionally targeted the ‘growing older’ NES children who were becoming teenagers with their ‘counter-culture’ marketing to make the Genesis ‘cool’ and Nintendo ‘dumb’. Mario was untouchable during that time. Yet, Sega had the balls to go after Mario and made Sonic to do so.

The 16-bit Console War was, at first, interesting. The 16-bit generation was, at first, interesting. It was neat to see gaming with better graphics, sound, music, as well as new gameplay. One of my specific memories was telling everyone that I would be going to buy *this* game, and I pointed to it in an issue of Nintendo Power. Everyone laughed at me! They said, “That is a baby game!” or “That is for children!” The game that I pointed to? Super Mario Kart. I don’t believe I’ve ever had a game in my possession that was in so much demand to be played, so many requests to be borrowed, than the SNES Super Mario Kart. It had fantastic single player. Fantastic multiplayer. The replay value was absurdly high. I had bought it day one (which I’ve noticed I curiously tend to do with the ‘classics’ before we know they are classics!). There were other great highlights as well. It was a huge deal when Sonic 2 came out. I remember playing Final Fantasy IV for the first time which really made the SNES seem magical. That game was worth $90. Final Fantasy VI was also very much worth it. Contra 3 is another very memorable title. Who can forget Street Fighter 2 landing on the scene? There were many great games on both the Genesis and SNES at the time (though I feel the SNES games have aged better. Genesis was mostly home to the sports games at the time which haven’t aged too well).

When I say there have been no ‘great’ games, I refer to games like Street Fighter 2 that just come out of nowhere and seriously rocket the console in sales because everyone must have that game! Over the years, these ‘great’ games are becoming fewer and fewer. Grand Theft Auto 3 was one of those games that ended up rocketing the PS2 to success. In the last few years, the only games that I feel that are like that would be World of Warcraft, Wii Sports, and Wii Fit.

I specifically remember the 16-bit generation getting lame when the Mortal Kombat ‘controversy’ caught steam. Games were becoming more and more about ‘technology’ and ‘violence’. Mortal Kombat was not a family friendly game. The commercials for the consoles began to have a more ugly tone, including cussing, to say that “My game is more of a rebel than your game!” The button combinations of fighting games became absurd. Games stopped being fun. I noticed I was the only one playing games anymore. Family and friends didn’t want to play these games.

So I focused more on computers which WERE in a golden age in the early 90s. You just cannot emulate those great days of Kali online multiplayer in DOS today. I remember when Ultima Underworld came out. No wonder that game made John Carmack mad. It was stunning back then. Wing Commander was a huge moment because that was the first video game that truly pushed the cinematic feel (which consoles would copy ten years later and claim they invented it).

But yeah, the 16-bit console war made gaming retarded. The ‘console wars’ that followed were equally retarded. And there was no more 2d Mario so what the hell.

From my own memories, this is about the same time I started playing more games (though this is probably more a product of disposable income rather than choice – I grew up with Amiga). 

Oh, I am so sorry to hear about that.

I remember the anticipation for the Wii controller announcement and the subsequent forum frenzy about how “Nintendo was dead/doomed/a joke” and so on. I also remember thinking that Nintendo was doing what they had to do. If they had feature matched the HD consoles, they would have wound up in the same (or worse) position as with the Gamecube/PS2/XBox era. The self-appointed hardcore cried “Nintendo have abandoned us” with the Wii, but they fail to see how they “abandoned” Nintendo games on the Gamecube. That is the prerogative a consumer has – to choose – but it also has consequences. Nintendo had to take the path it did, or face potential irrelevance. I’m glad they went with Wii, because not only has  it been home to some great software – it is also home to new ideas.

One of the reasons of making these articles and all is to ‘catch’ the flavor of the market at the moment when it is hot. It is like catching a butterfly.

In other words, twenty years from now, you will describe the events you witnessed. You will say, “I remember when the appearance of a Wii at the store was like the appearance of a leprechaun, rare and almost immediately about to slip away. I remember when I could sell a used Wii for more than a new Wii!” Twenty years from now, people will think you are lying. They will not believe you. “I remember the ‘hardcore’ always dissing the motion controls.” They will find such a thing unbelievable.

