As a result, any conversation with him inevitably ends up being interesting. That includes this one: we recently had a chance to sit down and have a long chat with him, on a lot of video game news and topics. This includes Microsoft’s acquisition of Bethesda, Sony and Microsoft’s next generation strategies, how the next generation may end up playing out, what kinds of games may gain popularity in the coming years, whether or not video game streaming will ever catch on, what the future of Nintendo and the Switch may be, and even some thoughts on which specific upcoming games he expects will do well.

Strap in, and enjoy the ride.

I wanted to get the big one out of the way right away, which is the Microsoft Zenimax acquisition, which includes Bethesda Game Studios, and The Elder Scrolls and Fallout. What kinds of ramifications do you think this will have, since it’s a pretty big third party publisher now under Microsoft, with their lineup off the table for others.

I’d say if you want to play new games from Bethesda, you’ll have to buy an Xbox, or sign up for Game Pass, which is cheaper. Clearly Game Pass works, so if you’re playing on PC, you can get Bethesda games that way. But if you’re a PlayStation fan, you’re not going to be able to play new Bethesda games on there.

It’s really hard to know what will happen to the catalog titles, theoretically Fallout 3 and 4, Wolfenstein, Wolfenstein Youngblood, DOOM, those are all on PlayStation, and my guess is you can still continue buying and playing them on there. But I also think these games will all show up on Game Pass after the acquisition closes, so they just made Game Pass a much more compelling value, because you can play everything Bethesda’s ever made for $15 a month. So I expect it will help Microsoft’s subscription numbers pretty well. And Bethesda’s studios, they are not prolific, but they do put out one or two games a year at least. For example the last Elder Scrolls game came out in 2011, and I’ve been predicting a new one will come out since 2016… I will be right eventually!

But the exact year doesn’t matter, it’s coming out in the next few years, and that will be exclusive to Xbox. So that’s a system seller. It won’t put them ahead of Sony, but it will definitely shift a few million people from PlayStation to Xbox. And to be honest, I’m more of a PlayStation prospective purchaser over Xbox myself, but my number 1 and 2 games of all time are Bethesda titles, and probably five in my top 15; so the odds that I buy a PlayStation and not an Xbox are nil, I’ll end up getting both. But if I were to only buy one, before it would have been the PS5, because I don’t really care as much for Microsoft’s output as much as I do for The Last of Us or Spider-Man or games by Sucker Punch. Now it will be Xbox, though, because Microsoft suddenly has at least as many appealing titles as Sony does.

So in the immediate short term, in the next year or two, how do you think this move impacts Sony and PS5?

Not much. I mean, it really depends on the deals that were in place. Like Starfield I think is coming out soon, so it will probably be on both platforms. It’s really going to be new games coming in 2021 and beyond that will be exclusive, though if any have been announced for PlayStation, I think they will hit PlayStation. So it’s not going to have any immediate impact, and like I said, you can go buy Fallout 4 on your PlayStation, it’s still available for you. But I think going forward, Elder Scrolls is a 15 million unit seller, and I think that will sway people to Xbox, I think 2-4 million players who would otherwise have owned PlayStation will now own Xbox.

Yeah, I think given how big Skyrim and Oblivion were, I’d say The Elder Scrolls is Microsoft’s biggest system seller at this point.

Yeah, I do too.

Okay, so do you think that Sony will respond with a big publisher acquisition of their own, or do you think they will keep doing their third party exclusivity deals the way they have been doing?

Yeah, their acquisitions have been smaller, like Insomniac, and those are the kinds of acquisitions that I would expect. I do think Sony is in a good position to buy Warner Bros. Interactive assets should they ever go on sale again. Depending on whether AT&T chooses to sell them, and how. If they just want to license their IP out, they will probably not go with exclusivity deals, because they won’t want the games limited to just one platform, but if they sell perpetual rights to Batman or Mortal Kombat, I think those assets would be pretty cool for Sony to fold into their lineup. They already did it with Spider-Man, so we know they would be interested in something like that. I really hadn’t considered this scenario, since we had heard WB was off the table, but now that Bethesda just got bought for $7.5 billion, you have to think AT&T are thinking, “could we get $7 billion?”

So you think Sony could actually purchase a publisher? Like other than Warner Bros. maybe Capcom’s catalog, or Metal Gear from Konami, or Square and Final Fantasy? Do you think that’s viable?

Well Metal Gear without Kojima might not be worth very much, and Final Fantasy, when did the last one come out? 2016? I’m not sure anyone really cares there, I think that that’s just a couple of million units we are talking about, that’s not a system seller. It probably is in Japan, but the Japanese aren’t buying Xbox, so Sony doesn’t really have to worry there, especially since all those Japanese games will be on PlayStation anyway, so Sony isn’t at risk of losing those titles.

I don’t think those assets are worth much.

I wanted to go back to something you had mentioned earlier, which was that you think Starfield will hit PS5 as well, but Elder Scrolls will be Xbox exclusive. But those are just the big Bethesda titles, what do you think will happen with DOOM and Dishonored and Wolfenstein? Do you think these are going to be Xbox and PC only from now on?

I think that contracts for console platforms are signed one or two years before a game will come out. So Wolfenstein and DOOM and Dishonored, are probably likely not subject to any existing contracts to PlayStation, so I think those will only come out on Xbox and PC. Elder Scrolls, let’s say it’s coming next year, it’s entirely possible Bethesda already had contractual obligations with Sony in place for it then. So that’s the big one – the sooner it comes out, the likelier it is to come to PlayStation and Xbox, both. The later it comes out, the less likely it is. Because again, the determining factor is whether or not a contract is in place, and I would guess there isn’t one for a game that is years out from release. But if there is a contract, Microsoft will honor it. That’s sort of why when they bought Minecraft, it didn’t disappear from PlayStation, and it continued to be supported on rival consoles as well.

Right, and they did say they would continue honoring any contracts in place.

And they will, all these guys are honorable businesspeople, they’re not going to do anything untoward. But if there is no contract, we can expect things to be exclusive.

You just never know, contracts can be amended or bought out, but I would guess for Elder Scrolls, Sony won’t relent. If it’s under contract, it will come out on PlayStation. I don’t think Microsoft will sign any new contracts, but they won’t violate any existing ones either.

So given that we now have Game Pass, two variations of the Xbox hardware, and Microsoft’s shopping spree having resulted in them now having 23 first party studios under their wing – how do you think Xbox will fare against PlayStation this time around? Because last time, they didn’t really do all that well.

You know, it’s really going to be interesting to see what happens with that cheaper Xbox, because purchase intent looks very low for that thing. Mostly because I guess there’s some awareness that it has only a third of the teraflops the Series X does. And I don’t even know what a teraflop is, so I don’t know what that matters. What I do understand is that the Series S will play next gen games, just not at 4K and 240fps or whatever. And I would say more than two thirds of gaming households still don’t have a 4KTV, so if I don’t have a 4KTV, then I don’t really care about the higher end one, unless I buy a new TV – because even on 1080p the games will look stunning. So I think that price point might be a differentiator, even though right now, early adopters and hardcore fans don’t seem to be too interested in it.

I think Game Pass makes the Xbox audience bigger. I think that for $40 a month, getting Game Pass, Xbox Live Gold, and an Xbox console will get them some marketshare, so I would say best case Xbox takes 45% of the market, and Sony keeps 55%. And worst case, 60-40. It will be hard for Microsoft to go over 50, because Sony just has a great brand and loyal fans in Japan and Europe. I think you’ll win a few of those customers with the cheaper Xbox, a few from Game Pass, a few from the Bethesda acquisition, a few more from the other acquisitions they have made. But it will be hard for them to go over 50% overall.

So on the whole though, would you say Series S and Game Pass are Microsoft’s big aces next generation, in terms of expanding the reach of Xbox?

Yeah, I think the instalment purchase, which is really what most cellphones do, makes consoles more affordable for a lot of people, because most people may not have $500 lying around for a new console. So that $40 a month plan that gets you Xbox Live and Game Pass, you don’t need to buy very many games, you can do a $40 a month plan and get a Series X, and then buy 2 months a year that aren’t on Game Pass, let’s say FIFA and Call of Duty, and that’s really it, otherwise you’re always going to have something to play. And that’s a pretty good deal. So, we’ll see how it goes, I’d be curious to see if it gains them more than 5 percentage points of marketshare.

Sony of course are also doing two variations of the PS5, the Digital Edition which lacks the disc drive on the standard one, but is otherwise identical to it; and of course, the standard one. But the Digital Edition is a whole $100 cheaper. Which of the two models do you think will have a bigger marketshare in the long run?

I think Sony really blew it with that, because as far as we can tell, the cost of making a PlayStation 5 is $450, so they are breaking even on the $500 version, but losing $40 or so on the digital version. A disc drive isn’t worth that much. So they’re losing $40, but they gain $6 more per digital game than they would gain otherwise. So you would have to buy a lot of games to cover up the loss, and I just think it’s unlikely many will buy that many games.

I actually don’t think many consumers will want to save the money, I think most would rather have the disc drive on hand so they have the option to take their game to their friend’s house or trade it in or whatever. So I think they blew it with the Digital Edition, but it’s hard to tell early numbers, because it’s all sold out anyway, and we don’t know how many of each they made. But I think over the long run, they’ll sell and make fewer digital editions.

So this holiday season, between Xbox and PlayStation, which one do you think will do better?

It just depends on supply, because this Holiday they will both be sold out.

What you said was that at the end of this cycle, you see Microsoft having up to 45% marketshare, and Sony having up to 55% marketshare. How does Nintendo factor into all this? The Switch is not slowing down, it is having a recordbreaking year, and growing.

I don’t think Nintendo factors in, to be honest; I don’t think the Switch is an alternative to Xbox or PlayStation, because there are so few games that are shared across them. I don’t think there is anyone who says “I can only buy one” and then buy Switch instead of PlayStation. Of course, if they are a Nintendo fan, and they can only buy one, they would get the Switch, but if they only want to play Call of Duty or FIFA or Cyberpunk, they’re not getting a Switch. I would say fewer than half of Switch purchases are as the only console in the house, unless the gamer is under 10. So if you look at the gaming community over 10 years old, it’s probably the only console for about 20% of the households, whereas for the other 80%, it’s probably a secondary purchase bought to supplement their exiting PlayStation or Xbox. So I don’t think the Switch matters to how things play out for PlayStation and Xbox.

So as far as Nintendo’s trajectory goes, how do you see the Switch doing? Where do you think it ends up by the end?

I think that 20 million units sold a year is a pretty sustainable number; I mean obviously they are going to sell a lot more than that this year, because of the shelter in place guidelines, but I don’t think that will obviously last over the long term. I see it normalizing at 20 million sold a year, which I think is great, that’s a very solid performance.

We also know that Nintendo is apparently working on a next generation Switch, Switch Pro. What are your predictions about that? Do you think they will stick with the hybrid model, or do you think they will eventually go back to making dedicated consoles?

Uh, I don’t really understand the whole hybrid concept. I think that was something Iwata did to differentiate the Switch, and he wanted to have a console that could go back and forth from console to portable. But I don’t think most people play it in both modes, I would say that maybe 20% of Switch owners play both modes; and I think most Switch owners play it handheld only. So I honestly don’t understand the whole point of the hybrid. Who cares? Play it as a handheld. And Nintendo isn’t that smart, so you never know what they will do next, but I think the smart thing would be to get rid of the Switch console and only have the Switch Lite, get rid of the docking station, get rid of playing on the TV; maybe offer a Fire Stick style dongle for those who do want to play it on the TV. But I just think that a portable only Switch makes the most sense, it’s the cheapest to make, and they could make the screen nicer and the build quality better. But I am not sure what we will see from them next generation, if there will be upgrade to processing power. They should at least put some flash memory in it so you can download some games and not have to screw around with cartridges.

I wanted to go back to Microsoft and Sony now. Halo Infinite got delayed into next year, it’s no longer a launch game. Do you think this hurts the Xbox’s prospects at launch much? I know you said it sells out no matter what, but do you think it could have had a higher ceiling if they had Halo?

I don’t think it matters; of course having a system seller is good, but I think they will be sold out at launch no matter what. But sure, maybe demand would be 10 million at launch instead of maybe 5 million now.

So as far as Game Pass goes, we talked about how Microsoft is making a play for that as that being their primary way of expanding their audience. They have 15 million subscribers already, and obviously the numbers will go up further as more exclusive games start coming up. Do you think Sony will ever have something similar? Do they even need to?

Well they have it, they just don’t market it very well. They have PS Now, they just don’t have as many games and they haven’t been putting their new releases on there. And that’s the problem, that their subscription doesn’t have new releases, and Microsoft’s does. So question is, will Sony walk down the Microsoft path? I’m not sure Microsoft makes money off that model, so I think that may be a bad business decision. I mean Microsoft has a lot of money in the bank, so they can do whatever they want, but Sony doesn’t have as much. So to give Sony credit, I think they are very good businesspeople, and they make intelligent business decisions. So there has to be a reason for why they haven’t done this yet, and that reason is probably that it doesn’t make as much economic sense.

Okay, one thing Sony also said they wouldn’t do, but they are doing now, is said they won’t have cross-generation games. However, as we now know, Spider-Man and Horizon 2 are both confirmed to be coming to PS4. Do you think they will continue with the cross-generation release strategy? Can the next God of War also be a cross-gen game?

You know, it’s really hard to tell. Microsoft did something that surprised me, which is discontinue the Xbox One. And I saw an article recently which said that lots of people trying to buy a Series X bought an Xbox One X. I didn’t read the article, but that sounds stupid to me, since Microsoft isn’t even making those anymore, I have to assume it was retailers clearing inventory. But in any case, even though Microsoft doesn’t make it anymore, they will support it as long as they can.

