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Wii U price cut, 2DS don't solve problems - Pachter

Wii U price cut, 2DS don't solve problems - Pachter

Wed 28 Aug 2013 7:50pm GMT / 3:50pm EDT / 12:50pm PDT
Hardware

Analyst says both moves will help, but Nintendo still lacks compelling console game lineup, and portables will still be hurt by mobile

Nintendo's big announcements today will help the company in the near-term, but don't address some underlying problems, according to an investors' note from Michael Pachter. The Wedbush analyst kept his neutral rating on the company, but raised his 12-month price target on Nintendo stock from 10,000 to 12,000. It's currently trading just below the 12,000 mark.

"We expect the price cut to drive higher sales, but believe the Wii U will remain challenged by a lack of compelling first- and third-party content this holiday," Pachter said. "By the time a significant number of high-profile Wii U games have been released, Microsoft's Xbox One and Sony's PS4 will have launched, creating direct next generation competition and impacting any potential lift from those titles."

As for the new portable, Pachter said he expects the introduction of the 2DS to spur sales 25 percent in the near term. However, Pachter believes that dedicated gaming handhelds of all types will continue to be hurt by the growing smartphone and tablet market.

One thing the 2DS will accomplish is helping Nintendo (nearly) meet its original guidance on hardware shipments. Pachter expects the company's annual 3DS system sales to reach 17.4 million this year, just below guidance of 18 million. As for software, the analyst is now projecting 3DS games to sell 72.9 million copies this year, a bit short of Nintendo's guidance of 80 million copies.

15 Comments

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
I wonder if Pachter realizes that the 3DS has largely been the best selling video game console in the world for the past 2 years. I don't think competition from mobile is harming it nearly as much as he has predicted

@JohnArnold.
Do YOU really need to be marketed to before you decide on a product?

We're industry people. We hear about products the day they are announced and then do our own research. The average moms and pops of the world more likely need the marketing push to decide on a purchase but how does it affect YOU? What is a cleverly marketed commercial written and directed by an external ad agency going to do for YOU that this very announcement already didn't?

Posted:A year ago

#1

Patrick Frost QA Project Monitor

400 196 0.5
I love it when Pachter chimes in about Nintendo. Surely he should be seen as an anti-dowsing rod for them now?

And agree with Jim about the weirdness regarding the 3DS. If there is still great content on that system then it will draw in consumers.

Posted:A year ago

#2

James Prendergast Research Chemist

735 432 0.6
I'm not sure what "hurt" precisely Michael Pachter is referring to in the handheld arena. The WiiU, sure... but Nintendo's handheld hardware and software are doing fantastic. Further to this, Nintendo would have known about the 2DS release when announcing their forecasts/guidance so they obviously had this factored into those predictions anyway...

Posted:A year ago

#3

Adam Campbell Associate Producer, Miniclip Ltd

1,179 967 0.8
Well the hand-held business doesn't have a problem to solve, just room for growth. A WiiU price cut is not a saviour but a much welcomed move, I know people who feel more prepared to pay for the WiiU at a lower price and some who have after retailers like Asda cut it themselves.

Edited 1 times. Last edit by Adam Campbell on 29th August 2013 11:17am

Posted:A year ago

#4

Keldon Alleyne Handheld Developer, Avasopht Ltd

449 422 0.9
I wouldn't call the Wii-U price cut a retreat, the system has been out for a while. As for the 2DS - sure.

I think glasses free 3D is flawed as it limits the viewing angles and I don't think I've seen an application that gives justice to the immersion that the effect adds. Augmented reality is cool but Sony has shown how much that field has advanced, and the tech in the 3DS is unfortunately quite far behind that. I liked what Nintendo did with Zelda OOC though, that was a clever use of the gyroscope.

The 3DS needed its Avatar - a project inspired by the sensation of remotely viewing the world and controlling a living being (making oneself an actual avatar in that world). Other than that sensation (which inspired Cameron to make a film from it) there is absolutely no need for 3d in cinema right now and with games it is no different.

Posted:A year ago

#5

Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 496 1.1
I think Pachter is right in the wrong ways. In the long-term, these moves, particularly the Wii U price cut, don't change the fact that Nintendo have undone much of their hard work from the Wii/DS era, though the 2DS is obviously a move towards a wider install base, which should be welcomed. As successful as the 3DS is, it's been trending closer to GBA than DS, which would represent a loss of 50 million to 70 million hardware units sold for Nintendo depending on how long 3DS remains on the market. 2DS is the clearest sign yet they aren't going to accept such losses without a fight, and if the device resonates with a wider audience, it's the first sign for me that 3DS as a whole could continue to see meaningful growth in the next few years.

Wii U is more difficult to judge, because we don't know what's in store for 2014, nor do we know how PS4 and Xbox One will perform post-launch. For me, the lower price point is welcome, but I don't think Nintendo have done enough to increase the value of the device. I would have kept Nintendo Land in the Wind Waker bundle to maximise immediate value for money, and I would be planning to talk about their 2014 titles in January, really, as they did with 3DS this year. If you can assure existing and potential owners that there's a regular supply of software, the hardware you are selling becomes much more attractive. I don't really think, as Pachter implies by stating:
"By the time a significant number of high-profile Wii U games have been released, Microsoft's Xbox One and Sony's PS4 will have launched, creating direct next generation competition and impacting any potential lift from those titles."
that early adopters for PS4 and Xbox One are directly overlapping with people who would buy a Wii U to play Zelda, Donkey Kong or Mario, but they may very well be swayed next year by the potential of a more robust software line up stretching into the longer term, and Nintendo, despite a good end of year line up, haven't done enough to allay concerns that they have a robust software line up in 2014. They have the beginnings of one, but as soon as Christmas is over, they need to be announcing every couple of weeks as they did for 3DS early this year, when high profile titles like DK, Zelda and Pokemon were announced along side eShop and lower key localisations.

