An Hour With Michael Pachter: a Talk on PS4, Xbox One, Wii U, Titanfall’s Exclusivity, Morpheus and More

We spent almost a whole hour chatting with Wedbush Securities Analyst and crystal ball holder extraordinaire Michael Pacher, who gave us his opinion about quite a few different topics, ranging from Morpheus to Sony, Microsoft and Nintendo, touching Electronic Arts, Titanfall, Ubisoft and more.

Pachter mentioned that he feels that Sony’s Project Morpheus isn’t probably going to be successful, as the market is simply too small to fit both Morpheus and the Oculus Rift. You can read more about that part of the conversation here, but it’s worth mentioning that it was recorded before the sudden reveal of the purchase of Oculus VR by Facebook.

Pachter also shares his opinion on the fact that Electronic Arts believed that the PS4 and Xbox One would be priced competitively and that Xbox would keep the lead this generation.  He also adds that EA was paid to embrace Xbox One. Sony (who historically doesn’t pay for content) is now working a similar deal with Activision. Pachter adds that Microsoft will probably continue to offer Activision something for the usual head start for Call of Duty map packs, but maybe this time Sony will match it.

Ultimately the publishers behave in order to make the most money, and while they’re far from perfect, they try making their best guess when they pick sides.

According to Pachter, EA picked the wrong horse with Sony initially in the last generation, then they picked wrong again by backing Nintendo, and then on the third try they chose correctly with Microsoft. This time around they’re not backing Nintendo at all, they picked Microsoft early but they’re probably already regretting that decision.

Michael continued by saying that the attach rate for PS4 on Titanfall would have probably been around 30% of 15 million, so they missed on the chance to sell another 4.5 million units sold. If their profit is 15 bucks a unit they missed out on roughly 70 million dollars worth of sales. If Microsoft paid them that same amount or more (for the exclusivity) then it wasn’t a bad decision on EA’s part. Microsoft probably paid close to a hundred million dollars for exclusivity and they’re selling a lot of boxes, so there’s no worry about EA losing money here. They made a rational decision to go exclusive, but we won’t see very many exclusives this cycle from third parties.

On the other hand the game is not on PS4, but that’s a reason why a million or so people will buy an Xbox One. Counting the discounts from retailers, the Titanfall bundle makes the Xbox One cheaper than the PS4, so EA is getting back quite a bit in sales.

Pachter also mentioned that if the bundle isn’t discounted across the board on all retailers, then the price drop isn’t sponsored by Microsoft, so the retailers are taking a loss on the console. They’re normally given a discount of around $30 per console so they’re probably selling it at $20 below cost because they think those sales are traffic drivers that will compel customers to buy other items.

Pachter thinks that Ubisoft is a hybrid between Take 2, that has a large number of great IP, and Activision that has just a handful but manages to release them frequently. If Take 2 managed to do what Ubisoft does with their IPs (launching its brands every 2-3 years with a handful that are annual) they’d make a ton money.

Assassin’s Creed has been fresh enough, so they’re keeping their game interesting even if it’s an annual franchise, they seem determined to sell a Tom Clancy game every year (three games on a three year cycle), and it sounds like Watch_Dogs is going to be another “every other year” franchise and the same goes for Far Cry. The Division and The Crew are probably every other year games as well. They have good IP and exploit them pretty well with good quality games. On the other hand maybe they spend too much money with thousands of people at work on them, but gamers seem to like it. Investors don’t so far, but stocks are going to do very well for people.

Pachter also talked about the difference between talking to gamers and talking to investors, and explained that his predictions have the purpose to tell investors what companies might do. Companies act out of “enlightend self-interest,” looking to exploiting consumers as much as they can without alienating them. Basically they’re trying to charge them one penny less than what would cause the consumer to switch to somebody else, and Pachter just comments on whether they’re effective at doing that or not.

He made a comparison with the movie model where the price is lowered in time, depending on whether you go see a movie at the theater or you wait for them to come out on commercial TV. Movie companies try to segment their offer to make as much money as possible over time, and video game publishers aren’t any different.