I don’t know, it’s a good question. If you don’t support the old gen, you force people to buy new gen hardware and software; if you do support it, you give people time to make the decision. Again, I think it’s a business decision. I think it’s smart to support both, I really do. I think the key is, everyone who buys a game gets two copies, it could be piecemeal upgrades like on PS4, it could be paid upgrades like Activision and 2K are doing with Call of Duty or NBA, or it could be Smart Delivery like Microsoft. There are all sorts of models that we will see come out, that will help last gen consumers figure out what the best deal for them is.

Okay, so one of the things with next generation, which you alluded to, is that publishers may be looking at pricing their games at $70. Do you think that becomes an industry standard?

I don’t know if what you said is right, it’s only one game from Activision, one game from 2K, and one game from Sony at that price. It really comes down to what the console MSRP is for games. Microsoft has been pretty clear with Smart Delivery, which they have said is free for current to next gen upgrades. So if Smart Delivery is free, unless Microsoft raises the price of current gen games from $60 to $70, they can’t price their games at $70. And next gen games from them will be $60.

I think 2K pricing their game at $70 is going to upset customers. And I get that it’s worth it, I get that inflation is a thing, and that game prices haven’t increased in years. But the fact is, if the platform holders don’t suggest a $70 price point, then third party publishers will look greedy by asking for $10 more. Activision actually announced the next gen version of Call of Duty is $60, I believe, the $70 price is only if you want a copy of the current gen and next gen versions both. So they’re doing two different versions… so I don’t know if it’s going to happen. I think what we’re seeing is publishers trying to figure out what they will do with regards to pricing, and I have to imagine Sony didn’t help anybody announcing Miles Morales at $40 and Demon’s Souls at $70.

So right now there is no telling what model everyone might go with.

That’s right. But no, I don’t think everyone will charge $70.

Okay. One other thing Sony has said is, they might look at releasing games on PC on a case by case basis. They already did Horizon and Death Stranding. Do you think this becomes an ongoing strategy for them? Do you think we eventually see Sony games come to PC day one, like Microsoft games do?

You know, I think that this is all part of that enhanced subscription package that they haven’t yet announced. Microsoft did Game Pass, and they said that it’s on PC as well, and all that really means is that a lot of people who have Xboxes at home can play at work. And I think that’s what the plan was. So I think Sony is trying to go that way, and I think that ultimately favors the whole streaming solution, so you can play on PC, or TV without a console, and that’s where the whole subscription model makes sense. I think Microsoft doesn’t care if you sign up for $15 a month for Game Pass, but don’t buy a console, because they’re making $15 a month from you anyway. So Sony, I think, is headed that way, but they just haven’t announced it yet. That’s what I think Sony will look at doing.

This last gen we had PS4 Pro and Xbox One X, which were upgraded versions of the consoles; do you think we see something similar like that this upcoming gen as well? PS5 Pro and Xbox Series X… X, or something?

(laughs) It’s too early. It’s too early to tell.

But in terms of an ongoing business strategy, would you say it’s appropriate?

I would say it depends on if they can improve the console enough to charge more. And I really don’t know. Ultimately, I doubt that they will get much faster, and if they do, I doubt people will be able to tell the difference. So really, this will probably come down to bells and whistles, and how many Terabytes of SSD storage do you really need? So no, I doubt we’ll see anything like that, but we’ll find out.

Now I wanted to talk about some of the games. One of them is Call of Duty: Black Ops: Cold War, and I wanted to ask if you think it will become the highest selling game of the year? Right now we have Animal Crossing, which has a really ridiculous pace of sales.

Well, I haven’t seen what the Animal Crossing numbers are, it isn’t over 15 million is it?

It’s 24 million or thereabouts.

Oh, then no, Call of Duty won’t outsell it this year. Not this calendar year, it’s coming out in November, there is no chance it outsells Animal Crossing in two months.

How much do you think Cyberpunk will sell in its first year?

It’s really hard to tell… it’s also coming out in November, so I say it probably sells around 15 million. Could it sell 20 million? Sure. 12 million? Sure. But 15 million seems right. If it gets like a 99 on Metacritic, then it could sell 30 million. But if it gets 90, it can sell 15 million. And it won’t get an 80, it will be a great game.

The difference between a 90 and a 97 is these really tiny nuances that game critics focus on; I could see Cyberpunk get a 97, but right now I would say 92 is the likely Metacritic average, and that it sells 15 million.

Sony is launching with a few exclusives, which are Spider-Man and Demon’s Souls. Spider-Man of course will do well, given how big the brand is and how well the original did. How do you think Demon’s Souls will do?

I honestly don’t know much about that franchise, I don’t think it sells big numbers though. I personally hated it, I’m the wrong guy to ask, honestly.

Nintendo has announced a new Zelda game that will be a sequel to Breath of the Wild. Breath of the Wild of course broke franchise records, and sold over 20 million. Do you think this sequel will be able to sustain this level of critical and commercial success, or do you think there will be a drop-off?

I think it will sell more. Bigger install base, and the brands that everyone buys Nintendo systems for are Zelda and Mario Kart and Smash Bros. And how many Switches will be on the market by the time the next Zelda is out, 75 million? They will probably have no trouble selling 25 million units of the next Zelda game, they will probably sell 35 million, even 40 million.

Those would be amazing numbers for a Zelda game.

Well, they’re great games. Zelda is the best thing that Nintendo does, I’m not a big Smash guy, but Mario Kart and Zelda are great. I think one reason Nintendo hasn’t done a Mario Kart since 2014 is that they want to have a giant install base to sell it to and set records.

There’s that Mario Kart game coming out this Holiday season, with the AR kart racing. Will that do well, or might it flounder like Labo?

I mean everything they do does well. But I mean, not 40 million well.

That’s fair. As far as third party games go, we have Watch Dogs Legion and Assassin’s Creed Valhalla both from Ubisoft, launching pretty close to each other. Do you think there is any scope for cannibalization there?

They’re different games for different audiences. You know, Watch Dogs is pretty close to Cyberpunk. Not a perfect competitor, but you know, future and tech-based, I would say that might be a bigger issue for Watch Dogs rather than Assassin’s Creed. I don’t think many consumers even know that Watch Dogs and Assassin’s Creed are by the same publisher to be honest, so this would be like arguing that Call of Duty can affect Overwatch sales. Which it doesn’t, because they’re different. The same as here.

Do you think these third party games will sell more on PS5 or Xbox Series X?

Well, it doesn’t really matter, they’re going to sell well on both consoles. But this, again, comes down to supply from Sony and Microsoft. If you tell me Sony has made 8 million PS5s and Microsoft has made 5 million Xboxes, I will say the games will sell more on PS5. If you tell me Microsoft made 8 million and Sony made 5 million, I will say the games will sell more on Xbox Series X. It comes down to supply again.

So basically your predictions for how this Holiday season plays out is all contingent on supply.

Yeah, and I mean, like I said, if there’s only 2 million consoles sold, do you really care if someone sold 500,000 games on one and 600,000 on another? It doesn’t really matter.

One publisher we haven’t talked much about so far is EA. They’ve had mostly a quiet year this year, but they have said the next Battlefield game will do, how does 2021 play out for EA?

You know, that’s a really good question, because the two Battlefield games that did super well were 4 and 1, and they came out against the two lowest rated Call of Duty games. So both of those Battlefield games did super well. Then the next Battlefield game came out against Black Ops 4, which was one of the best received games in the Call of Duty franchise, and it didn’t do that well. I mean it still sold 8 million units, but the others have done 15 million. So I think that EA has a problem with Battlefield because it is so close to Call of Duty, it plays and looks the same. And obviously there are fans of each I{P for different reasons, but they are both military FPSes.

So I think that the odds of Battlefield going up against another well received Call of Duty are pretty high, so I would say Battlefield will sell worse than people expect, because it will be up against a tough competitor. But hey, if they make a great game, market it well, and have a good launch window, maybe they’ll fare better next time.

Battlefield aside, what do you foresee for EA next year?

You know, they haven’t announced much. We’ve heard on and off about a sequel in the Titanfall universe, then it got canceled and then it was back on but then it was delayed… that is probably coming. We haven’t had anything since Anthem, which wasn’t that long ago, but BioWare has two studios, so by Fall of 2021, I would expect a new Dragon Age. And those are the two games I foresee from EA. The Sims has been doing great with smaller installments and recurring revenue, but we are way overdue for a new game, so maybe we see that as well. Then, of course, EA has smaller stuff like Plants vs Zombies, we’ll see. I think that more likely than not, there is a AAA title probably from BioWare, and it is probably Dragon Age. But of course, they could just revive the Mass Effect brand and do something in that universe. Who knows, we’ll see.

One thing that happened this generation, there were two trends that took off. One was battle royale, and the other was Destiny style service games. Do you think these will persist into the next generation as well?

Battle royale is here to stay, and it’s actually shocking to me to see that Ubisoft took so long to figure out they should have a piece of that pie. Activision sort of entered the arena in 2018 with Blackout in Black Ops 4, but it took until Warzone for them to hit big. Meanwhile EA hit it big with Apex Legends. Ubisoft just entered the space with Hyper Scape, and while I’m not sure how well it is doing, at least they have something now. Now wait for Take Two, they should join in as well, they’re a big publisher. So I think we will get at least one more battle royale, and the thing that fascinates me is that these are all additive. The entry of Apex Legends hasn’t made Fortnite lose market share or revenue, these games are all growing the market. So that’s good, I think that’s the kind of thing that will ensure we continue to see more battle royale games.

Speaking of Fortnite, that game is fully cross-platform, and I think that is important for its success. I think it’s only a matter of time before someone emulates that. I don’t know who; Call of Duty isn’t built that way, Warzone is a different game from Call of Duty mobile, so I don’t think they could do it. Apex could do it, but they haven’t even come out on mobile yet. But regardless, I do think that’s the next big step for battle royale games.

As for what you called Destiny style games, I don’t know. I personally think those MMO raid-based games, I think that market is saturated, so I don’t really see a lot more of that. I think the bigger opportunity is taking games like Overwatch or GTA Online, and making them free to play, I think if you did that, they’d see another 100 million players each. And I mean free free, I get that you can get Overwatch for $20 and the barrier for entry is low, but make it totally free and you will get 100 million players. And having a bigger playerbase makes it more fun for everyone.

So I think there is plenty of room to take existing games that are behind paywalls and making them free; I also think this about Ultimate Team, make that free and you have another 100 million players. And a lot more money. So, give this time and that’s the trend we’ll see emerge in the next five years, I think.

Yeah, we have already started seeing this with Warzone which is free.

And Activision resisted doing that, like I said they did Blackout behind the paywall. And they were afraid if they made Warzone free, no one would buy Call of Duty. Warzeone came out March 10, and the next time they reported financial results, they reported they had sold a record number of Call of Duty units in the first three months of the year, and then in June they set another record. So in the first six months of the year, they sold more units of Call of Duty than they have in a similar period for any year since the franchise came out. And that’s with Warzone out there, so clearly Warzone brought in new players, who said, “hey, this Call of Duty game is really good, I’m going to go buy it.” So I wonder why Take Two doesn’t do this with GTA Online, and why EA won’t do it with Ultimate Team. Do it, what will happen is you sell more copies of your game. So I think publishers are being short sighted. Like GTA is such a massive game, 200 hours of content, and you can pick it up for cheap now, of course people will buy it, so why not make GTA Online free? Every million players you get, you will get a hundred thousand new buyers for GTA5. You’ll make more money.

I hope you are right, because I think that sort of thing will help broaden the reach of video games in the coming years.

Me too.

My last question is, how do you think 2021 will play out for Sony, Microsoft, and Nintendo?

Nintendo will plug along selling 20 million consoles a year, making great first party software and selling record units of Zelda. Microsoft and Sony are going to probably sell out all their consoles for the first seven or eight months of 2021, and then let’s see what happens to these streaming initiatives, let’s see if that ends up being a viable alternative to consoles for the market. If it doesn’t, I think Sony and Microsoft will have a good first year.

But ultimately, we are eventually going to get streaming of new games for purchase without a console, which means that the late adopters of consoles might be early adopters for streaming, because even if they don’t have $500 for a console, they can spend $60 on the game they want and just get going. So let’s see how this plays out, I think there will be competition in the streaming arena. And I think 2021 will be the year when everyone gets serious about winning the streaming wars.

Okay, that was all the questions I had, thank you so much for taking the time out to talk to us again!

No problem! Thanks for having me!

Recently, GamingBolt conducted a lengthy interview with industry analyst Michael Pachter of Wedbush Securities, talking about all these things and much, much more. You can read our conversation below.

NOTE: This interview was conducted in December 2018.

"I think that next generation of Nintendo will compete with this generation of PlayStation and Xbox. They’re just behind by a generation. That seems to be their strategy, they seem very happy doing that, so I expect them to keep doing it."

The NPD figures for November for all three systems were surprisingly strong, I think all three systems sold north of a million each. Usually this late into their life cycles, consoles don’t sell this well- so why do you think both the PS4 and the Xbox One have been selling as well as they have, even five years after their launch?

Well, obviously there’s greater demand, there’s really good games, there’s some bundles. You’re getting some pretty good games thrown in, on the Switch in particular- Mario Kart was thrown in for free, which is a pretty big deal. And none of them are particularly expensive. I think the Switch is pretty expensive at $299, but the other two guys are pretty consistently priced at that or below, with giant libraries of content, so it makes sense.

And I think even Fortnite become quite a popular game has had an impact. You’ve got parents that are reaching down now and buying consoles for their nine year-old kids, and they weren’t doing that before.

Yeah, and the PS4 had a pretty good bundle with Spider-Man for Black Friday.

Exactly. And again, they can all do this with their own content, because they’re not giving away very much. I think all Sony had to spend for Spider-Man was pay royalties to Insomniac.

So do you see this continuing in 2019?

