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Industry’s Leading Analyst Goes Mad

Those of us who follow the videogame industry love to follow Michael Pachter. He’s a brilliant man who can cause millions of dollars to change hands based on his recommendations; love him or hate him, you have to respect that. But today, he said something so completely incomprehensible that one can’t help but chime in. 

According to the gaming guru, this console generation will be the last. Yes folks, you heard it right; Pachter explicitly stated that he thinks “we’ve seen the last generation of consoles.” What leads him to this conclusion? Well, apparently the systems just aren’t profitable enough for the console makers. Those 50 million of you who bought a Nintendo Wii may be scratching your heads right about now. Evidently your combined $12,500,000,000 in payments to Nintendo for their system isn’t producing enough profit.

Ah, but that’s not all. Mr. Pachter went on to tell his audience at GamesBeat 2009 that the essence of his argument lies with the attitudes of the third party developers, particularly towards Microsoft. As the company most likely to try to release a next-gen console first, Pachter thinks “the publishers will tell them to pound sand. ‘We haven’t made any money this cycle, and we’re not going to support it.’” 

So then, what will we be playing our games on in ten years? A standard delivery form like the recently announced OnLive. Think streaming web games, only they’d be full AAA releases zapped straight to your computer or TV. 

Don’t get me wrong, I like Michael Pachter… I even respect Michael Pachter. But in this case, I just don’t know what he’s on about. Personally, I think (and hope) that it’s all a load of rubbish.

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  • Kiousu

    While i will be one of the first people to say that PC gamers are the master race, This claim of the end of the console generation is ridiculous. I won’t go into a long list of reasons why it isn’t the last generation, but I will ask what third party developers Mr. Patcher thinks are unhappy with developing for consoles. This may be a terrible time to bring it up, but couldn’t the lack of publishers making money be from the fact that video game prices might be a bit to expensive? To support this outrageous claim, I cite this article “http://tinyurl.com/dcamxj”. Even if Mr. Patcher is correct (and i have no cause to believe that he is), I don’t think it will be for the reasons he cites.

    -Summer Glau

  • Chris

    I think he’s finally gone around the bend. PC gaming has been dying a slow death for several years. The reason console gaming has been growing is the easier access to games without a need to every couple of years update your machine. I can understand his argument that the 3rd party publishers aren’t making enough money for them because they’ve been trying harder and harder to kill the used game market.

    But there’s major problems with this OnLive and cloud computing systems he seems to be thinking about. Currently OnLive can only support 720p as long as the user has a pretty fast ‘net connection. That’s only 70% of US homes with broadband with a sufficiently fast enough connection. Never mind the fact that there’s still 20-30% of all homes in the US with dial up!

    Unless gaming wants to go back to the post E.T. mess of a market and kill itself there better be another console generation.

  • I don’t think gaming prices are “too expensive.” Prices on some games back in previous generations were more expensive than the $60 we pay now. The number of games with more expensive prices goes up if you adjust their prices for inflation.

    The third party publishers problems are because the costs of development are incredible, particularly on AAA games. Further, they also spend money on BAD games like that stupid 50 Cent game.

  • Jordan Silverthorne (Silverthorne)

    …and let’s not forget that some service providers are implementing usage caps that could prevent gamers from streaming OnLive games to the extent that they would like.

  • TheL1T1G4T0R

    Thank you Jordan. You hit it on the head.

    What happens if my Internet goes down? OH I can’t play my OnLive games. I’m forced to keep paying for Internet just to play games.

    I DON’T THINK SO!

    Consumers seriously don’t understand that the more we aim towards less tangible means of retail, the less control we have over the prices we pay for things.

    If this is the last console generation, I better stock up on PS3s to last me the next 40 years. I’m not going to be held prisoner to online media and my Internet company.

  • McSkittles

    Chris,

    First, and most importantly, PC gaming will never ever die. Consider: the point at which a console can do all the things a PC can, a console will become a PC. Additionally, no one in their right mind is going to try to play WOW with a 16 button controller, and without a mouse. There are things that consoles will not be able to accomplish due to the fundamental design paradigms that create them.

    Second, Yes, machine updates are expensive, and yes, for the incompetent, installation of upgrades is a pain. However, I would prefer that the rate of processing power and graphics capabilities continue to expand at the rate that they are, rather then stagnating to only periodic annual improvements or even less frequent multi-year console cycles.

    In short, PC gaming is not slowly dying. There may be slight changes in how PC gaming is carried out, but consoles will not supplant PCs and PCs will not supplant consoles.

    -McSkittles

  • McSkittles,

    I agree that playing WOW on a console isn’t preferable, just like most console games still haven’t gotten the RTS right, although the number of sales for Halo Wars strongly suggests Ensemble might have.

    But the numbers for PC gaming vs. console gaming say it is dying and has been for years, based on a number of factors. In 2008 the total sales for gaming touched $11 billion, PC game sales were only $701 million of that total, a 14% decline from 2007, 29.1 million units sold total for the PC. World of Warcraft actually accounted for 15 million units of that total. PC game revenue overall dropped 23% from 2007. That number is a problem for developers. If they want their games to get to the biggest market they’re going to need to develop for consoles, not PC and they know it.

    I think the fact that you do have to upgrade your PC to stay current on manufacturers specifications is a big deal to most people. They also don’t seem to care about having the latest and greatest graphics. All console gamers with half a brain cell knows their console, regardless if it’s PS3, XBox 360 or (of course) the Wii is outclassed by PC graphics the day they were released. Yet it’s obvious all three consoles sell far better than PCs built for gaming. Further, the fact the Wii is (somehow) selling approximately 750,000 units per month now shows IMO that many people don’t care if their console is the top of the line in graphics because the Wii is third in terms of graphical power in the console market.

    Third, piracy. It’s far easier to pirate a PC game than it is a console game and doesn’t require you to do anything to your PC that is going to necessarily get you banned by the online community, like modding your 360 will cause you to get banned from XBL. So many people figure why pay for it and support the developers when it’s easier to not do so? I think that’s a big reason why PC games sales are down.

    Fourth, DRM. The problems of Spore probably won’t teach PC game developers a thing, it never does, otherwise DRM would have been abandoned years ago as counter productive.

    I don’t see PC gaming dying out totally in time soon, but I do think that console gaming is where the money is and increasingly, developers are seeing that. That’s why you had Oblivion ported to the consoles and Halo Wars developed specifically for the XBox 360 as well as Mass Effect developed specifically for the consoles. Not to mention the fact that the XBox 360 is basically the default place to play FPS now.

    But, back to the topic of the article, I completely agree with the Litigator’s statement that the more we get towards digital distribution which allows us all to be lazy and not have to go to the store, the less we actually own. If the Internet goes down, with OnLive we’re not going to be able to play games. Further, if the speed drops (and mine does a lot) there’s a large chance you get disconnected in the middle of a single player game! That’s just wrong. Lastly, if it only exists on a server you don’t actually own it and can’t sell it and there’s no used market. Publishers basically can still charge you $60 for Call of Duty regardless of how long it’s been out because there is no secondary market for them to compete with. Either pay their prices or you don’t get to play the game.

  • OnLive is just like console development. Sure PC development is cheaper but its not like robots can do it, the staff still has to be there.

    Console publishers make plenty of money the only difference is the next generation of consoles will become even more mainstream with just the most popular releases coming out like COD. Something more hardcore/niche will hit Pc or maybe not even come out if costs are gonna be this high. At the same time the audience for games might grow so big that it balances out the cost.