Going back to Sony, Pachter mentioned that the company simply isn’t stupid. They learned that it’s a bad idea to launch a console a year late, so this time they didn’t, and they also learned that it’s a bad idea to launch a console at $600, so they avoided that mistake as well with PS4. They haven’t yet learned that having many peripherals are “kinda stupid,” but Microsoft hasn’t either. They also learned that they can’t give away the PSN for free, so they made PlayStation plus and made it obligatory for multiplayer on PS4. They also learned that the more they give you free that doesn’t cost them very much, the more people will perceive value in the system.

Pachter feels that they do a lot of things right and a lot of things wrong, like Playstation Now, that according to Pachter is going to be “a disaster,” because they’re not going to get any content newer than two years old from third parties unless Sony is willing to pay a lot for it.

Michael also explained that in his opinion the difference between Nintendo and Sony is that Sony has a capable leader and Nintendo doesn’t. Iwata is not a good business manager. He still makes comments like it’s never too late for the Wii U to do well for compelling content and he’s wrong. It’s too late. EA is not making games for the Wii U, and they’re never going to. They should learn that the console is not selling and aggressively court the third party publishers, and Nintendo is not doing that, while Sony never had that problem.

Probably Nintendo’s board isn’t independent or smart enough to figure out that Iwata should be replaced. On the other hand according to Pachter they shouldn’t stop making hardware, but they should concede that they screwed up with the Wii U, go back to the drawing board and make a better console and while they’re waiting, make money on software by putting it on other platforms like smartphones.

That could allow them to convince many potential customers that their software is so great that when the next console does come out, the experience will be even better. Making the games available on smartphones would make them visible to a billion people, and possibly 20-40 million of them will then buy Nintendo’s next console.

Looking at the future, according to Pachter we’re probably going to see a lot of cross-generation games for the next two-three years, even if next-gen only games are going to gradually increase in 2015 and 2016.

You can listen to the whole conversation below. I apologize for the bad sound quality of my own voice, but my microphone suddenly decided to die on me. It’s always amazing how technology decides to always break at the worst possible time.

Join the Discussion

  • Matt Dickinson

    A game that supports VR doesn’t necessarily require it. A lot of the games for Rift are modifications of regular games to use VR.

    So the “chicken and egg” problem is not so obvious, as regular games (shooters and driving games, for instance) could be played both with and without the glasses and not much more money would be spent on development.

    • Giuseppe Nelva

      The problem is that Sony said explicitly that game for VR are gonna be dedicated to VR for what Morpheus is concerned.

      • Matt Dickinson

        I remember reading that, but in that list a number of games for PS4 are also ones that are planned to have Rift support, so it seems likely that they would get Morpheus support as well (Strike Suit Zero, Project CARS, The Witness, War Thunder, maybe Minecraft).

        But it would probably be in Sony’s best interest to make the Morpheus compatible with PC games or even Xbox ones. I’ve seen a lot of people write they want it for PC.

        • Matt Dickinson

          Dying Light is another. I’d be surprised if major third party titles don’t get VR support. Hopefully it will be easy to sync up the VR looking/motion/controls across devices rather than having to deal with a lot of proprietary software with each platform.

      • uptownsoul

        are the initial VR games going to be cockpit style games (IE driving and fighter pilot games)? or no idea?

        • Raul Juarez

          Imagine playing MLB the Show with VR. Especially Road To The Show game mode. Looking at the field from the batters box. Actually making a catch on the outfield, or calling the game as the catcher.

        • VitalyChernobyl

          The Occulus take is that VR is currently a seated proposition (so that’s a yes from them), Sony’s take hasn’t been clearly defined but from their GDC presentation, they are expecting it to have some mobility of play in a living room, so, most likely “no” from them.

  • Black leg sanji

    for once i agree with everything he said except morpheus im on the fence about that

  • superkarma

    Wow, color me surprised. He actually seems coherent and is making sense, rather than making outlandish predictions that make him look foolish.

    I disagree on the Morpheus front, especially after the Facebook buy-out. Granted, this interview was before that. The Facebook buy-out only further increases the chance of the Morpheus being successful on a big-scale. We all know the Oculus is essentially dead now, so unless another competitor enters the race, the Morpheus has it locked up pretty tightly. All Sony needs to do now is open it up to the PC market and it’ll be a done deal.

    • Gannicus

      oculus isn’t dead, it will come to mass market its just I cant see it being for “hardcore gamers” like it was supposed to be itll be repurposed into some genric pile of trash with facebook slapped all over it, can imagine VR version of walking with dinosaurs then ad getting slapped on its torso saying 15% off your next trip to the natural history museum with this voucher!!!

