Q&A/Podcast: Wedbush Morgan's Pachter Sounds Off

Author: by Tom Kim, Staff

Gamasutra has quizzed Wedbush Morgan analyst Michael Pachter about the biggest game industry surprises of the past few years, his most under-rated publisher, and why next-gen game prices are too low in the latest Gamasutra Podcast. For his part, Pachter's unvarnished opinions and gutsy predictions have garnered him and his firm a high, if somewhat controversial profile in the gaming community. During the Gamasutra Podcast interview, conducted by Tom Kim, Pachter defends himself: "I don't solicit all this press coverage. The press finds me. I think that the press finds me because I'm colorful, I'm not shy, I have an opinion and I frankly really don't care if someone agrees or disagrees with it. I'm willing to share." He continues: "The controversy - the invective - that I get comes primarily from the games industry people always writing me emails and asking me, 'what do you think about this?' You know, 'What do you think when one of your competitors said "something"'. I wrote back [saying] that the guy was naive. And boy, headline: 'Pachter calls other analyst naive.' Today someone asked me, 'What do you think about the Sega marketing guy saying the Wii is a fad?,' and I responded. Boy, headline." The podcast also talks about the method behind his madness, delving into some of the thinking and methodology behind his analysis. Pachter talks about how his coverage of the entertainment sector, and games in particular, differs from other categories covered by sales side analysts - adding that investor-friendly publishing and consumer desire might not be mutually exclusive. Elsewhere in the interview, in true Pachter-ian fashion, the analyst straightforwardly addresses his cult of personality among message boards and gaming communities. "I publish my monthly console and handheld hardware numbers because the NeoGAF guys think it's so fun," says Pachter of the infamous messageboard. "But no one's ever asked to see my annual forecast for all those things. I'm spot on, for my annual forecast. I'd love to see those guys put out a contest for annual forecasts for the next five years and then we'll compare my numbers to theirs, because I've been spot on for five or six years now." "The average NeoGAF visitor isn't equipped to actually prepare those things," says the analyst, "because it requires you to make an assumption about pricing, and I've been great on that as well. It's hard to do." In addition Pachter shares some of his biggest industry surprises of the past few years, and his personal pick for most under-rated company in the game industry - Ubisoft: "I love the innovation. I love the opportunistic rapid market response. I think this company's going to earn a lot more money than most people do." And, finally, the analyst responds to earlier comments he's made that next-gen game prices are too low and that 'consumers are getting a gift': "I'm just making an economic argument, not so much a suggestion," says Pachter. "[Prices of next-gen games] aren't going up. You're seeing collectors editions at $70 -- you're seeing the GTA collector's at $90. Guitar Hero -- $90. People don't even blink. They stand in line for the thing." "I just meant that the public is willing to spend more for the content that they want," he adds. "Again, adjusted for inflation, the old PSone game in 1995 that came out at $49.99 would be probably about 70 bucks right now. It's just that, at 3 percent inflation compounded for the last 12 years, you'd be up over $70. On an 'apples to apples' basis, $60 is a bargain. And the content of a PS3 game is a lot greater, or an Xbox 360 game, than the content of the first generation PSone games." For those wanting to listen in full, you can now download the Gamasutra Podcast: Interview with Michael Pachter (.MP3, 48 minutes, 22 MB). In addition, you can subscribe to the Gamasutra podcasts by clicking this link for iTunes. You can manually subscribe to our feed in your favorite RSS reader, too.