Yeah, I do. I think we’ll probably get a price cut on all of them. And Nintendo may position it as a reinvented Switch. My guess is that Nintendo will take the Switch and get rid of the “Switch” part, so it’ll be handheld only. They’ll probably just make the Joycons part of the integrated body of the tablet, and probably drop the price. Get rid of the docking station, and the external power supply- just turn the thing into a handheld that’s rechargeable with a power cord, you know, like a normal handheld, and charge $200 for it. So they do that, Sony can probably cut the price, Microsoft probably will cut the price. You’ll probably get a $199 Xbox and a $249 PlayStation, and a $199 Switch that’s handheld only, and that’ll probably be enough to drive unit demand to keep it constant year-over-year.

Yeah, that’s what’s interesting about Nintendo and their hardware revision, if they do end up doing it- do you think there’s a chance that they make a Switch that is more powerful, rather than something that’s cheaper?

Not in 2019, zero chance. Sure, there’s a chance in a few years, but not next year.

So would that be something they might consider to compete against the next-gen PlayStation and Xbox?

I think that next generation of Nintendo will compete with this generation of PlayStation and Xbox. They’re just behind by a generation. That seems to be their strategy, they seem very happy doing that, so I expect them to keep doing it.

Yeah, I think Nintendo have pretty much stopped caring about traditional console generation life cycles. 

Right.

"Microsoft isn’t doing well enough with the Xbox One to put off launching the next one, and if Sony were to make the mistake of waiting till 2021, Microsoft will get an advantage- which is what happened with the Xbox 360. They got an advantage by launching first. Sony won’t let them have that advantage this time."

That was going to be my next question- when do you think the PlayStation 5 and whatever the next Xbox is will launch? Does 2020 seem likely to you?

Well, I think that Sony told you by skipping E3 in 2019, that it’s not going to be 2019. And by skipping 2019 – I mean, they didn’t give an excuse, but the fact is that they’ve pretty much announced all the games for this generation. We know about Death Stranding and Days Gone and all the games that haven’t yet come out – Death Stranding I don’t think even has a date yet – but there aren’t going to be any more current generation exclusives from Sony. So that’s why they’re not going to have a presence at E3. That tells you that they’re saving up the remaining first party titles to support their next generation launch.

Sony probably saw how successful the Switch was with Zelda: Breath of the Wild as a launch title, followed by Mario Odyssey just six months later. And I think Sony recognizes that if they really put their super popular AAA titles on their next-gen console, it’ll sell well right out of the gate. My guess is, yes, 2020.

Microsoft, I think, has always been on track for 2020, and they’ll still be at E3 obviously. But they’re a bit quieter about it- remember, they’ve got a streaming service, a subscription service, so they’ve got different things, and obviously a pretty well developed and profitable Xbox Live business. I think they’re just gonna try to kind of keep things going steady into the next generation. But yeah, I think 2020 for both systems sounds likely.

Do you think if the PS4 and the Xbox One continue to sell as well as they have been doing, if they do not lose momentum, that might make Sony or Microsoft, or maybe even both, reconsider that they can push back the launch of the PS5 and the next Xbox to 2021?

I don’t think so. I think what’ll be more interesting is what happens to the old-gen consoles. Microsoft has historically wound down production of its prior console shortly after launching its new one, and Sony has done the opposite, and kept the old one in production for a while, for as many as three years. I think Sony has a different view of the world. They think that they can still sell 20-30 million consoles in Africa, Asia, Latin America, and developing parts of Europe. So I think they’ll keep the PS4 alive at a $149 price point or something for the next few years.

Microsoft tends to think the Xbox Two, or whatever they call it, is gonna be so powerful, they’re want to sell everybody one of those, and no more Xbox Ones. So it’ll be interesting to see, but no, I don’t think they’ll be delayed to 2021. Microsoft isn’t doing well enough with the Xbox One to put off launching the next one, and if Sony were to make the mistake of waiting till 2021, Microsoft will get an advantage- which is what happened with the Xbox 360. They got an advantage by launching first. Sony won’t let them have that advantage this time.

Yeah, I guess it’s a matter of mindshare. The Xbox 360 had a huge advantage because it was on the market longer than the PS3.

At a lower price. And with people pissed about the $600 PS3. Sony got the advantage back by launching the PS4 at the same time as the Xbox One, at a lower price.

Speaking of Microsoft, there have been reports lately that they’ve been working on four separate Xbox models. That is kind of unprecedented for games hardware- like, there might be different variants of the same product at launch. Do you think that’s something that Sony might some day think of doing?

I don’t think Microsoft will have four, I don’t know where those reports are coming from. I expect a dumbed down console, like the Steam console, where it’s download only, and there’s no hard drive or disc drive. So I think a streaming device there will be a streaming device, like a $100 Xbox console that doesn’t run in 4K or 240 frames per second. And then I think there will be a more expensive $400 console that supports 4K, 240 FPS, virtual reality. I don’t know if there will be models. I don’t think you’re going to get completely different devices. 

Whether Sony does it, I think they will probably have that 4K and 240 FPS device. that’ll support PSVR. Whether they have a PlayStation Now device that is streaming only, I don’t know. Maybe there will be two each for PlayStation and Xbox, but I would be surprised if there were more than two, and I’m not sure whether Sony is committed to doing that.

Yeah, the reports I mentioned mostly revolved around the variants being discless and focusing on streaming and stuff like that. 

Yeah, because Microsoft is going to have a pretty well established business for that. I mean, Sony has PlayStation Now, but it’s only available if you own a PlayStation. And I think Microsoft, because of Play Anywhere, are further down the curve in offering games without a console. So I think it’s going to be, like I said, like a Steam box, a device that lets you stream without having to make the big investment in a console.

"When you say Astro Bot did well- sure, it sold a million units. But it’s not like there are 30 million people playing it. You know, it’s not Red Dead Redemption. It’s chicken and egg- you’re not going to see sales of a VR game unless you have big sales of VR headsets, and you’re not going to see big sales of VR headsets unless they’re free, or unless there’s a ton of content to support them."

That leads me to my next question- do you think there’s an infrastructure in place that’s strong enough right now for streaming and cloud gaming to be a proper, genuine alternative to the traditional way of playing games? Or do you think with xCloud, Microsoft’s more concerned with setting things up for the future?

Well the cloud works for sure for single player games. The problem with streaming is latency when you’re playing multiplayer games. If everything is being done in the cloud, and we don’t have parallel processors at the location that we’re playing, and you and I are 2,000 miles apart and we’re trying to play a multiplayer game, whatever we do has to go through the cloud to the central server, and it has to come back to us. There’s a lot of latency in that. We’re not talking about crazy latency. You know, a hundred milliseconds is a tenth of a second, and you will notice it, we’ll both see it. That’s why our local processing works. You know, you have an Xbox, and I have an Xbox, and we’re playing together, and our boxes are rendering at the same instant, and the only information that’s passed back and forth is that I pulled the trigger.

My box knows that I’m aiming at you, your box knows I’m aiming at you, because it knows where my gun was swinging before. So you can’t do multiplayer with cloud and have it be really effective, I don’t think. Fortnite is essentially multiplayer in the cloud, I guess- but you can do it with some games, but nobody really expects super, super fast twitch with zero latency. You want that in Call of Duty. 

So I don’t know that we’re ever gonna get that kind of streaming. That was what OnLive and Gaikai were all about. You know, Sony bought them both, but we haven’t seen anybody embracing streaming of multiplayer gaming, and I just don’t think that happens. 

But again, why do we care about streaming? Back in 2007, the answer was because storage was so expensive, and the CPUs and GPUs were really expensive, and GDDR RAM was so expensive. And what you’re going to get in the next five years is all of that stuff together costing $25 or $50. And that’s gonna be the so-called streaming device. It might have a CPU, GPU, and GDDR RAM, and flash memory. But I don’t think we need to be in the cloud if people are willing to spend $100 on hardware. And I think that $100 will end up being built into a television eventually. I mean, it’ll be built into an Apple TV, or an Amazon Echo device first. So I don’t know that we’re ever going to get to multiplayer cloud gaming, or that we’re ever going to need to. 

Yeah, but I guess there’s the advantage of being able to stream those games on any device. 

Again, to view, or to play single player, it works flawlessly. But to actually play multiplayer, it’s not flawless.

I guess Assassin’s Creed worked pretty well on Google’s stream. 

Yes. Single player- totally worked.

So something else that’s been a pretty big point of discussion for next generation is VR. VR has been doing very well lately- especially this year there was stuff like Moss and Astro Bot and Firewall. Do you think VR becomes more integrated in our consoles in the near future?

Sony probably will try. But we haven’t yet advanced to where the technology is wireless and inexpensive. So I don’t think that you’re going to have a PS5 that has VR included. I think it’ll be $400 for the PS5 and $600 for the PS5 with VR. The system itself will support VR, just like PS4 supports VR, and it’ll support VR at a higher frame rate and a higher resolution, but no, I don’t think it becomes fully integrated.

And when you say Astro Bot did well- sure, it sold a million units. But it’s not like there are 30 million people playing it. You know, it’s not Red Dead Redemption. It’s chicken and egg- you’re not going to see sales of a VR game unless you have big sales of VR headsets, and you’re not going to see big sales of VR headsets unless they’re free, or unless there’s a ton of content to support them. So we’re kind of in that never-never land where we can’t have one without the other. It’s just gonna take a while, it’s not gonna happen soon. It’s gonna be many years.

Yeah, I guess it’s kind of a Catch-22 situation. People won’t really be incetivized to make great games on VR unless they know VR is a proper, legitimate source of sales. 

Yes.

But I think games like Astro Bot – I mean Astro Bot more recently, but there have been others – they show that VR has potential. Like Microsoft has been pretty much ignoring VR. Do you think they’re going to dip their toes into VR, at least?

I think Microsoft will partner. I think they’ll support Oculus or something. I don’t think they’ll do it themselves.

Fair enough. So I’m gonna switch gears and ask you something about the Switch for a moment. I guess the question I have to first is, with how much momentum it’s gathered lately with the launches of Pokemon and Smash, do you think it hits that 20 million target that Nintendo has set for it?

No, no chance. Their President, [Shuntaro] Furukawa gave an interview recently and was asked about their targets. He said they’re very comfortable with the software target, and the hardware unit target is more challenging. So I don’t think they’re tracking to it. It looks to me like they’re tracking to somewhere between 16.5 and 18.5 million units. And 16.5 is the number if they just repeat what they did in December, January, February, and March last year. It will be higher if Smash drove some adoption. My guess is they’ll probably end up at 17.5 million. It wouldn’t shock me if they got to 18 or 18.5, but it would very much shock me if they got to 20. I’d say there’s no chance of 20.

"I think there will be an update to the Switch that will still be handheld. I think they’ll probably stick with handheld forever. But you never know."

Speaking of software sales on Switch, we’ve been seeing very impressive numbers. I mean, Pokemon, Smash, Mario Kart, these are franchises that have always sold well. And it’s not that stuff like Zelda doesn’t sell well, but it’s been selling better than it usually does. And that’s true for other games as well, like with indie titles- so why do you think software on the Switch has been performing so strongly?

Well, partly because they have a lot of inexpensive titles. You know, games like Stardew Valley and Golf Story, the $10-15 titles. The other thing is that Nintendo honestly deserves to sell a lot of units for games like Zelda and Mario and Smash. They get 90+ review scores. I mean, they’re so good, that it’s not at all surprising that they’re getting giant attach rates. You know, Smash will probably have a 75 per cent attach rate to the instal base of Switch, which is probably 23 or 24 million right now. They will literally probably sell 18 million copies of Smash. They deserve to do that. They make an amazing game, and of course you want to buy it. 

And if you have a Switch, there really aren’t a lot of third party choices. I mean, Call of Duty and Red Dead aren’t there. So what else are you going to buy? You can buy an old Elder Scrolls, but, like how many people are playing Wolfenstein or DOOM on the Switch, or Diablo? Some, but most people are going to buy the newest thing, and the 90+ rated Nintendo titles are gonna sell well. So that’s why, because they dominate in terms of quantity and quality the software that’s available on the Switch.

On top of that, I think indies have, surprisingly enough, found a home on the Switch. Like Hollow Knight did really well, and like you said, there was Stardew Valley.

Right. And that’s mostly because at a $15 price point, it’s a low-risk proposition for the gamer. And low-risk especially because you get the reviews in, and something like Stardew Valley, people just love the game. So sure, that sells super well.

The 2019 lineup for the Switch also looks pretty good. How do you think that drives hardware sales for it in 2019? Do you think there will be growth, or will it sustain the kind of sales it’s had?

Probably not growth, and probably yes, it’ll sustain sales. I mean, who is left that doesn’t have a Switch, who’s waiting for a full-fledged Pokemon game, instead of buying one for Zelda or Mario or Smash? I mean, sure there’s somebody, but there aren’t 20 million people who’re waiting for the big Pokemon game. I think a price cut to $200 means a volume increase. I think if they do 17.5 million this year, and then they cut to $200, they could do 20 million next year pretty easily. If they don’t cut the price, I think the number drops to 15 million next year. 

And looking ahead a few years, do you think if Nintendo has the kind of long-term success they’re hoping for with the Switch, is the console-handheld hybrid thing something that they will stick with? Because historically they’ve liked to experiment with most of the new hardware that they put out.

Yeah, I think that this is not a hybrid. I know that they think this is a hybrid. This is a handheld. It may be convenient for some people to prop it up on the table and play with the Joycons or a regular controller, or slide it into the docking station and play it on the TV. But I continue to believe that the vast majority of the people who play on the Switch play it as a handheld. And I think the vast majority of new adopters are going to play it as a handheld. And the “Switch” ability to be a console that plays on your TV is a gimmick. I honestly don’t know anybody who keeps doing that. Some people who have it in the docking station will leave it there forever, I get that, but anybody that bothers to take it out and play it as a handheld just keeps it as a handheld. So I think it’s a gimmick that doesn’t have a basis, there’s no reason for it. 