      • superkarma

        It will come to mass market, sure…but no one will pick it up. The VR market is niche to begin with. Now you have a company that has absolutely no clue about gaming buy out a gaming VR headset? The Oculus we knew and were intrigued by is now dead. Facebook can do whatever they want with it, but it will never see the success it could of had, thanks to them.

        • Gannicus

          I can see it swinging 2 ways atm but the end result will always be the same heres what I think will happen. 1. they’ll leave them alone and fund the tech which could speed it up significantly if Zuckerberg allocates enough funds also comes the buying power of being able to order components in much larger bulk orders, tooling up some factory in china etc to reduce the cost to the end consumer, and maybe hiring more people to make the toolkits or whatever better…. 2. well it doesn’t make sense thinking about it facebook is a casual thing, you cant hook your VR upto your mobile phone whilst on ya break at work. It doesn’t add up, why would Facebook want this? lets say there creating a virtual environment to meet up with your friends or someat and create avatars and that… but how many ppl have friends on facebook they don’t even know, 1 person doesn’t have 1000 friends. It doesn’t make any sense why they’ve bought it out. Zuckerberg is a nerd, could it be a pet project for a billionaire? maybe this is what billionaires play with. who knows it just doesn’t make any sense

  • Wargreymon559 .
    • Matt Dickinson

      I think I was annoying someone on Twitch the other day like that 🙂

  • tgunzz

    Nice interview for them, my take on this info, is that all I need to focus on is the end result, great games on my xb1, and ps4. Reasons behind deals, sales, who is first, second, or otherwise makes no difference to me… Choose a system (or all), and enjoy the current great game (Titan, infamous are first), and wait for more great IP’S…

  • Dion Abbott

    Pachter fails to realize ps NOW os for backwards compatibility not new titles, Pachter makes some good points then procedes to say something incredibly ignorant and dumb.

  • stealth20k

    More Nintendo Bashing from him? Not that surprised.

    Sorry, but Iwata lead Nintendo to the greatest heights a game company has ever been.

    The man is compelling, I will give him that

  • Holyfire

    No time for lengthy discussion here, save to say Pacther must be one of the least intelligent ppl on the planet. knows nothing of gaming

  • stealth20k

    “make money on software by putting it on other platforms like smartphones.”

    How will bad mobile games convince gamers that Nintendo games are great? Does not make sense to me

    • Giuseppe Nelva

      Do you mean nintendo games are bad?

      I’ve seen emulators playing old SNES/NES/Gameboy games on Android. They’re way better than 99% of the Android games out there.

      • stealth20k

        Nintendo games are fantastic, mobile games are terrible, mobile controls are even worse.

        I have talked with pachter about this, he is more interested in IOS than android.

        • Giuseppe Nelva

          Pachter is talking about directly porting old nintendo Games, which aren’t “terrible” especially for those that like the kind of games Nintendo makes. As for mobile controls, the controls of old nintendo consoles aren’t complex enough to suffer from the translation to mobile. There was no analog stick, so there really isn’t a problem.

          • stealth20k

            Yes, and with crappy touch controls they would be made terrible.

            Megaman on IOS? Broken
            Secret of mana on IOS? Broken

            There is not been one successful snes translation to mobile, let alone GBA.

            Me and him always butt heads over this and that is the way it will always be. I respect the man alot though. It goes both ways,

          • Giuseppe Nelva

            Oh please. There’s absolutely no analog control involved in most Nintendo games of old. Most of them wouldn’t suffer one bit from the translation. I’ve never been a supporter of mobile gaming, but it’s beyond any reasonable doubt that Nintendo would do extremely well on mobile, it would be a low risk, high yield operation, that would probably allow them to expand their console userbase as well.

            Pachter is 100% right on this. There’s isn’t even room for discussion.

          • stealth20k

            It is not about analog. It is about precision controls. Something mobile does not provide. Nintendo should never ever put anything on mobile.

            It is not a matter of money, it is a matter of a quality product. Nintendo does not think it is possible. Neither do I.

            Pachter is 100% wrong on this.

          • Giuseppe Nelva

            LOL precision controls. They’re platformers and adventures, not flight simulators.