I know this because if I describe how things were twenty years ago, no one believes me. People who grew up on the NES could not believe that there were gamers at the time who hated the NES and wanted ‘hardcore gaming’ on their computers. It is only when they see Trip Hawkins fighting to refuse Electronic Arts to start making games for NES do they get an idea. They can’t imagine a world where the joystick was the game controller. The NES pad was alien to everyone. Some people never used the NES pad and just used the NES Advantage!!!

To this day, there are still some Atari hardcore gamers who still mutter, like the walking dead, “Nintendo destroyed gaming!” Gaming was brilliantly done on Atari systems, you see, with the joystick and with computers. But Nintendo came in with that NES and ‘messed it up’. Twenty years, and they still haven’t gotten over it! There will be some pockets of hardcore with us for a very loooonnng time. They are the new retro players! “Classic controls… FOREVER!” “Yeah! Before Nintendo… ‘messed up’ gaming!”

The games that proliferated in the late 1990s and have dominated gaming since then are the big budget, epic shooting titles with very little variation between them. First person shooters, third person shooters, wrestling games and racing games pretty much describes 90% of the software in the past 10 years. I think it is a healthy thing for a platform to encourage developers to try new things, even if they fail from time to time as with Wii Music. Other times some oddball success stories emerge, such as Lost Winds or World of Goo. Ignoring external issues, if this kind of experimentation is not encouraged, the future of gaming in ten years time will look eerily similar to what it looks like now – only with less gamers.

Wii Music would be an example of Nintendo becoming arrogant. Wii Music had some radical ideas in it, true. But this was the flagship holiday game. Nintendo didn’t properly test these radical changes in smaller or lesser games as they normally do.

Anyway, I am tired of attacking Wii Music and I am sure everyone is tired of reading me doing so. Moving on, the ‘experimentation’ is exactly what Iwata wants Wiiware and DSwire to be.

This brings me to a question – you have said a couple of times that Nintendo ideally needs to become a permanent “Wheel of Disruption” in order to maintain the kind of success it has found with Wii. You also say that only a few companies have ever managed to do this. I wonder if you could mention a couple of these companies and give some examples that parallel what Nintendo has done so far, and what, in your view, Nintendo needs to keep doing. 

Sony used to be a Wheel of Disruption. Sony used the computer chip to disrupt all sorts of industries. The Walkman would be the most famous example.

Google is a Wheel of Disruption for the obvious reasons.

Apple, somewhat. Apple likes to play in the Red Ocean. Apple did disrupt with the iPod, no doubt about that. Then Apple disrupted with the AppleTV (which would be more interesting if Apple stopped using it as a ‘hobby) and, of course, with the iPhone. Christensen doesn’t like using Apple as an example so I’ll follow his lead on that one.

I’d have to look it up to give you more examples. The number of them is very small. But Sony is considered the most famous disruptor. Ironic, eh?

Your columns make for very interesting reading, and are a refreshing change from reading ‘hardcore fanboy vitriol’ directed at Nintendo for daring to capture new customers. For my moneys worth, they havent made a new customer out of me, but they have certainly stopped me from losing interest in the medium altogether.

What is funny is that all my critics think I am nothing but “Nintendo fanboy vitriol”. On a PlayStation 3 forum, one poster said that Malstrom was the al-quada for Nintendo!

What is sad is that the Console Wars have been going on for so long that no one can even imagine another way to look at things.

My passion is not so much for Nintendo as it is about attacking the game industry. I believe the game industry is destroying gaming. In order for gaming to survive and thrive, the current industry must be creatively destroyed.

On game business websites, we read the following:

“However, in order to live on, The Pirate Bay requires a new business model, which satisfies the requirements and needs of all parties, content providers, broadband operators, end users, and the judiciary.”

I hate piracy, but I did admire the Pirate Bay’s  ’legal page’ where they thumbed their noses at lawyers and politicians. There is one thing the political class cannot handle and that is being mocked.

But what type of previous business model are they referring to? Why is it that when people want to sound ‘business orientated’ they throw ‘business model’ phrase in front of everything? (as well as words like “demographics”)

To show how absurd this is, let me re-write it:

“However, in order to live on, The Bank Robber requires a new business model, which satisfies the requirements and needs of all parties, banks, police, savers, and the judiciary.”

At first, you might laugh at my above sentence. But then I realized how true it was. Only in the twentieth century do bank robbers wear a mask and hold a bank at gunpoint. In the twenty first century, bank robbers wear a nice suit and run for Congress. Alas.

