Thursday, July 22, 2010

"Analyst" Michael Pachter Predicts 2-4 Million Kinect Sales (Standalone) by March 2011

What?!  Hah hah!  This is the sort of cartoon fantasy one typically blames on the three-martini lunch (my bold for emphasis):

Wedbush analysts Michael Pachter and Edward Woo expect most existing Xbox 360 owners to wait until Kinect's price drops before picking one up, but estimate that early adopters could still drive sales of two to four million units by March 2011.

That range would account for 5 to 10 percent of existing Xbox 360 owners, and specifically refers to the standalone motion control solution that was recently priced at $150. Microsoft will also be selling a $300 Xbox 360 Kinect bundle packaged with a 4GB console.
Comedy gold, my friends. Consider what is being claimed.  Four million Xbox 360 owners are going to buy Kinect, despite all evidence to the contrary, despite the hostility and backlash seen on websites and forums like NeoGAF. The hardcore gamers are NOT flocking to the Kinect. Their response so far has been critical, if not hostile, ever since Microsoft's disastrous E3 spectacle. They view Kinect as an accessory aimed solely at "casual" gamers, not for them.

We are not talking about total sales for Kinect, including the deluxe package aimed at new customers.  We are talking specifically about the accessory itself, which would be purchased by existing Xbox 360 owners.  These are the "hardcore" gamers in our little "hardcore vs casual" drama being played out in the video game business today.  Think of it like West Side Story, only without the dance numbers.  The hardcore gang hates the casual gang, and after four years of fighting, they are not about to suddenly walk over and embrace their rivals, just because there's a "Microsoft" label on the box.  This is a cartoon fantasy.

Consider the following event just this month (courtesy of Gamerzine):

Microsoft's Director of Policy and Enforcement for Xbox LIVE Stephen Toulouse has hit out at the hardcore gamers who have raised concerns about Microsoft's upcoming motion control interface Kinect, saying that they have "kinda been wrong a lot for the past ten years".

"I have one thing to say to the hardcore gamer who says Kinect has nothing for them," said Toulouse while discussing concerns about Kinect on Major Nelson's latest podcast. "Those games will have achievements, so don't tell me you're not going to play at least some of them, you hardcore gamers out there. I know you will."

But Toulouse later suggested that the hardcore audience, who largely expect Kinect to underperform and under deliver when it launches in November, had been "wrong a lot" about market trends and successes "for the past ten years",

"Let's go back and look at the track record of the hardcore gamer," he continued.

"Shipping a console with an Ethernet port? Oh, it'll never succeed. Paying for multiplayer? Oh no, that's not good. I don't like avatars; I won't buy anything that goes to my avatar. The Wii... I mean no offence hardcore gamers, you've kinda been wrong a lot for the past ten years.

This sniping and increasing hostility has been building since the E3 trade show, when the Kinect was formally unveiled.  The "hardcore" came away upset and unhappy, and they let their feelings known on the internet - websites, blogs, and social media.  Word-of-mouth is extremely powerful, more so than ever, thanks to modern technology.

This week, Microsoft addressed their hardcore backlash in an interview in, attempting to strike a more conciliatory tone:
I’ll say again, at the risk of sounding like a cracked record, that [Kinect initially being “casual”] doesn’t in any way, shape or form represent us stepping away from the core – which is why, during the press conference at E3 for example, we spent a good solid chunk of time around Halo Reach, Gears of War and Fable. And there will be more coming from us, and our third party partners.

These are not the actions of a company that is confident of selling 2-4 million Kinects to its core base. This is a company engaged in spin and damage control. And this is perfectly in keeping with Disruption literature. A company must secure its core base and earn the right to innovate. If this does not happen, there is a risk of a backlash that erupts into a fire...exactly what we are seeing right now.

As for these game industry "analysts" (and I put the word in quotation because it's far closer to public-relations spin than independent financial analyis), these prophesies about Kinect are absurd, without merit, and completely defy the actecdotal evidence on the street.  There is no empirical evidence for Pachter to make such claims. Sadly, he has a long history of making similar predictions that fail to pass. There are many examples of this, as the oracle Google will reveal. I'll close with my personal favorite prophecy, one that Pachter insisted upon for many months without evidence:

"A Wii HD would really position Nintendo well, which is why I'm absolutely convinced there is a Wii HD coming,”

I rest my case.  Gamers and investors are being sold a bill of goods - Caveat Emptor.

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