Industry analyst Michael Pachter says he doesn’t expect a new generation of consoles to appear before 2013, primarily because game publishers don’t want to invest in new technology before they’ve had a chance to fully capitalize on the current generation.
“We do not expect a ‘new’ console in 2010 (other than the long-rumored high definition Wii, which is likely to upgrade the Wii to current console technology),” Pachter said in a recent industry newsletter. “We do not expect the ‘next’ generation to begin before 2013, if at all. We remain convinced that the publishers will resist the introduction of any videogame hardware technology that requires a refresh of software, as the publishers have as yet to capitalize on the immense investments made in being competitive in the current cycle.”
Pachter’s statement comes on the heels of investor concern that videogame sales for the current generation have peaked and will now begin to slide as anticipation for new hardware builds. He said declines in NPD numbers are actually the result of tough-to-beat figures from 2008, which saw the release of Super Smash Bros. Brawl in March and Grand Theft Auto IV in April.
“We therefore think it is likely that the ‘next’ generation will begin after 2013, meaning that software sales are likely to grow by a compounded annual rate of 6-10 percent for another five years,” he continued. “Because R&D costs are likely to flatten out with the benefits of a learning curve, we expect earnings leverage as the publishers are able to exploit R&D investments. In brief, we think that investors have it wrong so far this cycle, and think that investment in videogame publishers will bear fruit for many years.”
But his advice flies in the face of a statement by Ubisoft CEO Yves Guillemot, who suggested last week that his company was already gearing up for the next round of console releases. “We need to get ready for the future generation of consoles,” he said. “In the next few years, there will be new home and handheld consoles, and if you don’t invest… you will not be able to cope with both [current and next-gen consoles].”