Success of Wii does not "bode poorly", says Pachter

Wedbush Morgan analyst Michael Pachter has dismissed comments by a fellow analyst which suggested that Nintendo's success will have a negative effect on third party publishers.

Kaufman Bros. Equity Research analyst Todd Mitchell stated that, "Nintendo's success with the DS and Wii bodes poorly for the publishers", adding, "Nintendo is dominating software sales on its popular hardware platforms, leaving the publishers with a smaller slice of an only somewhat incrementally larger pie.

"We feel that the likely shorter product cycles of Nintendo's platforms puts the publishers in a permanent catch-up mode."

Speaking to GamesIndustry.biz, Pachter described Mitchell's comments as "naive".

"Going forward, the publishers are all trying to be largely platform agnostic. The success of the Wii and DS means that virtually every mainstream title will appear on both platforms," he said.

"If consumers have a choice of all games on the Wii and DS, and Nintendo's offering remains constant, Nintendo must lose share. That is a good thing for the third party publishers."

Pachter went on to state that he believes Mitchell offered "an incomplete analysis", arguing, "His conclusion is that Nintendo's success on the GameCube and GBA will translate to future success on the DS and Wii, so he's basing his opinion on a view that Nintendo will capture somewhere around 30 per cent market share on each of its new consoles. This is naive.

"I expect that Nintendo's first party share will decline from around 30 per cent last cycle to around 20 per cent this cycle, and that many publishers trying to capture market share will succeed."

Pachter pointed out that companies such as Electronic Arts and Ubisoft "generally ignored" Nintendo platforms during the last console cycle - but are now "laser focused on growing market share on both the DS and Wii platforms".

"THQ has demonstrated that if a third party publisher competes for market share on a Nintendo platform, it can be successful," he continued.

"Multiply THQ's effort in the last cycle five-fold, and you'll see that Nintendo's first party software will lose market share and all third parties in the aggregate will gain share."

Pachter is predicting that EA will offer 15 SKUs for each Nintendo platform annually - "at least double its effort last cycle" - noting that development for the consoles is "not particularly complex".

"Somehow, I think Tiger Woods PGA Tour will do all right on the Wii," he concluded.