“However, in order to live on, The Rapist requires a new business model, which satisfies the requirements and needs of all parties, women, police, men, and the judiciary.”

OK, now we have a really absurd illustration. All I am doing is just replacing the word ‘Pirate’ with any other criminal and adapting the ‘needs’ that the criminal touches.

“However, in order to live on, The Counterfeiter requires a new business model, which satisfies the requirements and needs of all parties, banks, police, Federal Reserve, and the judiciary.”

This is fun.

“However, in order to live on, The Arsonist requires a new business model, which satisfies the requirements and needs of all parties, architects, police, renters, and the owners.”

Have you figured out what is absurd in all this?

CRIMINALS DON’T HAVE BUSINESS MODELS! Businesses are what have business models. Non-businesses do not have business models. Is it that hard to understand?

If you are walking down the street, and you see a nickel and pick it up, is that a business model? NO! If you have a machine that prints money, is that a business model? NO! Is the change in your couch a business model? NO! Is bank robbery a business model? NO! Is taxation a business model? NO! Is piracy a business model? NO!

The Pirate Bay has its faults, but one thing it did aptly was naming itself appropriately. If there is no piracy, is it really a ‘pirate bay’? I feel like I’ve fallen into Ultima 7’s Buccanner’s Den where all the pirates become merchants and sell games and prizes.

Why has there been a trend of applying ‘business models’ to things that it does not and cannot apply? If this is the way things are going, I am going to call the tree outside my window a ‘business model’ as well as my billion dollar cat (who has generated billions of dollars more than the net-loss Xbox Game Division) a business model.

Content creators and providers need to control their content and get paid for it.

But if we adopt, according to the person who said that sentence, the ‘Pirate Business Model’ (which, curiously, I have been unable to find in any business textbook), then who needs to be paid for anything?

With all this crazy business model talk, perhaps I should start selling ‘air’. It is said that ‘air’ cannot be sold because there is no scarcity to it. It is ‘everywhere’. Perhaps we should adopt the ‘business model’ of ‘birds’ or ‘whales’ and then we can start selling air.

I’m always amazed at what people choose to email me about. I got many emails about the pronounciation of the email address. The emails said that the ‘AT’ and the ‘DOT’ are to prevent spam harvesters.

Fair enough. I had never seen anyone write their email address that way. I read sites that get WAY more traffic than Kotaku, and people still don’t write their emails like that. And generally with any email address, spam is a natural part of the Internet. Why bother writing the AND and DOT since anyone could just write the email in a normal way, on any comments section or message forum, and thus it would eliminate the ’spam-bot’ evasion you perform when saying AND and DOT?

But when in Rome, do as the Romans do. Therefore, I will participate with this way of expressing the email address but with an upgrade. I suppose I am to write my email address this way:

seanmalstrom AT yahoo DOT com

But a sneaky spam bot *might* be able to translate the AT and DOT and harvest my precious email address. Oh noes! What shall I do, reader? Therefore, let us re-invent the email address:

Es Ee Ae En Em Ae El Es Tee Ar Oe Em AT Why Ae A’ch Oe Oe DOT See Oe Em

I shall now use this new re-invented email address at the bottom of all my articles. To those who say, “That is tacky!”, I will say, “But behold how it evades the nefarious spam-bot!” And what can they say to that?

Hi there Sean.

Gah, this is getting frustrating. Having just read this: http://kotaku.com/5303609/in-defense-of-the-classic-controller 
i can only come to one conclusion: this hardcore audience is not worth fighting for.

I’ve been looking at forums everywhere and i see all sorts of these articles popping up.
Hardcore still don’t understand that gaming is going through a fase of change.
They even think that stuff like Natal and The Magic Wand from Sony will only be optional.

It’s at times like these that i hope that one day, Reggie is going to walk on stage and flip the bird to the hardcore.
Along with Cammie saying “F*ck YOU”.

There, needed to vent that to someone i know can use this as material. :)

Sony and Microsoft *have* to use motion interfaces throughout all their games or risk being disrupted. They cannot just do a Birdman approach by saying, “Casuals are stupid customers. Therefore, if we have some slick marketing and some stupid games, the stupid customers, which are what the casuals are, will all come in mass!” I think Microsoft and Sony are both going to royally screw up on their motion control front. Nintendo did it right in implanting motion controls with pretty much all the games rather than just one or two games.