Unfortunately, they named it the Switch, so I’m curious what they’re going to name the handheld-only version. Because it won’t be the Switch. They’ll probably call it the Switch Lite, but… it’s sort of like taking the DS, and taking away one of the screens. Would they still call it the DS? Probably, but it wouldn’t be.

Yeah, basically like what they did with the 2DS.

Right, yeah. It wasn’t the 3DS, it was the 2DS.

But from Nintendo’s perspective, what they’ve done with the Switch is, they’ve consolidated their development efforts on a single system, rather than dividing it between handheld and console. 

Yeah, but again, I don’t think what they did was innovative at all. They think it’s innovative, and they’re really proud of themselves, but it really wasn’t. It’s really a handheld. 

Yeah, but do you think having a consolidated focus is something they will continue to do, or do you see them making another dedicated home console in the future, and dividing their focus between handheld and console again?

No, I think there will be an update to the Switch that will still be handheld. I think they’ll probably stick with handheld forever. But you never know.

"I think Sony are fools to bypass E3 2019. And they’ll be back."

And as an extension to that question, do you think either Sony or Microsoft try to do something like what Nintendo has done with the Switch?

No.

I think it was [PlayStation chief] John Kodera who recently said that they’re aware of the potential in the handheld market. But do you think the Vita was Sony’s last handheld effort?

Yes. I think they’re done. I think that the Vita proved that they suck at it.

Alright, I wanted to go back to something we talked about earlier, about Sony not being at E3. My question to you isn’t about why they’re not at E3- I assume because they’re gearing up for something big after E3. My question to you is, do you think this is a one-off situation for them, or do you think Sony has basically just given up on E3?

Oh, no, I think it’s a one-off. I think they made a bad decision. I think they somehow internally determined that the money’s not well spent- and they’re wrong. I don’t know what they spend on E3, but even if it’s $15 million, they get $15 million of publicity out of it. So I think they’re fools to bypass the show. And they’ll be back.

Yeah, I think their 2018 show might have had some influence on their decision, because it didn’t go very well, at least in terms of reception.

Well, they had that stupid walk-through that nobody understood, and it just wasn’t fun. And I think they probably spent a ton on that. And they’re very much guys who don’t acknowledge that they did anything wrong, so they just take their ball and go home, because it didn’t work well. 

But why do you think there was no PSX this year, then?

I don’t know… again- no games. So I think it’s all related to gearing up for the next generation console. They’ll probably announce the next gen console in Spring of 2020, and have their own event- maybe they’ll call it PSX. Maybe there’s a PSX in December of 2019, and they announce their next-gen console then. 

Alright, and I had another question about Microsoft, and their recent string of first party studio acquisitions. Phil Spencer has said that Microsoft wants to make sure that the studios retain their creative independence, but do you think in spite of that, Microsoft will try to get them to develop and cultivate new franchises that has as much cache as something like Halo or Gears? Or do you think they’re just going to let them do their own thing?

I think they would like to, but the studios that they’ve acquired, perhaps with the exception of Ninja Theory with Hellblade, haven’t made big games. Obsidian’s made big games for hire, so Fallout: New Vegas, and I frankly think The Outer Worlds looks great, so they might actually have a big hit their. But what’s The Outer Worlds going to sell, 5 or 6 million units, on multiple consoles? Which would be great! And that’s probably what it’ll do. But that’s not a Halo-type. I mean, Halo is 8-10 million units on one console. So 5-6 on multiplatform is about a third as big as Halo.

So no, I don’t think that any of the new studios does that. Hellblade- what did Hellblade do? There’s no way Hellblade was more than 5 or 6 million. So I don’t think so. I don’t think that any of the studios are accomplished enough to put out Bungie-type quantity titles.

I mean, any of them could be great. There’s a lot of studios that come out of nowhere- look at Rocksteady. So it’s possible. 

Yeah, speaking of The Outer Worlds, actually, I had a question about that. I mean, I’m sure this didn’t have any bearing on when they revealed it, but the timing for its reveal certainly seems fortunate for it, because with how Mass Effect did last year, and with how Fallout has done this year, The Outer Worlds looks like the sort of game that a lot of people are very hungry for right now. So do you think that’s something that could affect its sales or its reception in any significant way?

Well, it very much looks like Fallout. They trotted out [Leonard] Boyarski, who was the first Fallout creator on stage first, and then they showed a game that looks an awful lot like Fallout, so yeah! And I actually really like the Obsidian team, and I think they really do make good games, so it really might be great. Again, it’s a new IP, it’s gonna be hard to see it do Fallout numbers, like 15 million.

Yeah, definitely, it’s still relatively a niche title.

Yeah, again, if Obsidian puts out a game that gets a 92, then sure, it could do that many.

"I don’t think there’s any risk to any future single player games [from Bethesda]. It just tells you that they weren’t ready to make a multiplayer-only game. They probably have to go back and figure out what they did wrong, and how to get it right."

And speaking of Fallout, Bethesda pretty much said very clearly before the launch of 76 that this is something that is completely new for them, and there’s going to be unforeseen issues. So that covers a lot of what happened with Fallout 76, and its servers, and how it played online, and how its PvP was received, but there was still a lot of stuff with the game, and stuff surrounding the game that had a lot of really weird issues. Like the duffel bag thing, and Bethesda accidentally leaking private information of a lot of the players- how does something like that happen? I mean, Bethesda is not a small, inexperienced company, they have put out a lot of huge games.

Other than The Elder Scrolls Online, they’ve never really done an ambitious online game, and Elder Scrolls Online was never that big. I just don’t think they’re very good at multiplayer, I think that’s what it comes down to. They’re a world class single player game developer, and they try to pivot, and do multiplayer, and it’s hard. 

So do you think what’s been going with Fallout 76 affects Starfield or The Elder Scrolls 6 in any way, especially when it comes to the issue of something like bugs, which has been a problem in Bethesda’s games for a pretty long time.

I don’t think there’s any risk to any future single player games. It just tells you that they weren’t ready to make a multiplayer-only game. They probably have to go back and figure out what they did wrong, and how to get it right. I have to say, it’s the first game in the Fallout series I haven’t played, and I don’t have any interest in playing it. I mean, it was so poorly reviewed that I’m just not gonna try it, and I’ve played all their games for hundreds of hours. 

Yeah, and I think one of the biggest issues people had with the game takes us back to the topic of bugs. In the past, people have been able to overlook bugs in Bethesda’s games because they have been so good, like Skyrim, or Fallout 3, or even Morrowind, which had a lot of bugs. But Fallout 76 was missing a lot of the things that made those games so good, so people weren’t as willing to overlook those bugs. So if their future single player games continue to have technical issues, do you think people will be able to overlook them again because of their strengths as single player games, or have they been burnt now with Fallout 76, and something like that will just burn them more?

You know, it’s sort of like when you have a movie franchise, and there’s a bad instalment. So I remember when, I think it was Mission Impossible 3, I might be wrong, it might have been 2, but one of those was bad, and there was a lot of speculation that that was the end of the franchise. The next one was great, and now they’re up to 6, and they’re fine. So you’re allowed to screw up once, you’re not allowed to screw up twice. So people will buy the next Fallout as long as it’s good, but if the next one is bad, then I think they have a problem. 

Yeah, obviously I think Bethesda has a lot of strengths as a single player developer, and hopefully people see this as a blip rather than as something that will define the future.

Yeah, I expect that people will look at it as a blip, but you never know. 

Something else I wanted to ask about is kind of related to Fallout 76. Service models have proven themselves to be very successful, with games like Rainbow Six: Siege, and Fortnite, and Overwatch, and that’s something that we’re seeing bleed into single player games as well. Like the DLC for Assassin’s Creed Odyssey is being doled out in a service-like manner, it’s episodic. I think by this point it’s a little pointless to assume that single player games will die out because of service model games, but do you think they’ll change because of this? Do you think service models are something we’ll see more of in single player games?

I think that every publisher is keenly interesting in recurring revenue, and the higher they can drive recurring revenue, the more profitable they are overall. So I think that building a game and having it continue for multiple years, like Grand Theft Auto Online, that’s really a big deal. I mean, Grand Theft Auto Online has generated roughly $400 million a year the last couple of years. And because it was so popular, it kept catalog sales up, and they were selling 10 million units of GTA, or 15 million. Maybe only at $20, but still, a lot of units. So GTA just kept throwing off $600-$700 million a year, for a company that only does $2 billion. So it’s a really big deal. And that’s what Ubisoft is trying to do, and I think that’s what Activision already did with Overwatch, you know, continuing to generate revenue.

That model is across Call of Duty standalone and Destiny with expansion packs, and Overwatch with ongoing cosmetics, and Hearthstone, which is all microtransactions. Everybody is trying to figure out where the balance is, to keep consumers engaged and spending money, and the best games in the world where the consumer keeps spending money, and doesn’t feel like they’re getting ripped off. So that’s what everybody is trying to do. 

You mentioned microtransactions, which I wanted to talk about. Recently, Ubisoft confirmed that Trials: Rising would have microtransactions, which would be cosmetic, but would be in form of loot boxes, and a lot of people weren’t very happy with that. It seems like people don’t have an issue with cosmetic microtransactions too much, but when it comes in the form of loot boxes, they don’t like that.

Well, the people who don’t like it are the guys who buy the game. So if you purchase a game, of course you think that for my $60, I should get the whole game, and I shouldn’t have to keep spending money. But, you know, you’ve never heard anybody complain about FIFA, and FIFA Ultimate Team’s card packs are loot boxes. You don’t know what you’re getting in your card pack. And nobody complains about Hearthstone, which is free-to-play, or Clash Royale, which is free-to-play, and all you buy is card packs. 

So the gamers that are complaining about loot boxes in any other game are just whiny little babies who think they’re entitled and think they deserve everything for free. If you didn’t pay for the game, shut up. If you did pay for the game, you have a right to complain about loot boxes. It really is that simple. 

"The loot box complaint got loud when EA decided to lock up Darth Vader in Star Wars. That was the dumb part. It’s like a balance- if you give the players enough for their $60, then they don’t mind that extra stuff. Like FIFA, the game itself, is awesome. You don’t need to buy anything to play the game and have a great time."

So why do you think there’s that inconsistency?

I think it’s primarily because they feel like they’re getting value. And really, the loot box complaint got loud when EA decided to lock up Darth Vader in Star Wars. That was the dumb part. It’s like a balance- if you give the players enough for their $60, then they don’t mind that extra stuff. Like FIFA, the game itself, is awesome. You don’t need to buy anything to play the game and have a great time. But if you want to build your Ultimate Team, you understand that you gotta get the players to do that. So it totally makes sense, the way that they’ve structured it, and getting that balance right is hard. The companies that do it thrive, and the companies that blow it have a lot of whiny little entitled babies complain about them. 

Alright, I had just one more question for you. You mentioned GTA Online, which reminds me of Red Dead Redemption 2, which has been selling very well. And I don’t think it’ll have the sort of long-term sales that GTA 5 has had, but how long do you think Red Dead sustains its sales?

Well, Red Dead is a different game. Obviously, it’s a super highly rated game, but that’s like saying, “will a western movie do as well as Avatar?” I mean, you could make the best western movie ever, but trying to compare it to the best-selling movie ever is a tough one. 

I think that Red Dead probably had 25 per cent of the appeal of GTA for sure, and maybe has 35 to 40 per cent. So GTA 5 sold 105 million units, maybe Red Dead gets to 35-40 million. But 50 per cent? I’d say probably not. GTA is modern, and the missions are modern, and the vehicles are modern, and the weapons are modern, and you can do stuff like, “let’s build a meth lab, and take the profits from that and buy a helicopter, and use that to smuggle drugs across the border”. With Red Dead, what’re you gonna do, get on your horses and go knock off a saloon? I mean, that’s just silly. So no, it’s not gonna have as big of an appeal, and Red Dead Online, same thing. It’s gonna be collaborative, sometimes competitive, but you know, we have to go and harvest a bunch of beaver pelts, and start our coat business or whatever. But that’s not as exciting as running a meth lab, I think. 

So I think that 30-40 per cent as big as GTA is probably right, and same with the online version. 

Yeah, GTA has a lot more mass appeal than Red Dead does, it’s a lot more accessible in that way.

And again, mostly because it’s modern. There’s nothing wrong with the western genre, it just doesn’t have the universal appeal that a modern crime setting does.

Alright, I think that’s all the questions I had. Thank you so much for taking the time to talk to us again!

Alright, have a wonderful new year!

We haven’t seen a high profile failure like Fallout 76 in a long time, a game which was critically panned upon release, and has also disappointed in terms of sales as a result. Bethesda has obviously received a lot of bad press as a result, not to mention several controversies surrounding the game since its launch- but according to industry analyst Michael Pachter, the Fallout 76 fiasco is not something that will be detrimental to upcoming single player Bethesda titles like Starfield and The Elder Scrolls 6.

According to Pachter, Fallout 76 is more indicative of the fact that Bethesda isn’t ready to do an online game yet, but that the bad press surrounding the game won’t impact Bethesda’s two upcoming single player RPGs much, and that people might end up looking at Fallout 76 as more of “a blip” than something that sets the trend for future releases as well.

“I don’t think there’s any risk to any future single player games,” Pachter said in an exclusive interview with GamingBolt. “It just tells you that they weren’t ready to make a multiplayer-only game. They probably have to go back and figure out what they did wrong, and how to get it right. I have to say, it’s the first game in the Fallout series I haven’t played, and I don’t have any interest in playing it. I mean, it was so poorly reviewed that I’m just not gonna try it, and I’ve played all their games for hundreds of hours.”

“I expect that people will look at it as a blip, but you never know,” he added later on.

