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Pachter: iPod Touch is "dangerous" for publishers

Device will force down prices and deter a generation from moving onto consoles, says analyst

Publishers are approaching iPhone and iPod Touch development with the wrong strategy, according to Wedbush Securities analyst Michael Pachter, and don't realise how dangerous the device could be to their business in the long term.

"I think the publishers are completely lame on this. I think they have it wrong," Pachter told Bonus Round. "EA's chasing it because they think it's an opportunity. I think the iPod Touch is the most dangerous thing that ever happened to the publishers, ever."

Putting well established franchises such as Madden on the iPod Touch for USD 10 cheapens their value, he explained. "Whether it's the same experience or not, and it's not, why would I ever spend USD 60 for Madden if I can get it for USD 10 on my iPod Touch?"

While he believes the iPod Touch versions of games are geared towards a different audience, he doesn't think that makes the device's surge in popularity any more desirable.

"It's going to be a different audience, it's going to be young kids because iPod Touch is USD 199 this Christmas, it'll be USD 149 next year, USD 129. When it's USD 99, every nine year old kid is going to have one of those instead of a DS or a PSP, and if you train kids that this is the game that you want to play... How about Tetris? Why would you pay USD 20 for Tetris when you can get it for USD 6.99 or USD 3.99 on iPod Touch?

"It's a serious threat to pricing. And once people start to look at this as a substitute for the DS for smaller kids, for 12 and unders, then you're going to train a whole generation of 12 and unders that this is a perfectly acceptable gaming experience at that low price point."

Furthermore, the analyst believes the device could spawn a whole generation that won't ever move on from playing games on their Apple device.

"All the 20 year old kids playing games now started paying on the GBA and you work your way up. And if you start with an iPod Touch I'm not sure they do work their way up. I think Apple intends to capture that audience and keep them," he said.

"It's dangerous and I'm not a big fan of it from a publisher perspective."

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