The article, itself, is hilarious. Does she not realize that things are called ‘classic’ when it has no future, that when something is called tradition it is because it is dead?

What is most fascinating to me about this article is not that it is a blatant defense of ‘the classic controller’ (which, itself is funny), it is that this article is not being written by a typical hardcore male but a hardcore female. Female game journalists, for some reason, always go out of their way to find some female working in the games industry and interview her.

Her latest project, Train, is aimed at provoking players to think about the Holocaust. Players lead grim, gray boxcars full of little yellow pawns. The draw cards along the way that release some of the figurines or slow the train ride.

Only when the first train reaches the “goal” do players learn that their final destination has been the Auschwitz concentration camp. 

Oh boy, that sounds like fun for the entire family! That doesn’t sound remotely entertaining (which is what games are supposed to be, entertainment). Academics are the last people to ask about things going on in the market since academics don’t live in the market. They live in the world of “theory”. I wish I could live in the world of “theory”. Everything is correct in the world of theory.

Basically, the article tries to articulate the ‘counter-culture’ defense of the hardcore. The article, of course, does not specifically say ‘counter-culture’, but I know the hardcore better than they know themselves. Gaming cannot become mainstream while remaining counter-culture. The hatred for Nintendo in abandoning the ‘hardcore’ is really that they abandoned the ‘counter-culture’. Nintendo has no desire to put out commercials that attack the mainstream as it did in the 16-bit and N64 eras.

Note how the article is using a picture from the E3 2006 version of Wii Sports, not even the released version! Talk about lazy! The game has been out for nearly three years and we get a picture from its unreleased state? Come on.

I interpret this article to be, very much, an attack on Natal mostly. Core gamers do not like Microsoft changing direction. You thought Nintendo had a fire break out on its core market with its new direction? You’ve seen nothing yet. Only a marketing stunt was shown for Natal. There are no games or even release date for Natal. Yet, this article shows there is intense anger at Microsoft’s direction. I don’t think Microsoft will be able to successfully counterattack the Wii with that amount of intense resentment coming from its core.

In other words, the closer Natal comes out (if it ever does), get out the popcorn! It is going to be fun to watch the core go stark raving mad!

[Leigh Alexander is news director for Gamasutra, author of the Sexy Videogameland blog, and freelances reviews and criticism to a variety of outlets. Her monthly column at Kotaku deals with cultural issues surrounding games and gamers. She can be reached at leighalexander1 AT gmail DOT com.]
’Cultural issues’ means ‘chick stories’. In the old days with the news, the news was about financial markets or fierce political issues. Since the news has been ‘chickified’, we get stories about a pregnant woman, whose man left her, struggling in her day to day life and what will a politician do to help HER? Think of news shows being dominated by some young white girl who was kidnapped. Or think of Oprah. This is why when you are watching the news, you go, “WTF!” when you see feature story after feature story all over the place. Those who work in the news business have told me this is occurring at rapid speed in the mainstream news (which might also help explain why the news audience is collapsing for them). When asked why they keep bombarding us with all these ‘feature stories’ which have the substance of cotton candy, they just say it is ‘cultural issues’. This is why I say ‘cultural issues’ tends to translate as the politically correct way to call ‘chick stories’.

What is with female game writers and the issue of sex? They seem obsessed over it. You never would find a man with having a blog named “Sexy Videogameland”. All the ‘sex in video games’ conferences and stories all seem to have a female spearheading it. You know what Nietzsche would say about this? Well, I’m not going to quote what he would say!

Who, in their right mind, says their email address in that way? AT and DOT? Do they expect a gold star for being ‘cute’?

I am becoming more and more convinced that just as the masses read funny pages for amusement during their morning coffee, investors read analyst reports for chuckles. Why else are they paying for this? I am, of course, referring to Pachter’s latest analyst report.

The sources I am pulling quotes from are IndustryGamers and Wired.

It would be a waste of time to refute Pachter’s report. For each page Pachter writes, it would take three in reply. Replies end up being longer because a refutation demands a tear-down of the original argument and then explanation of what is actually happening. A refutation would be long-winded and boring. I have another idea.

Let us have Pachter, himself, refute Pachter. Yes, folks, this report is boiling with contradictions.