Given how prominent Fallout 76’s failings have been on multiple levels, I think it’s possible that people might be apprehensive of future games coming out from the same studio, but it remains to be seen whether that is something that ends up affecting the quality of the games themselves.

Either way, by all accounts it’s probably going to be a few years before we found out, with both Starfield and The Elder Scrolls 6 probably years away from launch- though Pachter himself seems to believe that Bethesda might fast-track a release for the latter in 2019 itself. Read more on that through here.

Sony’s announcement that they won’t be attending E3 2019 – the first time they will be sitting out E3 since its inception – was one that shocked the entire industry. While some have suggested that a lack of new things to show or wanting to save huge announcements for the next generation are the primary reasons for them skipping the show next year, others have suggested that they might just be done with E3 altogether. According to Wedbush Securities analyst Michael Pachter, though, 2019 is a one-off occurrence, and doesn’t mean that Sony are going to be absent from E3 beyond 2019 as well.

While speaking with GamingBolt, Pachter said that Sony missing E3 2019 is a bad decision on their part, but that they will be back at E3 sooner rather than later. “I think it’s a one-off,” he said. “I think they made a bad decision. I think they somehow internally determined that the money’s not well spent- and they’re wrong. I don’t know what they spend on E3, but even if it’s $15 million, they get $15 million of publicity out of it. So I think they’re fools to bypass the show. And they’ll be back.”

Pachter was also critical of Sony’s E3 2018 conference – which was roundly criticized for its bizarre and misguided experimentation, in spite of great showings for games like Ghost of Tsushima and The Last of Us Part 2, and announcements for titles like Resident Evil 2 and Nioh 2.

“They had that stupid walk-through that nobody understood, and it just wasn’t fun. And I think they probably spent a ton on that,” he said. “And they’re very much guys who don’t acknowledge that they did anything wrong, so they just take their ball and go home, because it didn’t work well.”

When asked about why he thought Sony had skipped PlayStation Experience in 2018 as well, Pachter said that it was a combination of not having new things to show, and gearing up for the next generation. “Again- no games,” he said. “So I think it’s all related to gearing up for the next generation console. They’ll probably announce the next-gen console in Spring of 2020, and have their own event- maybe they’ll call it PSX. Maybe there’s a PSX in December of 2019, and they announce their next-gen console then.”

Given recent speculation for a PS5 reveal in 2019, and Sony also teasing announcements for the year, it’s highly likely that they will have something major to show in the second half of the year, so a PS5 reveal event close to or even at PSX 2019 seems quite likely. Then again, that’s little more than speculation.

Out full interview with Pachter will be going live soon, so stay tuned.

Microtransactions are controversial, especially in the wake of the Star Wars Battlefront 2 controversy last year, but there are, from publishers’ perspective, several reasons why they may want to implement them. Microtransactions can act as engagement hooks to retain audiences over a long term, and it’s additional revenue generation, too.

However, analyst Michael Pachter of Wedbush Securities feels that how publishers go about implementing these in full priced games is myopic, and that they need to broaden their perspective a bit.

Speaking to Josiah Renaudin on The 1099 in an interview, Pachter said that publishers could stand to give purchasers of full priced games with microtransactions equivalent in-game credit, which would encourage the player to actually try out the online modes, and be likelier to spend more money in the long run.

“The model I think that would make sense to change is how microtransactions are implemented. I spoke to EA about this a few years ago and they laughed at me,” Pachter said. “I asked them: ‘Why would you not, with every copy of FIFA, just give everyone who buys the game $60 in gold to spend in Ultimate Team?’ Every single person who buys Ultimate Team would try it. And then [EA CEO] Andrew Wilson actually said: ‘Well we have people spending $300 in that game, and now they’d spend $240.’

“I asked him how many free-to-play games he played, and he just said Ultimate Team. I play about 30. So I’d spend about $300 a year on them and with [my way] I’d spend $360. Try it, you’ll learn.”

The general idea is that giving players in-game currency has multiple benefits—goodwill means players are likelier to spend more money on the game, and simply having that much in-game currency means the player is likelier to try the online modes with the microtransactions, and therefore get hooked and spend more money in the long run.

It does make sense—but, as Pachter said, publishers are too busy counting their immediate profits to care. I don’t think we will see anything as dramatic as this happen any time soon.

Then there are third parties, chasing the battle royale trend, and new business models like Game Pass. What can we expect from the gaming market this year, and beyond? GamingBolt had the chance to sit down and talk to Michael Pachter of Wedbush Securities about precisely those questions, and more. Buckle up.

I guess I’ll start with God of War, which just launched. Reviews have been overwhelmingly positive, and apparently, it has been tracking really well at retail, pre-orders were sold out. Do you think it’s on track to outsell Uncharted and Horizon, and be Sony’s most successful PS4 exclusive?

“Yeah, I think that’s right, you have a bigger install base, so more people can buy it, and it’s higher rated than either of those, though those were obviously pretty well rated.  It’s pretty well rated, and… I think 95 actually probably puts them in the 10 highest rated games of all time, I think the highest is Ocarina of Time? GTA got a 97. 95 is pretty universally a great, great game, so there’s minimal risk that anyone will buy it and be disappointed.

I think that the gameplay is actually easy to pick up and play, and there’s a lot of little things in the game that can appeal to different niches of game players, there’s action, and adventure, puzzles, and a compelling story. It appeals to everyone, and I think making it a father-son story makes it similar to The Last of Us, which, again, brings in fans of that game too. So I think it will quite clearly be the number one bestselling PS4 exclusive. Which is great, good for them, they made a great game, and I hope it’s their best selling game ever.

"I think 10 million units sounds like a low bar for it, actually. Last that Sony announced, there were 70 million PS4s out there, so 10 sounds really reasonable. I’d say realistically, it could do as many as 20 million."

Do you think could potentially hit 10 million units?

I think 10 million units sounds like a low bar for it, actually. Last that Sony announced, there were 70 million PS4s out there, so 10 sounds really reasonable. I’d say realistically, it could do as many as 20 million. Now that’s hard, because not everyone who has a PS4 will like an action game like God of War. But I’d say between 10 and 20 million, and I’d say 10 million is a low estimate. I think they will absolutely do 10 million [over the game’s lifetime].

In terms of exclusives performance, for example, how would you compare God of War’s performance versus exclusives by Microsoft and Nintendo? Can it do better than Halo, Breath of the Wild, Mario…?

You know, they’re different, so… the Microsoft games are kind of more niche focused, like Gears and Halo. They’re very much shooter games, and while they have stories, that’s not why most people bother with them. Unlike God of War, and The Last of Us and Uncharted, which are all very much story driven games. Nintendo games are much broader appealing, because they are friendly. Butt stomping a mushroom won’t offend anyone. And I personally think Zelda is really hard, and I can’t even imagine how difficult an eight year old might find it… where Mario Odyssey has super broad appeal. I think one of the things that Nintendo has going for its first party titles is that they don’t have as many third party games. So if you ca’t play Call of Duty, Battlefield, or GTA on a Switch, you know, you are a bit more limited in your choice of great games. So of course you buy the Nintendo first party titles. That’s different for a PS4 owner, they have a choice of every game made except a Nintendo game on their console, and so God of War has to compete against everything else, and so does Gear. So it’s harder for those to stand out as much, it’s a perverse logic, where Nintendo’s lack of third party support ends up being a strength for its first party.

But, you know, this is Nintendo’s model, Nintendo, launching the Switch in 2017, coming after the launches of the PS4 and Xbox One in 2013, did not have any pretensions that everyone will throw away their old PS4 for their console. I think they want the Switch as a second console for most people, so you get your Call of Duty fix on Xbox or PS4, and you get your Nintendo fix on Switch. So it’s not a straight comparison, because Nintendo first party titles don’t sell like the norm… like Zelda probably has an 80% or higher attach rate. It’s going to be the odd person with a Switch who won’t buy Zelda. There’s no way any Sony game will compare.

I suppose you are right, there’s more vying for you attention on a PS4 versus a Switch. That makes sense. But I wanted to talk about another PS4 exclusive- Detroit: Become Human, by David Cage. What are your expectations from that game?

You know, I really like Quantic Dream. Their games are, they appeal to a certain type of gamer, they are very much a more niche style of gameplay, they’re single player only, and we’re in this era now where the single player gamer is on one side, and the multiplayer gamer is on the other. And I personally prefer single player games, but… I think we need more people making single player games.

I’m actually looking forward to Detroit, it looks like it will be a different kind of game. I think Quantic Dream makes very dark, very thoughtful stories, but if you just want escapism, their games won’t be the best ones to play. So I’m a huge fan, and I think it will do super well, but I don’t think it’s doing 15 million units, or outselling God of War. 3-4 million units sold, which is good for a PS4 exclusive.

One of the PS4 exclusives that you weren’t too hot on the last time we talked was Days Gone. And I remember, I think you aid, you weren’t too into what they’d shown. In a sense I think you have been vindicated, because the game is now delayed to next year… do you think this gives them time to sort of rework it into being as special as Horizon or God of War were?

You know, it reminds me more of The Last of Us, I mean it’s another zombie shooter. It’s like, I personally am tired of those. How many zombie games can you play where you’re killing these hordes of undead who are trying to eat you? But on the other hand, I read about how everyone is excited for the Zombies mode in Black Ops 4, and I just got an invitation for an H1Z1 battle royale tournament, and Fortnite itself stated off as a zombie game… it’s like, enough with the zombies!

Days Gone looks really good. And I thought all of the scenery of the mountains, that all looked interesting and fun, but I just cannot play another zombie game. So I’m just less interested in it, because of that, and not because I think it will look bad. I just think the genre is tired. But you never know what’s going to resonate with shooters, so props to anyone who tries to put a twist on a tired trope… ad Days Gone might be that twist, I personally thought The Walking Dead was one of the best games I had played. But it’s more because that’s a universe I am familiar with.

"Days Gone looks really good. And I thought all of the scenery of the mountains, that all looked interesting and fun, but I just cannot play another zombie game. So I’m just less interested in it, because of that, and not because I think it will look bad. I just think the genre is tired."

But I think that’s what Days Gone is trying to do… there are survivor camps, and marauders, and good people, it’s like The Walking Dead TV show, but we’ve already had it… so I don’t know. I don’t like derivative games. I love games like Portal, that’s original. It’s so clever, there’s ever been anything like that before or since. So maybe I am odd, but that’s why I feel that way.

No, I mean, there is something to the sentiment that there is zombie fatigue. And like you said, we’ll find out if Days Gone actually ends up resonating with a larger market. So far people have been a bit cooler on it than they are with Sony games otherwise, so we’ll see.

It’s really good looking. I’m sure it will be a good game, and it will be a solid 80+ Metacritic score. I just don’t know if that’s enough to get people to buy another zombie shooter.

Speaking of games that didn’t get good Metascores, Sea of Thieves. Microsoft launched it last month, it was one of their big games, and started their Game Pass initiative. Now I am using the game as a jumping off point here, but why has Microsoft, so far, this generation failed to put out games that resonate with the larger market in terms of reception?

You know, I think, and I mean this with respect, but I think they have limited capacity within their studios to innovate. So the 343 guys do Halo, and that’s great, and it challenges them to the max, to come up with some new twist every 2-3 years on Halo. The Coalition guys do Gears, and it’s the same thing for them. Rare, on the other hand, has just not been very good at innovation. I think the pirate genre is just outrageously stupid- but, again, that’s just me, it’s not my thing. I didn’t like Assassin’s Creed Black Flag because of the pirates stuff, but I know people who only did that. So… I think it’s a niche audience, and I am not that motivated to go find 400 treasure chests and put them on my ship, it makes me look like a container or cargo ship. I’m not into that, I don’t get it. And I don’t personally like games where you play multiplayer and others can go get your stuff, and you have to go get your weapons and your gear back. It’s not my kind of thing.

I think the decisions Microsoft makes on what games to make are based on the talent they have internally, and as for Rare, I think this is what they’ve go. This is the best they can come up with. So it’s hard. There’s a lot of rumors about Microsoft buying someone, whether EA or Bethesda, and these rumors are based upon the commonly held perception that Microsoft needs more first party content.

I honestly think Sony has a deeper bandwidth of talented studios, they have multiple 90+ ratings among them. And Microsoft doesn’t have as many. They had Lionhead, and that didn’t work out very well. They’ve stuck with Rare for 20 years, and that didn’t work out… I just think Rare has gotten worse and worse.

So I guess this segues nicely into my Game Pass question. Are people actually bying Sea of Thieves, or is it just that any success it has is because of Game Pass?

Well, I think Xbox One owners, if they don’t have another console, they are hungry for first party games. I am sure a few million people ought it. But the Game Pass issue… it’s a very complicated business model, because at $10 a month, you have to essentially enjoy two AAA games a year, or it’s not worth it, or four or five smaller games. And the library is pretty good, but the new content, if the only content that comes to the service day and date is first party content, ad that’s all it is so far, there’s not very many people who buy everything Microsoft makes. We named all the first party games they make just now, essentially, there’s not that many games, especially per year. So the odds that something you like is going to be around the corner are low… I think there’s a low probability that the average customer thinks this is a good deal. The only people Game Pass appeals to are people who consume a to of Microsoft content, and people who don’t, I don’t think they’ll sign up.

So the answer is, out of, let’s say, 35 million Xbox One units out there, maybe 1-2 million are interested in that. And the rest of us aren’t. And the thing is also, an average guy buys four games a year, and if Game Pass had all four of those games, then it would make sense. But if that were the case, then you would get $240 worth of games for $120… half the price, bad for publishers, you get less money. So subscriptions are a perverse notion because if it’s a good deal for the consumer, it’s a bad deal for the publisher, and vice versa. They never work. They make no sense at all. The reason that subscriptions work in other media, is that you get the newspaper every day, for example. You may not read it, but the price is so low that it works out for you. So even if I read a few issues and not all of them, I feel I am getting my money’s worth. And I can’t buy older issues on the newsstand. Something like that works.