In the near absence of long-term third party support, then, and in the face of severe delays and development bottlenecks in internal development, I don't yet see Nintendo doing what they need to do: acquire studios, expand EAD, increase manpower across the board, and extend development and publishing co-operation outside of Japan to Western developers. Middle-tier companies like Bethesda, Warner Bros and Epic might be more willing to work on Nintendo platforms if some of the financial risk was removed, and it would diversify and strengthen Nintendo's offerings. Wii U's biggest problem will remain a lack of software, and if Nintendo can't rectify this through multi-platform titles or their own current internal capacity, then they need to work on solutions. Nintendo don't need EA and EA don't need Nintendo to be successful businesses, but Nintendo do need more software, and that's something they should be striving to provide.

Edited 1 times. Last edit by Daniel Hughes on 29th August 2013 11:08am

Posted:A year ago

#6

John Arnold Partner, Socialblade

28 44 1.6
@Jim Webb Thank you for your response Jim, I agree with some of what you've said, it doesn't effect me. However I think where the problem lies is that a lot of people I know have little knowledge and interest in the Wii U and seem to be more focused on the PS4. In my country people clearly haven't lost interest in games consoles and haven't been lured to phones; just as with every console era it takes time for people to switch.

I strongly believe the Wii U has a lot of potential and I think Nintendo clearly has done a incredibly great job with their TViii and hardware, but I largely feel Nintendo in some aspects has faded into the background for many people; of course Nintendo is nowhere near ignored through the means of the internet. But most gamers I know in real life have never even heard of Nintendo Direct and if Nintendo had done their presentation in a big press conference, which could have been dramatic and exciting like all of Nintendo's conferences have been for the past ten years.

As much as I want the Wii U to beat the success of the Wii, they're really going to need to reach out to those gamers who have for seven years been occupied by Sony and Microsoft. If Nintendo and Valve could work together to make an account system and really flesh out some popular exclusives, Nintendo will do great.

Some popular third party developers are unsure about developing their games for the Wii U and if Nintendo can't encourage them I think that if Nintendo can incorporate more japanese developers and create some fantastic FPS and RPG franchises, the Wii U is great to go.

The Wii U has only been out for nearly a year and I'm fully open to the fact things might just change.

Posted:A year ago

#7

Nick Parker Consultant

288 157 0.5
I tend to agree with Pachter on this. The standard Wii U model could be phased out, leaving a clearer proposition for Nintendo but a $50 cut is not enough on its own; educational marketing and the listed titles are required in the fall - I imagine Nintendo looking to Wii Fit to provide the mass market fillip needed. Year to date sell-through is indicating a tough ride for Wii U as a credible platform for publishers so with five months to go, Nintendo needs more than sticking plasters.

Posted:A year ago

#8

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
If anyone needed more validation for the existence of the 2DS, look no further than Samsung's new Galaxy Tab 3 for kids.
http://www.tomshardware.com/news/galaxy-tab-3-tablet-kids-children,24025.html#xtor=RSS-181

Posted:A year ago

#9

Steve Goldman Journalist.

81 92 1.1
Actually Nintendo is more than fine. Pachter, I respectfully disagree with

Posted:A year ago

#10

Steve Goldman Journalist.

81 92 1.1
Actually Nintendo is more than fine. Pachter, I respectfully disagree with

Posted:A year ago

#11

Rick Lopez Illustrator, Graphic Designer

1,269 942 0.7
Well if they can push more units of hardware into people hands by offering cheaper alternatives and price cuts, i belive it solves lots a problems. Because they have more hardware in peoples hands to which they can deliver more software too. And I think holding back on software is a prudent choice and I think the recent announcement of 2DS and hardware price drops are a set up for something bigger... and the playing field will be set for when the flood gates open and new software starts pooring in. So I can see this as a premeditated plan between now and october. If they can get more units of hardware in peoples hands by christmas it will reflect in better software sales...

Posted:A year ago

#12

Andrew Goodchild Studying development, Train2Game

1,254 420 0.3

Posted:A year ago

#13

Greg Wilcox Creator, Destroy All Fanboys!

2,193 1,170 0.5
Has Patcher EVER been completely "right" about anything? He's like the Jimmy the Greek of analysts (in that "I trust him about as far as I can comfortably spit a rat" manner). Anyway, I don't see Nintendo moving many more Wii U's this holiday season, but that 2DS may do really well...

Of course, this could backfire if you have parents who won't buy in because they already own a bunch of working 3DS systems and don't feel the need to "downgrade" (as their kids get older, they can use that 3D Nintendo says not to in their ads if the kids are under a certain age, ha ha). Or, you have parents who just bought one or more 3DS models this year and can't afford the new model.

They may buy that Pokemon game by the truckload, of course... but between the hating on the DoorstopDS' looks and the fact that it not folding will make others not want it because they're worried about the screen (a trip to a GameStop hear revealed that being a big thing the clerks were hearing from some customers), I think Nintendo will need to do some live (non-media only) demos in a few places between now and that launch (or post launch in some key cities)...

Posted:A year ago

#14

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