            Nintendo and you don’t think it possible because you’re both stubbornly stuck in the past, which is hilarious. Besides, “not possible” is an ever more hilarious falsehood. Emulators do it very well, and if fan-made emulators do it, Nintendo can.

            The 3DS doesn’t even have a fraction of the potential customers you can find on iOS and Android. That’s a simple fact. By putting games on 3DS you don’t expand your userbase, by putting them on mobile, you do, at almost zero cost, with almost free profits.

            Only those that are stuck in the past don’t move if there aren’t “historical precedents”

            You may want to start considering the fact that Pachter’s experience in the market is just a tad wider and deeper than yours.

            But knowing you, you won’t even considering that possibility.

            What Nintendo fanboys don’t get is that this kind of operation isn’t for them. It’s for Nintendo to make money (that could be reinvested in R&D and development of more console games) and to draw in people that aren’t Nintendo fans.

            But leave it to fanboys to be incredibly self centered and to think that their favorite company should cater only to their needs 😀

          • stealth20k

            Platformers demand precision controls. Imagine playing Mario 3, with touch? a nightmare.

            Now your name calling and really going over the line, so I think I am just not even going to comment on the rest of that. Your true colors always stand out.

          • Giuseppe Nelva

            Lol your definition of “namecalling” is very, very elastic 😀

            Don’t need to “imagine” playing Mario 3 with touch. People already do it. The problem is that Nintendo doesn’t get a buck from it.

            You really shouldn’t be talking about anyone else’s “true colors” really 😀

          • mat128

            You’re talking about Patcher as if he was some kind of absolute individual who’s never been wrong about anything. Nintendo games on mobile would hurt their Virtual Console platform, the people using emulators on mobile aren’t going to drop 5 bucks for Super Mario Bros just because Nintendo bent over. Why would anyone pay for individual ROM images when Visual Boy Advance can be snatched for $4.99 and play thousands of Nintendo games? Hell, most emulators are free anyway. Currently, Nintendo is using VC to pad their scarce release schedule, removing one more incentive to jump into their ecosystem is once again a big no no. Also as you may not have noticed, Nintendo puts gameplay first. Mario with a virtual D-Pad is a total nightmare to play and would only be rushed out the door by investors seeking short-term profits before cutting ties with the company.

          • VitalyChernobyl

            I disagree, why buy the console if I can play it on my phone? Not disputing it would expand the number of people playing Nintendo games, but it would not do much to expand their name recognition, most everyone knows Nintendo and the franchises they’ve repeatedly churned out since the 80’s. Releasing games on mobile will sell a ton of games, but that doesn’t equate to an uptick in console buyers as any inclined to buy after that would be offset by those who ask themselves the question I posed at the beginning of this post.

          • Gannicus

            porting old Nintendo games which aren’t bad…. we kind of know sort of cus flappy birds “barriers” were the pipes from Mario hahahah

  • Los Illuminados

    An Hour With Michael Pachter? LOL. hopefully talking to him for a hour about his opinions didn’t lower your intelligence DualShockers. to me he sound like an idiot.(^_^)

    • Giuseppe Nelva

      Actually what lowers my intelligence is reading people that disrespect a professional that knows a lot about the market just because they disagree with him.

      But what do I know. I just like learning what I can from people that have a professional resume thrice as long as mine.

      • Gaffering

        Always enjoy hearing diffrent perspectives. A lot of people get angry when they hear about the business side of gaming, but personally I find it intresting.

      • VitalyChernobyl

        Pachter may know a lot about the market, but his predictions seldom bear fruit. He’s a windbag, IMO.

      • CervantesPR

        Pacther is nothing special i dont even know why people quote him so much, hes a nobody who takes guesses which are often wrong.

      • People don’t like Pachter, because he gets paid very handsomely for talking about video games and hardware at all kinds of venues and his criticisms are from people who would like to be granted that kind of lifestyle, but unfortunately aren’t willing to put in the respect and graft to achieve it.

        • blessedswine

          i dont like pachter cause most of the time hes dead wrong about stuff, hes actually very wrong the vast majority of the time. Anyone remember him saying that the 7th gen was the last gen of true consoles, or when he predicted that streaming games was going to be the way Sony and MS were going to go with the ps4 and X1, but now he says Playstation Now wont have newer titles? playstation now is what he said was going to be happening with this gen. hes good to listen to when he talks strickly about the buisness side of things but not worth his weight when it comes to his predictions of the future.