"And the thing is also, an average guy buys four games a year, and if Game Pass had all four of those games, then it would make sense. But if that were the case, then you would get $240 worth of games for $120… half the price, bad for publishers, you get less money. So subscriptions are a perverse notion because if it’s a good deal for the consumer, it’s a bad deal for the publisher, and vice versa. They never work."

So would someone like Sony with a higher frequency of first party content be able to make it work better?

They could, but I don’t think they’d make money. As I said, if you price it to where the publisher makes $200 for the year for $240 worth of games, they lose $40. If they price it at $300, the consumer loses $60. How do you balance that? The trick, and this is where I think it’s interesting, is if your subscription benefits roll over if you don’t use them. I can see subscriptions working to drive loyalty to one platform. I could see it working if they said, buy a PS4 and we’ll give you 50% off of a Game Pass subscription, and charge you only $100 the first year, and then it’s $200 afterwards. I get that. But they won’t do it, because they will say, “wait a minute, you just bought a PS4 in 2018, you will buy five more games. You will buy Uncharted, The Last of Us, God of War, and so on.” So we’re getting $300 out of you anyway, why give that away for $100? They won’t do that. So I think this is a silly conversation, because I don’t think any of the console manufacturers will be motivated to do that.

Okay, so moving back to games, there’s State of Decay 2, and then later on in this year, Microsoft are launching Crackdown 3. Going back to our earlier conversation about how Microsoft’s games have so far failed to resonate with the large audience, do you see a better result for these two games?

Well, hey, another zombie game! You know, State of Decay is fun, it’s goofy, and that I can get, because it’s so silly. And I loved the first one, but it’s actually one of the reasons I am tired of zombie games, because I feel like I have done everything. But yeah, it’s been long enough that I think it might actually work.

Crackdown is an amazing series, and if Crackdown 3 is good, it’s going to drive console sales,” Pachter said in an exclusive interview with GamingBolt. “That is really a good franchise. But again, it’s not for everyone- super hard. But it’s a great game experience, and I think it will do well. I think it and [State of Decay] are the things I am looking forward to most on Xbox… I’m a fan of Halo and Gears, but Gears 5 and Halo 6? Okay… I’d much rather play Crackdown 3 and State of Decay 2.

That makes sense. That said, both Halo 6 and Gears 5 are confirmed to be coming eventually. Do you think these will be capstone games for Xbox One, or launch games for whatever the next Xbox is?

Yeah, good question. I think Xbox Two, or whatever they call it, will be a 2020 event, so I will be very surprised if we don’t get Halo and Gears before that. If I had to bet, Halo this year, Gears next year. I think Microsoft has been very quiet, but we’re getting them in the next two years. If I’m wrong about what year the next Xbox launches in, then I think one of them will be a launch title. It won’t be exclusive, I think it will be old gen and new gen, like Nintendo did with Breath of the Wild on Wii U and Switch.

Do you see Sony doing that with Death Stranding or The Last of Us 2?

You know, Death Stranding, who knows when that will come out? That might be 2025. And I gotta say, that is the weirdest looking game I have ever seen. The Last of Us 2, those guys are really prolific, I’d say that game is coming out no later than 2019, and it could surprise us this year as well. Sony has been good.

You never know, those guys surprised us the last time. They’re pretty prolific, they’re pretty competent, Naughty Dog. I don’t know when it is coming out, but it would surprise me if it came out later than 2019. All these guys are getting better at surprises, and I’m not sure how, because there are so many leaks, and so many things get leaked ahead of time…

"I’m not sure that console exclusives matter as much as they used to. I mean when Sony first launched the PlayStation, they had to have a lot of exclusives, because they needed to demonstrate why you wanted to switch from Nintendo to them. These things are so well established by now, though, that I don’t think you need tremendous first party support anymore."

Okay, so we’ve spoken of Halo, Gears, Crackdown, State of Decay, Sea of Thieves… now generally speaking, as you said earlier too, there’s a widely held perception that Microsoft is weak when it comes to first party content. Now Phil Spencer has explicitly admitted that this is a failing, and something they need to work on. Given that Xbox is 18 years old at this point, however, do you think it’s a little too late for them to be starting this now?

No, [it’s not too late]. I’m not sure that console exclusives matter as much as they used to. I mean when Sony first launched the PlayStation, they had to have a lot of exclusives, because they needed to demonstrate why you wanted to switch from Nintendo to them. These things are so well established by now, though, that I don’t think you need tremendous first party support anymore. In fact, I’m not even sure first party support is why most people buy PlayStation consoles. I think they buy a PS4 because it’s a great device, and because they like PSN more than Xbox Live, and because it has a lot of cool content, third and first party. I think a major driver is the timed exclusive Call of Duty DLC content for the mainstream market… I think that’s helped.

So, no, I think Microsoft is fine. Their first party quality aren’t necessarily bad games, I think they just have smaller addressable markets, because they don’t have the broad appeal that a Sony or Nintendo game has. And, you know, I personally think Sony has done a great job focusing on single player games. And Microsoft is so committed to focusing on multiplayer, that they haven’t done a great job with single player. I honestly think that’s the primary difference between Sony and Microsoft, not quality, Microsoft’s games are good (Sea of Thieves notwithstanding).

So this ties into what I wanted to ask next. Last generation, PS3 launched, and it was an absolute disaster, and it struggled for years, until Sony managed to pull a turnaround mid-gen, and end the generation on a strong note- they had caught up with the Xbox 360 by the end. And of course that all led into the PS4 launch, which was great. On the other hand, Xbox One, while Microsoft has made tremendous moves with things like their backward compatibility initiative, Play Anywhere, the Xbox One X… it hasn’t been able to rally the way the PS3 did. So if it’s not about the first party content, why do you think Xbox had issues trying to turn around like PS3 did?

I think that Sony did something magical with the original PlayStation, and built on it with the PS2, and had their 160 million household install base. I frankly think that had they not screwed up with PS3, they would have dominated that cycle as well. So all that really happened is they got back their fanbase with the PS4, that’s really all that happened. I think that people that grew up playing games on the PS1, if you say “name a console”, they say “PlayStation”, because that’s what they like. So I think Microsoft was fighting an uphill battle with the Xbox and Xbox 360, and the Xbox 360 worked mostly because Microsoft launched first, which was Sony’s screw up. Second, because Microsoft was better at multiplayer- remember PS Home?- so Microsoft figured out multiplayer, and Sony weren’t sure that people really wanted it, ad they weren’t good at it. They were priced higher, and that was a $200 price advantage Xbox had at launch, which it held on to for a year or two. It took Sony a long time to get competitive with the Xbox.

This cycle, none of those things are present. Sony has good multiplayer, they launched at the same time, they were competitively priced at launch, and that enabled their fanbase to return to the console they loved right at launch. Sony executed phenomenally well right now, but they are riding a wave of fan loyalty they earned in the 1990s, and they maintained in the first part in the 2000s.

Sony lost their way for a little bit in the late 2000s, but they’ve found it back, so I think the next generation, and the one after that, and the one after that, Sony will win as long as they give fans what they want. And they seem to really understand that- I don’t think Microsoft is doing anything wrong anymore- but Sony has the advantage of a massive built in fan base.

It sounds like you are saying that as long as Sony executes well, which they did with the PS4, then thanks to their history and fanbase, and nostalgia and loyalty, they are guaranteed to dominate a console cycle.

"Sony lost their way for a little bit in the late 2000s, but they’ve found it back, so I think the next generation, and the one after that, and the one after that, Sony will win as long as they give fans what they want. And they seem to really understand that- I don’t think Microsoft is doing anything wrong anymore- but Sony has the advantage of a massive built in fan base."

Yeah, and I’d say if we weren’t in a technological shift where consoles are not going to be needed soon, if consoles were to be the only way to play games for the next hundred years, I would have said that Microsoft can erode some of Sony’s advantage gradually over several cycles. If Sony at the end of this cycle sells 150 million consoles, and Microsoft sells 75, maybe the next time it will be 140 and 85 million, and the one after that would be 130 and 95 million, and maybe eventually Microsoft might pull even… but why would you switch? You like what you like, and if it is doing it for you, why bother? That’s just how we are. And I think Sony is smart to exploit that- they blew it with the PS3, but they will never blow it again.

So, do you think it’s smart for Xbox to not launch head to head with PlayStation again? Would they not be better served going for more isolated launches, like Nintendo with the Switch?

You know, I think Microsoft could try isolated launches, but the Xbox One X pretty much proves they’re not going to do that. It launched far too recently, so I don’t see a new Xbox launching in 2019, I don’t think so. And the thing is, both companies are pretty much aware of what the other guy is doing, so they’ll know if someone is working on a new console, and it’s coming. I don’t think- the reason the PS3 launched so late was because it was so complex, with the Cell processor, and Sony couldn’t get those fabricated quick enough. That kind of staggered launch won’t happen again. If one picks a date, the other will be there.

Do you think then in that case, and the only reason I am asking is because while we are hearing rumors about PS5, we haven’t heard any about the next Xbox, so do you think Xbox and PlayStation will both be 2020?

Yes, I think they are both 2020.

So one of the things I assume the next consoles try to push is 4K- do you think 4K adoption will be high enough for that in 2020?

Yes, I do. 4K, the crazy thing about them is that there’s a bunch of different kinds of 4K, and the one that most people think is the best is OLED screens, and those are still super expensive. But for the mass market, and by the mass market, I mean people who don’t care about having the absolute best all the time, 4KTVs are not that expensive. Store brands are pretty cheap. So if you don’t want the highest end 4KTV like LG or Toshiba, you buy the $500 55 incher, and that’s pretty cheap. By 2020, that will be $350. So I think 4K penetration will be at something like 35% for all western households, and 75% by 2022, that’s should be enough.

Okay, so I want to switch to Nintendo. We haven’t talked about them much so far. So there was a statement by Mr. Kimishima, who said that he intends to sell 20 million Switch units this calendar year… but so far, Nintendo has been really quiet this year, they haven’t done much, they got Kirby, Bayonetta, Labo out… so how exactly do you think they will hit that number? Smash is announced, but it’s not nearly that big. Do you think it will be Pokemon?

"I think Smash Bros. is a big deal. It’s a big game, and people love it. It’s not Mario Kart, but it’s a big deal. "

Well, I think Smash is big enough, to be honest. At the rate they are tracking, they are looking at 14-15 million this year. So the only way to get that additional 5 million units is to expand their market, so the two markets where they aren’t selling yet is China, which I think they launched in December. And Latin America- those are two relatively wealthy markets. So if that’s where we will all be surprised. So if they sell 15 million in their western markets, and Japan, and add China and sell 3 million and add Latin America and sell 2 million, then they will get there. But I just don’t know. Those markets have historically not supported hardware much, but we’ll find out. If Nintendo says they will sell 20 million, I believe they will do it.

But I think Smash Bros. is a big deal. It’s a big game, and people love it. It’s not Mario Kart, but it’s a big deal. Will there be more? I am shocked that they have been able to get out this many of their iconic giant brands to the Switch this quickly. Like Zelda, okay, that took forever. But Mario Odyssey surprised me by coming that rapidly, Smash surprises me.

Labo, I don’t think is a system seller, I think it could be a must have if you have the system. I don’t think most people understand it, you never go into the store and say, “that cardboard looks cool, so I’ll buy a Switch”, but if you have a Switch you might buy the Labo.

But yeah, I think Smash is the kind of game that would sell at a 50% attach rate, I think it will do super well.

Do you think Pokemon is going to come out this year?

Yeah, Pokemon has always been a handheld game, and this goes back to the last time we talked, I think the Switch is a handheld. So, you know, there is absolutely no reason for them to not put Pokemon on the Switch. And the idea that a Pokemon game on Switch is a console game will make a lot of people interested. And Switch owners aren’t necessarily handheld gamers- I think the novelty of Switch is that it sits in your lap but has console quality games. That’s the appeal. And I think Switch is converting console gamrs into handheld gamers, and they just don’t know it….

But yes, yes I think Pokemon is coming.

Okay, so I want to talk to you about Call of Duty- no single player campaign, battle royale mode. What is your take? How much truth do you think is there to the rumors?

The source of the rumors is Jason Schreier, and he’s pretty good, he’s an honorable guy, and he doesn’t make mistakes like that. So I wold say that if he has heard that rumor and is reporting on it, it’s petty reliable. So I believe it- I know both guys, I like them both, I know they don’t make stuff up. So I believe it.

I think what happened is that Activision decided that Red Dead and Battlefield are a threat to Call of Duty, Red Dead not so much because there’s not that much overlap there. But it is a threat because of wallet drain. Battlefield on the other hand is a direct competitor. And I think Activision blew it badly with Ghosts and Infinite Warfare, they made bad games, and they blew it worse by coming out after Battlefield, which were pretty higher rated games, and they sucked up a few million units in sales.

So I think Activision’s plan was to get in front of those guys, but when they decided to launch the game October 12, instead of November, they compressed the development schedule. So that’s one reason why I think we may not have single player. The second reason is that there is no question that Fortnite and PUBG have cut into the audience for Call of Duty, because if you like shooters, these are fun games, and Fortnite is even free. So I think Call of Duty engagement rates dropped, and Activision decided that it would make sense to have a battle royale mode in Call of Duty. So when they went to Treyarch, when Fortnite and PUBG were at their peak, and asked them to include battle royale, Treyarch probably needed to divert resources to that mode, which, combined with the compressed release schedule, led to the single player mode being sacrificed.

"Does that mean we will never get the campaign? No. I think it will come, of course it will. And I think it will be free DLC, you will get it later."