We expect the dominant console at the end of the this cycle to be the Wii, as we think that the console’s low price point, innovative control mechanism, and compatibility with standard definition televisions will provide it with a competitive advantage over the next two years. 

Then he contradicts this statement by saying Nintendo will be coming out with a Wii HD. A Wii HD would be losing that competitive advantage of compatibility with standard definition televisions, yes? Why would Nintendo want to lose its competitive advantage? Pachter sees a Wii HD of expanding the competitive advantage strangely enough:

We expect Nintendo to sustain this competitive advantage by introducing a high definition version of the Wii, perhaps as early as the end of 2010, in order to convert its large installed base into true ‘next generation’ households.

Because we all know Wii customers are interested in graphical improvement, right? Pachter, again, disagrees with himself:

Moreover, Wedbush Morgan estimates that “over half of Wii households are nontraditional, meaning that they would not have bought a console but for the novelty of Wii.” 

So if Wii customers didn’t buy the Wii for the ‘graphics’ but for the novelty (meaning the motion controls), why would Nintendo put out a Wii HD? Wouldn’t Nintendo, instead, upgrade their motion controller? It could be a small adaptor plugged into the bottom of any Wii-mote. You could call it Motion Plus. And this is exactly what Nintendo did. It is one thing to say that Wii HD is going to come out, but it is another to ignore that Nintendo has already signaled which way they are headed by upgrading the motion controls, not the graphics.

I am going to re-use an earlier quote from Pachter.

We expect the dominant console at the end of the this cycle to be the Wii, as we think that the console’s low price point, innovative control mechanism, and compatibility with standard definition televisions will provide it with a competitive advantage over the next two years. 

The price of the Wii is $250 in the US. Now let us listen to Pachter disagree with himself:
 
Xbox 360 and PlayStation 3 still have massive room for growth over the next few years, he says. Pachter points out that 90 percent of all consoles sold in the last generation were at prices under $200, which only the Xbox 360 has reached thus far — and even then, the “core” 360 SKU, the one that comes equipped with a hard drive, has not yet reached that magic price point. (To say nothing of the PlayStation 3.)

Obviously, Wii’s sales aren’t entirely connected to the low price as the Wii is above $200. This is not my logic I am using, dear reader. This is Pachter’s logic. This is pitting one Pachter against another Pachter. With Pachter in the news cycle almost daily, the idea that there are cloned Pachters running around saying stuff and coming up with different predictions is amusing. Pachter could debate himself!

Moreover, Wedbush Morgan estimates that “over half of Wii households are nontraditional, meaning that they would not have bought a console but for the novelty of Wii.” While Pachter points out that this is a good thing for the industry because it widens the market, it means that Nintendo may not have crowded Sony and Microsoft out of the market — there might still be room for many more sales of traditional consoles.

Everything else Pachter says contradicts this statement here. If Pachter believes that over half of Wii households are nontraditional gamers (a fact I likely believe to be more true than not), then what does that say about the core market? If the nontraditional gamers are the expanded audience, and they make up half of the Wii customers, shouldn’t that have been logical that the vast PS2 install base and other gamers from previous generations be flocking to the PS3 or 360? Where the hell did all these core gamers go?

Perhaps what Nintendo said prior to the Wii’s launch was correct. Dismissed as ‘marketing spiel’ at the time, both Iwata and Reggie said that the Core Market was slowly dying. Therefore, new gamers must be made or else all we could do is just sit by and watch gaming slowly die. If Nintendo is right about that, which they likely are since Nintendo was right about the DS and Wii, what does that mean to Pachter’s longterm predictions on the PS3 ‘comeback’? Exactly.

Miyamoto said that the Xbox 360 and PlayStation 3 are just giant dinosaurs fighting one another not realizing they are on the way to extinction.

In order for the Xbox 360 to improve its marketshare, PlayStation 3 marketshare must decrease and vice versa for PlayStation 3’s success. 360 and PS3 are clearly fighting for the same market as they feast over the rotting corpse of Core Gaming. The Wii is getting new blood into it. Make no mistake though, the collapse of the Core will harm the Wii too since the Wii had a foot in the Core Market. But the Wii can take its foot out and place it back in the Expanded Market. PS3 and 360 have no expanded markets to do so. Even if they start them now, such as 360 attempting to do with Project Natal, the Core could crash before a 360 expanded market is large enough to cushion the blow. Think of newspapers collapsing before they got their online news fully profitable.

