Pachter: PSP2 “Dead On Arrival”, 3DS Not Looking Hot Either

My readers might wonder why I haven’t reported on the PSP2 yet. My reasoning is because I don’t report harried leaks and other rumours that could – and often do – turn out to be wrong.

However, I do report on the industry at large, which means when Wedbush Morgan’s Michael Pachter says something stupid, I have to write about it because it moves the dial. And boy, did he let loose a good one.

Despite the fact that all reports about Sony’s PlayStation Portable 2 are little more than rumours and mock-ups, Mr. Pachter has already declared the alleged PSP2 “dead on arrival”, citing saturation in the handheld market. Interestingly enough, he also declared the PSP “dead on arrival” despite that system being out for four years now.

We’re starting to see DS hardware sales crack, I think the big woody of the iPod Touch is cutting into the handheld market, I think the PSP is dead on arrival and I think the PSP2 is going to be dead on arrival. It looks to me like young kids are just as happy playing with an iPod Touch or a Nano.

He’s similarly low on the prospects of Nintendo’s 3DS – an actually confirmed, street-dated system – for much of the same reasons. His line of thinking is that the initial burst of sales will be nice, but ultimately taper out while kids play their iOS devices.

The 3DS will prolong the handheld market for the game manufacturers, but ultimately, I think handhelds are in trouble. I really think as the iPod Touch gets more and more powerful, you’re going to see a lot of free games over there. What’s the difference if you play Tetris on an iPod Touch or on a DS? Well, you pay a buck on the iPod Touch, you pay $20 on the DS. Parents prefer $1 or free software, I think the iPod Touch is going to sell really, really well. So, after the 3DS has had its little rush I think the handhelds will continue to decline.

There’s a degree of truth to what he’s saying about the viability of iOS devices – the iPod Touch, iPhone and iPad – in the modern age, as people look for all-in-one devices. I own and use my iPhone religiously, sometimes even as a gaming device. But Mr. Pachter is overrating the casual market. From what Mr. Pachter is saying, casual is taking over the entire market, and while it’s making headway – the fact that Zynga is looking at going IPO is indicative of that – there’s still a niche for regular handheld games, especially if the 3DS and PSP2 fix the useability issues that DSiWare and the PSN have in terms of downloadable games.

For one, right now, the iDevices can’t replace what handhelds have had since the old LED based games of my youth: tactile response. None of Apple’s devices can do anything about the feeling of pressing an actual button, and it interferes with action-based games more than a layman would imagine. Ever try to play a shooting game with no buttons to at least give you a feel of what you’re doing? It’s guesswork otherwise, and people that are into AAA releases know this. Furthermore, the cost advantage of a $300 phone or a $229 (minimum) iPod Touch is lost due to the fact that Apple likes to force upgrades every couple of years (my iPhone 3G that I bought in 2008 is virtually useless for any game that requires a split second reaction, yet my 2006 DS could run another five to ten years if the battery holds up). Parents who pay attention are seeing that the costs, after awhile, are a wash, especially if you’re only looking into new games.

It’s also important to note that unlike Apple, the handhelds have the franchises of Nintendo and Sony behind them. You can’t play Mario or God of War on an iPhone, and those Mario and GoW games, by and large, are serious, well made games. That’s not to say there aren’t well made games on the iPhone – I did just review Baseball Superstars 2011 very well – but the average quality of a DS or PSP game is higher than most iPhone games. Mr. Pachter also notes “free” iOS games being a draw, but that’s usually deceiving, as these are either “lite” (demo) games or free-to-play, which involve having to consistently purchase things for the game with real world money via microtransactions. Even taking into account lower sales of DS and PSP systems, that’s because those systems themselves are reaching saturation after almost five years on the market, and one of the things driving sales of games down – piracy – is something that both systems are looking to address powerfully.

I’m not saying that handhelds are the only way to go, or that iOS is a fad in terms of being a gaming system. But I am saying that it’s foolish for someone who gets paid a comfortable amount of money to analyse the games industry to declare a device that *isn’t even announced or confirmed* yet to be DOA because of such a small sample size of data, as well as some curious analysis of where the market’s going.

In other news, Pachter also heavily criticized Activision for not monetizing online in Call of Duty: Black Ops. Again. I’d say more, but I’ve beaten that dead horse so badly that I’ve since moved onto the jockey.





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