          • Shi’a at

            It seems like only sony fanboys dont like patcher…. i dont know, it just seems that every gripe has to do with something he said about sony…..

      • Jecht_Sin

        Oh, come on now. You are the first to always call him “crystal ball holder extraordinaire”. Which is what he is far too many times, being also proven wrong at the end. Let’s see how much he will be right about PS Now and the VR thing, then.

        Apart that I believe he is wrong already about PS Now. The publishers should get money out of the games rental, shouldn’t they?

        • Shi’a at

          just out of curiosity, why do you think he is wrong about ps now? id like to hear you’re “professional” opinion…

      • truthtellerdealwithit


      • Virdin Barzey

        Nelva, I finally found a statement I agree with you. Plus I will add to it. Most gamers (especially on Dualshockers) are just ignorant. Its one thing to disagree with Pachter (which I have at times) but the guy gets paid a lot by investors to make big decisions that will either pay off or not for these investors investing millions.

        A little bit of common sense here goes a long ways but many don’t seem to have it on these threads. Why would investors continue to pay Pachter if he is wrong most of the time?

        Reading these comments, guess these gamers should be investors since they know better than Pach and probably should have a billion dollars by now. Nope. The reality is that these geniuses say crap about Pachter because he did not say positive things about their favorite console or favorite company.

        • Shi’a at

          well said!

  • bearmon2010

    Pachter is very annoying man. I need for him to go away .. PERMANENTLY!

    • ImonadrugcalledCharlieSheen

      This +100000000000000

  • PhantomVash808

    Remember when Pachter said Skype would be a killer app for the XB1.

    • stealth20k

      Pachter is a nice man, but his opinions (and that is all they are) are controversial. I really like the man.

      • PhantomVash808

        I agree 100%

    • Shi’a at

      I dont know I love skype on my xbox one… I travel a lot for business and my xbox one allows me to see my family every night. Sure I can use skype on my phone and laptop but its conveniently located on my xbox one also, plus I get a view of my entire living room. Im just sayin, its the best app so far IMO.

      • PhantomVash808

        I didn’t say Skype wasn’t a great feature but Pachter said that feature alone would be a system seller and a huge reason why the XB1 would sell better than the PS4.

  • drkztan

    Remember when patcher said that:
    -the DS would flop vs the “superior” PSP and drive nintendo out of the handheld market?
    and the DS went on to become the most succesful handheld in history
    -the Wii would not sell because of sony and ms’ offerings and that it would drive nintendo out of business into developing for the other 2?
    and the Wii went on to sell more than the other 2 combined for the first 6 years, and making nintendo enough money to survive 2 consecutive console flops
    -the 3DS would flop vs the Vita?
    only to have the 3DS, as of now, sell 12.5 units for every Vita sold, and almost reaching the original DS’ insane score in similiar lifespans.

    • Shi’a at

      I dont think the Wii sold more then both ps3 and xbox 360 combined…. If you quote them both at 80 million each, you got 160 million vs Wii’s 100 million… Maybe Im wrong but the ps3 and 360 still sell very well today, I wouldnt be surprised if either the 360 or ps3 eventually surpass the wii u’s sales..

      • drkztan

        It did. By the time the xbox 360 and ps3 started catching up with the Wii’s sales numbers, sony and ms had lowered the price so much, that they both are loosing money on each ps3/360 console sale, while nintendo has always sold the wii for a profit.

  • Jamar Moore


  • TristanPR77

    Remember when he said that Xbone would lead this generation? He should at least be man enough to publicly accept he was wrong.

    • ImonadrugcalledCharlieSheen

      Exactly he should take the L on this one, but he’s to much of an arrogant prick and a Microsoft Nancy boy to do that.

      • Gekko36

        What the f@ck is L supposed to mean?

        Agreed Patcher is an analyst so, basically a statistician.