One more Pachter vs. Pachter showdown:

By the end of 2011 (the extent of our current forecast), we see Nintendo ‘winning’ the console war by maintaining its share, with 48% of this market. 

Versus…

Notwithstanding the projected finish, we truly believe that all three manufacturers should be considered ‘winners’, with Microsoft selling twice as many Xbox 360s as Xboxes and building a robust Xbox Live business, and with the other two companies generating significant profits from their respective shares. 

What profits? There won’t be any profits when you factor out the billion dollar costs that it took to get there. The point is that the Xbox 360 and PlayStation 3 would have been pulled from the shelves if they were not ‘bailed out’ by other parts of the company (and even if that did not happen, who knows, the United States Federal Government could have ‘bailed’ them out. They are bailing out other disrupted companies so why not?).

Nintendo made a respectable profit from the Gamecube. Microsoft blew up billions of dollars over the Xbox. Both sold around the same. Yet, last generation Xbox was the ‘winner’ while Gamecube was the ‘loser’.

I’m a cashflow type of guy. I don’t have any respect for something that doesn’t become an asset. PS3 and Xbox 360 are ‘losers’ because they have not become assets when counting all the costs, including the ‘360 warranty’. Nintendo is interesting not because it gained so much marketshare lately but because Nintendo is consistent in making profitable consoles. Sony isn’t. Microsoft isn’t. Sega wasn’t.

—-

As an addendum, at the end of the Wired piece on Pachter’s latest report, Kohler says this:

That said, there seems to be one crucial piece missing from this analysis: Disruption. Any analysis of the current console cycle that was written in 2004 would have been completely wrong, since it would likely have concentrated heavily on Sony and Microsoft, counting Nintendo out of the equation.But Kohler, someone did predict this generation perfectly back in 2004: Iwata. Nintendo even invested billions of dollars behind the Wii (as is required for a console research and launch). Why could Nintendo predict the disruption and everyone else of the game industry couldn’t?

 

It is a cop-out to excuse the analysts that *no-one* could predict what would happen this generation. In 2004, they were calling the DS the worst mistake since the ‘Virtual Boy’. In 2005, they were filled with crazy quotes about the upcoming generation of consoles. Even in 2006, with the DS success apparent, they still were saying crazy quotes. Even today, in 2009, we STILL get crazy quotes like Wii HD right around the corner. We are making progress, however. Analysts have dropped the notion that PlayStation 3 somehow magically becomes the best selling system this generation. Now, PlayStation 3 has dropped to second place in their predictions.

Has any analyst demonstrated any understanding or curiosity about Nintendo’s strategy? Have they ever mentioned Blue Ocean Strategy or disruption? Nope.DS was not a disruptive product. It was innovative, not disruptive. Blue Ocean, yes. Disruption, no. DS’s touchscreens and dual screen allowed handheld games to attract new audiences such as Nintendogs or Brain Age. But it did not disrupt the PSP as the PSP is living quite happily in Japan. Handheld gaming did not fundamentally change with the DS. But with the Wii, console gaming will never be the same thanks to the Wii-mote.

Indeed, Pachter even points this out in the report, noting that the DS kicked off the current hardware generation “without fanfare” in 2004 and that “few observers appreciated that the Nintendo DS signaled a change in game play” that foretold the Wii’s innovations

 

Sony feels it HAS to put out a motion controller (even just a demo). But it showed no sign of making a touch screen or dual screen handheld or even just demoing one.

To simply look at Sony, Microsoft, and Nintendo and assume that their current strategies, extrapolated outward, will tell the future of the game business is to court disaster. Should a disruptive idea come from an outside company, it could change the ways that Sony, Microsoft, and Nintendo do business, perhaps forcing them to introduce new hardware to respond to a clear shift in consumers’ wants.

In order to disrupt gaming, it is going to have to come from a gaming company. The only game company I see that is in a position to disrupt gaming will be Nintendo who will disrupt the Wii for its new console.

Here is what is going to happen in the future:

-Nintendo will make more motion control games.

-Microsoft will attempt to do a co-opt counter-attack. It will reform the games studio to make a first party with interface being its orientation. Microsoft will attempt to carry these interface innovations to the rest of its platforms to attack Apple with.