Does that mean we will never get the campaign? No. I think it will come, of course it will. And I think it will be free DLC, you will get it later. But what no one is talking about is, we have Call of Duty: Modern Warfare 2 coming out as a single player only remaster… why is that? They already have the multiplayer, and the assets are all upgraded, so why not include the multiplayer too? And I believe they are holding that back, I believe when we get to Black Ops 4 launch, they will probably have Modern Warfare 2. I think that’s their big secret. And then a few months later, Black Ops 4 single player will be free DLC as well, and everything will be alright. So I’m not worried about it. I think battle royale helps them sell a couple million more, and I think bundling Modern Warfare 2 Remastered, if they do that, will help them sell units. Ad eliminating single player may cost them some sales, but if they announce t launch that it’s not canceled, it will just be a delayed release, but it will come, it won’t cost them anything.

So we’ll see how they handle it. I would really be surprised if they were working on sigle player for two years, and then decided to not release it at all. More likely, they worked on it for two years, but they will finish it later, and that will be fine.

You’re right, that does make sense.

They’d only cancel it if it was bad, they wouldn’t cancel it if it was not finished.

Speaking specifically of battle royale, Battlefield 5 is rumored to have one too. Do you think it’s for the same reasons?

I do, and I think it’s interesting, because back in the day, when Halo first came out, the first PvP mode they had was death match, local multiplayer, but when it went online with Xbox Live, it was hard to matchmake. It was hard for them to tell you who to play with, and you were limited with your friends list. And at first the only people you could play with were people you knew, it took another year before they had full matchmaking. And the reason that all was so complicated was because they could never figure out who was online, and servers weren’t that great, and people had different speed connections.

It took a while until matchmaking worked well. And the problem with death match was, when you died, you had to sit around and wait for the game to be finished before you could play another one. So Halo abandoned it, Call of Duty never had it, and they went with respawning instead. I think players liked the concept of death match, they just didn’t like sitting around- and it’s that same concept brought back with PUBG and Fortnite, except now as soon as you die, you can quit and start a new match.

I think that publishers of the big multiplayer games just failed to see this, and PUBG figured this out, and Fortnite emulated it, and if Fortnite can do it, then why can’t Call of Duty and Battlefield? They are going to. The difference is that the game engine for Call of Duty only accommodates 32 players, and Battlefield is 64 players. And Sony had MAG which had 256 players… so 100 in Fortnite is not magical, so I think you’ll get 32 player battle royale from Call of Duty and 64 player battle royale from Battlefield. And then probably not next year, but the year after, they’ll have the 100 person battle royale mode.

The better question is, will these games ever go free to play? And I think it would be brilliant if they did that, if Activision launched a standalone free to play battle royale game, I think they would dominate. But, again, will it cannibalize game sales or supplement? I think it supplements, get people playing Call of Duty, bring in 80% of the world’s population to the game and convince them to buy the full game, and yeah.

I guess my final question is, do you think any battle royale game will come to Switch?

On the Switch? Well, I was really shocked when PUBG got a T rating, because it feels so violent. And I don’t think Nintendo will ever do that, I think killing is against the kind of thing Nintendo does in its games. That’s kind of killing, but not nearly.

Will a third party do it? Will Nintendo allow that? Yes. That will happen. I think somebody will do it, the install base is big enough.

Within the latest episode of his Youtube show, Pachter Factor, the Wedbush Securities analyst Michael Pachter waxed poetic about several different topics, including the future of gaming consoles as well as where plans such as Microsoft’s Play Anywhere fit into the next steps. Perhaps surprisingly, Pachter believes that disk drives won’t be going away at any point. Perhaps not for the reasons a consumer would think of though.

Even with the constant growth of digital distribution and its growing acceptance by consumers, next-gen consoles (the PS5 and next Xbox) won’t be losing the disk drive because to cut that out would mean cutting retailers out – and the last thing Microsoft, Sony or Nintendo want to do is burn their retail partners who they need to get consoles in homes in the first place. As an aside to this, he also believes about half of the user base value the concept of used games too much to let physical die.

While Pachter doesn’t believe consoles are going away or that anyone is going to duck out of the race, he does believe that Xbox Play Anywhere is the building blocks to Microsoft’s next move, where that service and the Xbox as a physical system will switch in importance for the company. Predicting that devices will continue to become smarter, PC playable games will be the focal point. “I don’t think that they’ll care if you play it on a PC or a tablet or an Amazon Echo device.” Said Pachter.

It’s almost too much to keep track of- trying to understand what the industry may look like going forward can be difficult when we barely have a handle on how it is currently in the first place. However, Michael Pachter of Wedbush Securities has made a name for himself for his predictions on trends, games, and hardware in the industry- so when we had a chance to speak with him again, we decided to see what he had to say on where video games are headed. Here’s what he had to say.

My first question is, I want to talk about exclusives. In 2018, all three have big games, like Microsoft has State of Decay, Crackdown 3, Sea of Thieves, maybe a new Gears or Halo. Sony has God of War, Days Gone, Spider-Man, maybe The Last of Us 2 or Death Stranding. Nintendo, Yoshi, Kirby, Fire Emblem, Pokemon, and Metroid. So, Microsoft’s slate definitely looks better next year than this year, but is it strong enough to go up against Nintendo and Sony?

You know, I think that people sometimes place too much emphasis on exclusives. I think this late in the console cycle, I mean, the consoles launched in 2013, who doesn’t own one of them yet? Sony is something like 70 million, and Microsoft is 35 million, so I guess they are two thirds of the way through. The only people who haven’t bought a console yet who will buy one are working people, or very young kid whose parents will get one for them. And, I guess, exclusives will bring some people back in who haven’t played Mario in a while, to the Switch, which is still new. But not something like Halo 6- if you like Halo, you got an Xbox One for Halo 5. Halo 6 will definitely sell a lot to its fanbase who already own an Xbox One, but it’s not gonna drive new hardware sales, it’s very different this late in the console cycle. So the reason Ij think the Switch is so popular is that they launched two giant games with Zelda and Mario, plus two really good games with Mario Kart and Splatoon. And that’s enough for Nintendo fans to say “I have to have this device,” which is why the Switch is sold out…

To answer your question, yes, any Microsoft lineup with Halo in it is better than any Microsoft lineup without Halo. But, for example, if they had had Halo this year, I would still have said Nintendo wins by a mile. Mario and Zelda in the same year? I can’t remember that happening, ever. This year Nintendo won by a mile, but I can’t expect them to to do that next year. Next year, Microsoft with Halo coming out, I think it’s coming out, looks strong. And, Sony’s lineup looks fine, I mean their lineup over the next several years looks good. But I don’t think either their line-up or Microsoft’s makes a difference anymore, people have already made their minds up, and it was probably driven by, “If I want early access to Call of Duty DLC, I’ll buy a PlayStation.”

Okay. So let’s talk about multiplatform games, then. The Xbox One X is Microsoft’s attempt to be able to say that games like Call of Duty and Destiny run the best on their console. The Xbox One X has seen great developer support, loads of developers are jumping on board to support the console with 4K and enhancement patches… but on the other hand, do you think that the Xbox One X getting so much support might inadvertently end up helping Sony and the PS4 Pro as well? In that now more developers who were previously not supporting it are now supporting it along the way with the Xbox One X as well?

I’m sure that that’s right. I think that the PS4 Pro also has the benefit benefit of being priced lower, and it seems to be selling a bit better, though that is a bit hard to tell with retail, because we don’t know exactly how many Xbox One Xs were shipped; they’re probably sold out for a few weeks. But yeah, I think that as opposed to the Xbox One X helping the PS4 Pro, I think the very low price of 4KTVs now is helping both. So if you’re going to buy a new TV now, say it’s time to replace your main TV, it no longer makes sense to buy 1080p TVs. The difference in price between 4K and 1080p screens is now negligible, literally a hundred bucks. So it just doesn’t make sense. So if you’re a gamer, and you’re playing on a 40 inch TV, the difference in price is literally negligible. So once you make the decision to get a 4KTV, you might as well get a PS4 Pro or an Xbox One X- and I know the Pro is not actually 4K, but that is how it is marketed. So, yes, I think all these things are connected. More 4KTVs lead to more sales for PS4 Pro and Xbox One X, and more sales for those systems lead to more developer support for both. And you’re right, once you make a game enhanced for Xbox One X, you might as well do it for the PS4 Pro. So sure, you’re definitely right.

"“Once you make a game enhanced for Xbox One X, you might as well do it for the PS4 Pro.”"

Okay, I want to go back to the Switch, now. You talked about how Nintendo definitely won this year with their exclusives lineup. Will they be able to maintain this sort of momentum in 2018?

No chance. I think that Mario and Zelda are evergreen titles, so of course if you haven’t played Odyssey yet, and it’s a fantastic game, and if you haven’t played Breath of the Wild ever, it’s new to you. So there’s an audience out there who hasn’t purchased a Switch yet, and when they do, Mario and Zelda will be new games for them- so I think those two games will keep driving system sales for sure. So the answer is, they will keep up some momentum. But the reason I don’t think they can keep up this sort of momentum in 2018 is, I don’t think Nintendo can keep up this cadence of game releases. So, I don’t expect they will have any game of this profile- there probably is a Smash Bros. game coming some day, it could be next year. If that gets announced, then yes, I could see the Switch keep up its momentum. If Smash is a 2019 title, then I think there will be a while where Switch sales level of, but they will stay strong- but more like 15 million in the west and Japan, plus whatever they can sell in China, although I think a lot of people are overestimating what they can sell in China too.

So, for this year, we have the NPD numbers for December, which will be announced in January- would you like to guess which console comes out in top this month?

You know, I’d say that Sony will sell more PS4s in November and December in the US, but not by a ton, I think Xbox will be close. I think Switch is not supply constrained, but you know, it looks like PS4 outsold Switch by a healthy margin, and the Xbox as well. In December, I think PS4 wins again- I don’t think Nintendo has the capacity to ship that many units, Sony meanwhile can sell 3, 4, 5 million consoles in December alone. And I don’t think Switch will sell below 3 million, I think that’s impossible, I don’t think Nintendo would ship that few.

So in December, you think it will be PS4, then Xbox, then Switch.

Xbox, the problem is the Xbox One X is expensive and in tight supply. The Xbox One S is remaining discounted at $189, which I think works in its favour. If I am buying the first console for my household, it’s hard for me to justify buying a Switch for $300 plus two games for $120, when I can buy an Xbox One S for $189, and two older games for cheaper, and walk out the door for $250. It’s a significantly lower entry point. I just don’t know how I can tell someone with a straight face, ‘your 8 year old boy needs a $300 Switch with Mario and Zelda’; that’s a lot of money.

Okay, going back to Xbox, one thing you are getting at is Xbox’s larger appeal for the more mainstream crowd. But even for the core crowd, they have made some great initiatives this year, services like the Game Pass, cross platform play, backward compatibility, Play Anywhere, EA Access, so on… do you think all of these help the console’s appeal, or is it more about user base retention within the Xbox ecosystem?

I think it’s more about retention. It’s impossible to know how many people are sold on Xbox because of Game Pass or EA Access; when you walk into a store, and if you were a brand new console purchaser, and you ask for someone for help, I don’t think anyone will say ‘get an Xbox for EA Access,” I can’t imagine that. So I don’t think Microsoft is driving new purchases with these- the truth is, if you go to buy a new console now, you look at the price of the hardware, and the library of games. And both consoles, PS4 and Xbox, have pretty deep libraries. Just the idea that you can get 3-5 games at the outset for not that much money for both reinforces that.

I think one great Xbox feature os backward compatibility; the idea that a $5 copy of RDR for Xbox 360 will work on Xbox One as well is a good deal. So that might drive system sales, but the truth is, while Xbox has done a lot right with their services, most of these things are for the exiting install base, not for a new one.

"“I don’t think Microsoft is driving new hardware purchases with services like Game Pass.”"

Speaking of services in a different sense, one topic that has been in the discourse a lot lately is microsotransactions and loot boxes; some analysts say they are here to stay, others say that we need an increase in the base price of a video game- which of the alternative are likelier?

Higher priced games will never happen. Publishers seem to have accepted $60 price points as the right price points. And though we have had inflation, games have stuck to this price for a while. That’s not going up. I think that the problem the publishers have is, they want to make money, and the cost of maintaining a multiplayer experience has gone up. So when they used to make a single player game only, they had just a self contained experience on the disc, no obligation on the part of the publisher to provide ongoing content or maintenance. And once a game was sold to the consumer, the publisher had given the consumer everything they owed for those $60. Now, with multiplayer, you have consumers who have been trained to expect more content and ongoing maintenance, and that’s great, gamers develop relations with their games, you can see how they react when a popular game goes offline, for example.

So the publishers came up with DLC, by trying to sell them more content for $15 or $20 per download; but what happened was, on a big game, they would only achieve 30-40% sales on the first pack, 20-30% on the second, and 10-20% on the third, which didn’t help cover for ongoing costs, especially since DLC seems to have an in built cap of $20 that consumers will spend on it. So if you have a lot of money, and you will engage with the game a lot, you will still pay only the $20 that I will pay if I play it for a week. So what they came up with is like a free-to-play model, which started on PC in China, then spread to PCs all over the world, and now to consoles, where thy add micotransactions, going after the whale who will spend $100 a month. So instead of selling something for $20 every once in a while, they sell things for $100 every month. And EA has proven with Ultimate Team that that works, that there are whales out there- EA gets $600 million in microtransactions from Ultimate Team alone.

