Pachter Expects 360 to Finish 3rd This Holiday, Explains Why Wii HD is a Must

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Q: Judging by the August NPD, PS3 sales already saw a nice sales boost thanks to the lower price. Do you think PS3 will outsell the competition this holiday season? Who do you see putting up the best holiday performance - MS, Sony or Nintendo? Sony will see a huge spike, probably to 400,000 in September and October, but these figures remain behind Nintendo's numbers from a year ago. If Nintendo cuts price by $50, they'll stay in first place. I think Microsoft finishes third this holiday, but expect another price cut from them next year.

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Q: You've stated many times that you're convinced there is a Wii HD coming. What are the incentives you see for Nintendo to actually make such a move? Nintendo can't realistically expect 50 million+ Wii owners to upgrade to another new console can they? Nintendo can't afford to allow any potential PS3 or Xbox 360 buyer to pass up a Nintendo product in favor of the better graphics and more feature rich gameplay offered by the others. Many commentators continually state that "graphics don't matter." I completely disagree. If one has a standard definition TV (that's 2/3 of U.S. households and 80% of European households), perhaps they don't care, since the graphics difference isn't quite as striking. However, when a household gets an HDTV, all they think about is HD content. There's a reason why every network has switched to HD programming, and it's not about being charitable. Once the majority of households have HDTV (this should be year-end 2010 in the U.S. and year-end 2012 in Europe), the majority of households with consoles will begin to appreciate the inferior display offered by Wii games. The gameplay is great, but the experience would be more enjoyable in HD. Further, while Nintendo has its phenomenal first party lineup, third party games tend to be made "for" the Wii, and they're just not as good as the Xbox 360 or PS3 versions. Many games (GTA?) aren't made for the Wii at all. Ultimately, the Wii audience will grow more sophisticated, and will want games like BioShock and GTA, and they won't be offered on a Nintendo platform unless the platform can process content similar to what is offered on a 360 or PS3. That requires a hardware upgrade. Who knows when? It will happen when Nintendo sees its lead eroding. They're still in first place, and likely will remain there with a $50 price cut. However, once they can make a Wii HD (I prefer Wii Plus) and price competitively with the 360 and PS3, they can legitimately say that nobody should ever buy either competitor device, since they will get all Nintendo first party titles plus comparable quality third party games. Of course, Microsoft will argue (likely successfully) that Xbox Live is a differentiator, and Sony will push Blu-ray, first party and PSN as differentiators. I think that Nintendo MUST do this to remain competitive, and think it's a fall 2010 event, driven by a need to respond to the introduction of Natal and the Sony Wand.

The rest of the Q&A deals with Madden's Wii failure, Apple's
serious gaming intentions, and the new trade-in program from Toys 'R'
Us.