-Sony, like a clueless doofus, will keep doing their ‘ten year plan’ and will have motion controls only as a tack on way, a “cram”. Some FPS and ‘heavenly sword’ type games will be made with the motion controllers. But the cram won’t work and won’t steal sales from the Wii.

-Microsoft will do a full brand reboot and launch a new console with interface devices. Whether this includes Natal or something else doesn’t matter. It will have new interface devices though. Microsoft will ‘relaunch’ the 360 with this newly rebooted 360.

-The 360 core gamers will explode with anger and feel Microsoft is abandoning them. Microsoft will have a massive fire on their hands. It will cause them to back down from the co-opt disruption counterattack.

-One thing is for sure, motion controls will improve faster than customers can absorb the benefits resulting in a overshooting of the market. This will provide the cover for a new disruptor to come in. (In order to have disruption, you need overshooting. Wii could disrupt because 360 and PS3 were overshooting the market with their HD consoles whose graphical upgrade most people couldn’t tell as well as ridiculously expensive consoles).

-The Depression takes its toll and works against the incumbents and for the disruptor. Core Gaming becomes a niche. Core Gaming becomes to the game industry as Harleys became to the motorcycle industry. Sony’s PS3 has its pins knocked from under them as well as the 360.

-Disruption is complete. Aside from the few pockets of core left, Wii stands triumphant on top of the wreckages as having a practical monopoly on the Expanded Market. The Expanded Market becomes the new Core Market.

-Nintendo will ride this victory as long as possible. Another competitor, maybe Sony or Microsoft, will do either a Red Ocean attack or (if they are smart) a disruptive attack on the Wii. Then, Nintendo launches their new console which disrupts the Wii, upsets the apple cart again.

-Nintendo then becomes a Wheel of Disruption which only a handful of companies have ever achieved.

When thinking about reasons as to why I do not love the newer Zeldas like I do the older Zeldas, aside from the explanation that I am a fuddy duddy, it became apparent to me that one of the major reasons for old Zelda’s appeal was the fantastical Overworld. The Overworld was glorious, majestic, worthy of maps and study. The Overworld, alone, made Zelda I a legend. In Zelda II, the Overworld was very different but still very massive. In Zelda III, the Overworld was not as massive but there were TWO Overworlds overlapping one another!

3d Zeldas never could get the Overworld just right. Perhaps it is one of the flaws of 3d gameplay. Sure, young gamers might have waxed poetic about seeing Hyrule Field for the first time which Nintendo attempted to emulate in the vast ‘ocean’ of Wind Waker or the multiple ‘Hyrule Fields’ in Twilight Princess, but Ocarina’s Overworld was pretty small and empty. In Wind Waker, it felt like a vacuum. In Twilight Princess, it was graphically the worse parts of the game and, while *large*, felt very empty.

Other 3d games have interesting Overworlds. World of Warcraft has made a rich and fascinating Overworld. While I don’t expect Zelda’s Overworld to have that scale, the Overworld always comes across as empty and stale to me. Perhaps it is that almost every Overworld, with the exception of Wind Waker, replicates the Link to the Past Overworld with the stupid Lake Hylia and stupid Kariko Village and stupid Hyrule Castle. The Overworld to Zelda III was great, but I am sick of playing in it. I do admit I enjoy the 3d Zeldas’ dungeons, but the Overworlds just stink.

In the old days, the Zelda Overworld would vastly change and no one really understood why or really cared. No one kept ‘Zelda canon’ back then. Zelda was richly textured not because of how many oddball stuff they could stuff as its ‘mythology’ but in how detailed and vast the Overworld was.

Look at the original Legend of Zelda overworld. Just look at it! Magnificent! Glorious! It, not the dungeons, was the star!

Of course, it was vastly different in Zelda II. We all wondered what happened. Perhaps Zelda I was just a close-up view of a piece of Zelda II.

You can spot Zelda I’s areas all in that map. The graveyard and forests are in the same place as is the coast line and even the river!

I really wish we get a fresh and fleshed out Overworld this time. I am sick to death of the Zelda III Overworld. Miyamoto doesn’t have to flood the world again. But he can just say a massive cataclysm occurred and that is that.

I wouldn’t mind starting off with a ‘corrupted land’ and when parts of it are cleansed, the land terraforms not unlike in Excite Truck complete with unleashing new monsters. Anything would be good to keep the Overworld from feeling static and lifeless.