        And you know what they say about statistic’s,

        “There are lies, Damn lies and then Statistics”

        As for XB and PS fanboy’s, they all give head, though it’s known that PS fanboy’s always swallow and never ask for money. 😀

        • dagreatest021

          I was with you until that last sentence. Putting aside the fact that you used a really gross example to make your point, historically PS fanboys are the ones who demand more value for less. PS+ is the prime example of this. PS+ and XBL-Gold cost about the same $ amount but with PS+ you get a ton of free new games every month whereas with Live, MS fanboys are more than happy to shell out $ after $ for basic multiplayer and the occasional crappy game that came out 3 years ago. Also the reason why Sony changed their attitude so much this generation (e.g. being more gamer friendly, competitive pricing, etc.) is exactly because PS fanboys didn’t budge when the PS3 first came out and Sony paid for it and has been trying to win them back ever since)

    • Shi’a at

      Thats absolutely true but keep in mind this new gen just started. Its only 4 months old. This is a long haul, many things can change. Look at the ps2/ original xbox era. The ps2 kicked the original xbox’s ass in sales but there were months when the original xbox sold more consoles than sony. Also keep in mind the Original Xbox was MS first entry into consoles. Xbox is now a name brand, last gen was neck and neck and I think about a month or two ago there was an article saying the 360 was selling very well! So who knows who sold more last gen but this gen is too young to claim a winner or say someone was wrong. Let a year or 2 go by. I dont care who win as I own every console but lets not go pulling out the gold trophy just yet when my consoles arent even broken in yet…

  • Ritsujun

    Don’t give up, MS!!!!!

  • Thomas Cai Jinzhan

    LOL @ EA….third time’s a charm………NOT!

  • CervantesPR

    Pachter is a nobody, this guy is an absolute moron, heck he dosent even sound like a gamer from the few times ive heard him in his weak pach-attack videos,he should just be ignored, he is an insignificant moron that gets more attention than he deserves btw i didnt even bother hearing about this podcast id rather not bother hearing this baboon, its like this dude opens his mouth about any stupid topic gives his opinion and the next thing you see is articles everywhere titled “Pachter says…. blah blah blah” throughout all the gaming websites, as if this guys is some kind of gaming prophet LOL and his opinions mattered anymore than any of the posts in this comment section,its a complete waste of time reporting everything this guy says i say.

    PS im not writting perfectly here, english is not my first language, i also dont care about writing perfectly,i love the overuse of commas, they are are not grammatically correct but they sure get the job done.

  • PatcherStation

    The PS4 and One are both thin on games. The main reason why the PS4 is selling better than the One is because of the price. A few quid here and there can make a lot of difference. If the One sold for the same price as the PS4, it’d still struggle. Microsoft needs a price point of £300 with Kinect and a game. The One is a great console. Consoles can sell with a thin range of games, the PS4 isn’t exactly spitting out new game releases. Microsoft isn’t being realistic with its pricing. It needs to get it sorted now.

    • Jecht_Sin

      The PS4 is selling well because apart from USA and UK the PlayStation has always been selling more than the Xbox. With the PS3 Sony made some mistakes and so it started slowly, but then it recovered greatly. Especially after the price dropped to $400, but at the cost of removing the PS2 b/c.

      It’s actually scary to see how so many people easily forget that the PS3 included since the beginning a very expensive BR reader and a HDD, while the console from MS had a failure rate up to 50%. Oh, and let’s not forget either that the PS3 has been out in commerce 1 – 1 and 1/2 (Europe) year less. Recently it has been outselling each week even the Xbox One.

    • Fusion_Pirate

      I would also argue that the PS4 is also selling better because informed gamers know it’s a superior console- and no, I’m NOT trolling you. Price (of course) factors in, as well as the fact that Microsoft has been so shady about its business practices for the past year.

    • shinitaru

      an extra $100 is nothing to a dedicated gamer. If they were both the same price, I think the numbers would still be the same. The PS4 is simply a better machine, everyone knows it.

    • Michael Norris

      I bought a $500 bundle,could have bought a Xone.I didn’t because of E3 and the fact I think the Xone won’t run games as well as Ps4.That said it already has some good games,atm it has more exclusives then Ps4 for how long I don’t know.I really don’t try to hate on it unless I see a xbot lie or talk crap,then I try to correct them.

  • absucks

    We spent almost a whole hour chatting with Wedbush Securities Analyst and crystal ball holder extraordinaire Michael Pacher

    Good job you dumb shit.

  • junguler

    i’ve listend to the hole interview and i’m satisfied with it, thanks for posting it.

  • Bidoof Racer

    my 3DS is fcking lauching at Pachter!