So yes I expect microtransactions to stay around- and I expect that if they do, they will try and keep their games alive for many years. I think the problem is in the implementation. I don’t think gamers are wrong to expect certain things as part of the package if they buy a game for $60; I don’t think publishers are right to lock away Darth Vader in a $60 Star Wars game, if you buy Star Was, you ought to get Darth Vader from the get go. But, I don’t agree that microtransactions should be eliminated, because that would basically mean we regress to single player games only. People like playing multiplayer- and when they play multiplayer, they spend far more hours on a game than they do when they play just single player, and you know that. So hypothetically you should pay more for the ongoing experience, too. And players say “I pay for Xbox Live and PSN’” and that’s great, but the publisher doesn’t get a dime of that. So the publisher has to have a way to monetize, and the publishers who are adored by gamers are the ones who don’t implement pay to win mechanics in their games- like Blizzard with Overwatch. Customization, people are willing to pay for. So EA made the mistake of locking up characters and progression, and I think the complaints were legitimate.

On the other hand, let’s be real, when you play a game, there are plenty of unlocks. I remember, one of the older Call of Duty games, playing and I got a weapon when I reached Level 30, and I was so psyched, and I saw a better machine gun, and I knew you get it at a higher level, and that gave me an incentive to keep playing the game. I just had to keep playing the game to get a better weapon- and that’s the kind of thing we are used to. We all understand that- it’s just locking away actual content…

There’s an art to microtransactions, where you present the gamer with a balanced opportunity to earn something by grinding it out, or cut to the chase and pay for it. An the art is in making it fair. If it takes 80 hours to to earn something, and costs 50 cents, then even at that price, that’s pay to win. If it costs $1000 to unlock, but it takes you five minutes to get it, no-one complains. It’s extreme as an example, but the art is in making something that seems fair.

So they will stay, but it comes down to implementation.

Oh, absolutely. Yes. And as I said, it’s too big of an opportunity, look at League of Legends or World of Tanks, earning hundreds of millions every year. But again, implementation- have you ever heard anyone complain about GTA Online? The reason is, GTA is a single player game, there is no expectation for additional content. But they give you multiplayer as an additional option anyway- you just have to pay. Take Two implemented it in a very smart way, to be honest. So GTA5 gives you an 80 hour experience for $60, and the multiplayer is a bonus- and people don’t mind paying for that bonus. Star Wars, who knows what the single player is like, people are buying it for the multiplayer, that’s the appeal- and it is contingent on EA to balance the microtransactions in the multiplayer family for there to not be a backlash.

Okay. So now I want to go back to games for a bit. There were a few I want to talk to you about- the first one is an apparently upcoming open world AAA RPG from Playground Games, the folks behind Forza Horizon 3. Do you have any insight as to whether this might b exclusive to Xbox, or if they are going multiplatform with this?

I have no idea, I’m sorry.

Okay. The next one I had was Ghosts of Tsushima on Sony’s side, which looks pretty cool, like a ninja-Assassin’s Creed kind of thing. And, the last time I talked to you, I asked you for your opinion on various games- what is your opinion on Tsushima? Do you think this has broad commercial appeal?

I don’t think anything that Japanese has broad appeal. They’re great gams and get high ratings, and the hardcore audiences love them. But, for the average audience, they’re hard games. They’re too hard for most people. I mean, I played Persona 5, one of the highest rated games ever, and I like it, but I can’t believe it went on to sell as many copies as it did. It’s just not the kind of game that seems like it has mass appeal, even though it’s one of the best games ever made, and probably wins Game of the Year. But… going back to Tsushima, no, I don’t think it has broad appeal either.

"“I think The Elder Scrolls 6 is coming next year- maybe they announce it at E3.”"

Okay, so broad appeal- GTA6 and The Elder Scrolls 6, why do you think these two have not been announced yet?

Well, GTA, probably because it’s not coming out any time soon. So that’s that. I’ll take over/under on 2022, I say it comes out after 2022. Remember, Red Dead 2 came out eight years after the first one- so the idea that GTA6 comes out before 2021 seems ridiculous. And Rockstar, the only announcements they’ve ever made more than a year before launch was because the launch itself was delayed. So best case, GTA6 gets announced in 2020 for a 2021 release…

Elder Scrolls, I personally think they are working on it. You know, Pete Hines took me on this year after July when I said they might be working on it, he said it’s not coming this year. So I think it’s coming next year- maybe they announce it at E3. But, if I’m wrong, then I’ll say this next year, and then the year after that. But it’s in development.

Okay, so going back to the idea of the resolution war- early in the generation, Sony managed to use to great effect to establish themselves as the more powerful console for multiplatform games. It’s a strategy we’ve seen Microsoft attempt with the Xbox One X, but it doesn’t seem to be sticking as well. Why do you think that is?

Because it’s priced far higher than the alternatives. The Xbox One X is $500, and four weeks later, the PS4 Slim was available for $199, and the Xbox One S for $189. You could buy one of each for the price of a Xbox One X. So I think the One X has a lot of appeal for the existing Xbox owner, but I don’t know how much appeal for a new console owner. It’s just too expensive. If it ever comes down in price to $299, I think it will sell amazingly well.

So, let’s talk about single player games. The general consensus seems to be that there is a shift towards multiplayer games as a service on the whole, and that single player games will be sidelined. Do you think that is actually what we are trending towards? Or is that analysis an overreaction?

I think that sidelined is an overstatement, but I guess there’s more money in games as a service- this was something I talked about previously. The opportunity to sell someone a game for $60, an then collect microtrasnaction even regularly for a year or more is a big deal. For example, again, GTA- a single player game, and yet GTA Online did more than $100 last quarter. So they’re earning almost half a million dollars a year from micotransaction on top of the revenue from the actual sales of the game, that’s just too lucrative to pass up. So, the question is, will the next GTA be designed differently, where the single player campaign has the microtransactions bleed into it? Or will they go the same route, a 97 rated single player game, and then later add on multiplayer? I think the Rockstar guys created a compelling formula, to be honest- a compelling single player game with a multiplayer game built around it. So the answer is, you’re going to see both. There’s a reason that GTA5 is the best selling game of all time- and that’s because people buy it for the single player, and there’s a reason GTA Online earns so much money- because people stay for the multiplayer after the single player is done. So games should be able to have both.

But on the other hand, I have read statistics on how many Call of Duty players don’t even play the single player, they just jump into the multiplayer, or how most of FIFA is played in Ultimate Team online. So gamers are telling publishers that they like multiplayer- publishers recognize that they can make money in multiplayer. But even then, single player won’t be sidelined, multiplayer will just be emphasized. Remember, this all starts with the developer, and the best developers in the world pretty much make only single player games, like Kojima or Ken Levine. So- I don’t think single player games are going away or being sidelined, as much as multiplayer games’ potential for monetization is being recognized.

Okay. So I think one of the things you are getting at is that the future might be something like the GTA model where there is a satisfying single player campaign, with a compelling multiplayer mode added on-

I think that would be the goal for all publishers, to have a game that’s even a quarter as successful as GTA. But we’ll see how it goes, even with Red Dad. I think they’ll follow the same model, a compelling 60 hour campaign an then multiplayer on top of that. I don’t know if the setting means that the multiplayer will be as compelling, you know, the Old West versus modernity, but maybe.

Okay, so Rockstar apparently has the formula down. EA- well , as we discussed, they seem to be doing fine with sports games, but with non sports game, they are clearly struggling with how to effectively monetize their games, they’ve been too aggressive. And, of course, they’ve been making a lot of other missteps too, for example Mass Effect Andromeda was a big failure for them this year. Do you think this all affects the chances EA’s upcoming Anthem has at success? A nw games as a service game by a company in the public eye for not doing them well, and the new game by a developer whose last game was criticized is heavily?

Yeah, good question. I think if you look at companies that are successful in microtransactions, you’ll see that they are either making mobile games or free to play PC games. So there’s some formula to creating a compelling game along those lines that doesn’t seem to have translated over that well to console games yet by big publishers. I think the analogy is, the big publishers are like movie studios making these cinematic experiences, like Sony with Uncharted and Rockstar with GTA. So deciding that you like the other model, the mobile or League of Legends model, that’s not say to do- if it were, you’d see every company doing it. So the question for Anthem is, will A screw it up like with Star Wars? Or will they follow the Overwatch and destiny roadmap, where the actual game is fun to play and the payments are ancillary? Because where they got into trouble with Star Wars was in making it pay to win. Had they limited themselves to purely cosmetic items, I don’t think anyone would have said anything. So Anthem has the potential to be Destiny like in terms of game experience, and Overwatch like in terms of mcirotansactions offered, where it’s all cosmetic and no one bats an eye. But the truth is, Bioware has made several games that have sold around 5 million, so I’m very comfortable saying Anthem will sell at least that much. 7 or 8 million? Yes, if it’s a great game. 10 or 20 million? Probably not, but we’ll find out. Bungie did that with Destiny, Blizzard does that all the time. Biowae hasn’t yet done that.

But I’m encouraged because we have Casey Hudson back, since he is very capable- so I am confident Anthem will be great, and it will do well, on the whole.

"“I’m encouraged because we have Casey Hudson back, since he is very capable- so I am confident Anthem will be great, and it will do well, on the whole.”"

So you think there’s potential for it to do ell as long as EA doesn’t go all pay to win again.

Yeah. I think right now EA is on probation with gamers. I think everyone is watching everything they do. I don’t think they can afford to put an onerous mcrotransaction scheme in any game going forward, they need to re-earn gamers’ trust again. So I hope they are sobered by this experience, and learn from it. But I think they are smart people, so I am sure they will do the right thing going forward. We’ll see.

Okay. Do you think that we’re moving towards an all digital market? 100% digital delivery?

The problem with 100% digital is that as long as we have consoles, there has to be a trail store that sells it to you. I mean we can buy hardware on Amazon, but you still need a trail location selling it for a lot of people. So you’re never have a console that’s purely digital just for that- until the console is eliminated altogether. But if you get someone, say Amazon, as a seller of true game streaming or Game Pass style services, then yes, something like that might happen. And I think each time Amazon is selling something like an Echo Show, which has its own screen, and an Intel chip with a powerful microprocessor, and a GPU, they’re getting closer to a game console. Because if you’re selling something that can manage a person’s home entirely, why not throw gaming capabilities in there too? So I actually think at we are moving toward a world where at least very healthy people have these multi function devices in their homes, and in 10 years, I think that they will have penetrated 20-30% of above median income households. So you end up with 200-300 million households globally with these devices in them- why not put your games on them as well?

So, yes, a full digital system might happen- but if it does, it won’t be a traditional console, it will be something like this, and it won’t happen this generation, or even this decade.

So a lot like the move towards smartphones and tablets, but on an even bigger level.

Yes. It’s amazing what you can do with these devices, and how they link together. But I remember when Apple first said they would make a phone back in 2006, I thought it was the dumbest idea ever, I had my Motorola, and I was perfectly happy with it. But now, ten generations of the iPhone later, there are hundreds of millions of them sold. And we have hundreds of apps we all use- so even if the idea sounds alien now, yes, I think that is exactly the kind of shift we will see with these home devices for consoles.

We’ve talked about games as a service, games via digital delivery, and so on. One company that has been prescient with all of this, that has been ahead of the curve, has been Valve. One the last ten years, they made the shift to digital delivery, to microtransactions, to games as a service. But in all of this, the single player experiences that the company was known for have fallen by the wayside, a new Portal or Half Life game seems to be far distant and in the future right now. Do you think that Valve is still working on new single player experience? Or do you think they are going all in on their current games as a service model?

I would be really disappointed if Valve wasn’t working on Half Life 3. I know it’s been 12 years since the last one. But I’d still think they are working on it. I would b really disappointed if they weren’t working on a Portal 3, too. I know a lot of their writers have left the company, but I would still be disappointed. Those are valued properties that they should use continue producing, if only for the fans who brought them the success they have today. So- that doesn’t mean they can’t keep doing DOTA or Team Fortress or Counter Strike- I am sure they will keep enveloping those. But I think tat that company is very profitable and passionate, and I think they are consumer focused. Their games have open architecture, they encourage users to modify their games- even Counter Strike was born out of user mods for Half Life. What a great company, saying, ‘no, we don’t know better’. If they had never allowed that mod, they would be a single player game company today, I think. So those user mods matter too. So I think they will keep doing what they have been doing, that includes single player games- it’s just taking a long time for them to come out.

I really hope you’re right!

One of my worst predictions ever was when I said that Half Life 3 would launch with the Steam Machine, and be playable only on that. So, obviously I have been consistently wrong about Valve, an also about Bethesda and Elder Scrolls, and Rockstar and GTA… so, I guess I’m an optimist when it comes to these companies.

Well, hopefully your optimism spills over into my next question. That’s about Metal Gear- Metal Gear is a popular franchise, but it seems to not have much of a future right now because of the Kojima-Konami fallout. Right now Konami is working on Metal Gear Survive, which is most charitably described as a spin-off… but do you think there is a future for Metal Gear beyond that game?

I don’t understand how anyone can think that brand can survive without Kojima, so- I- no. I think that there are some games where the lead is so central to the success of the game that the game is nothing without the lead. I think that Mortal Kombat and Ed Boon, or the Housers and GTA; and I think Kojima is so central to the look, feel, story, and art style of Metal Gear, that without him, I think Metal Gear is over. Metal Gear as we know it is over. It’s done.

Do you think Metal Gear fans will be well served by Death Stranding?

Its the day before The Game Awards, and I’m hopeful we learn more about the game tomorrow. There’s going to be something told about it. And… most Japanese games are bizarre, but we love some of them anyway. I mean, Katamari is so weird, and I love that game. I couldn’t stop playing it. Or look at Final Fantasy- compelling, or bizarre. I on’t think Kojima is quite as bizarre as other Japanese developers. He has this crossover appeal- so does Miyamoto. I think it’s something to do with their personalities, they are really likeable people, ad they are open to thinking about other people and cultures, which translates into their games.

So yes, I think Death Stranding will b a phenomenal success, I think Kojima is on of the finest developers who ever walked the planet. I will play his games no matter what they are called or what they look like.

Another game I want to talk about is Pokemon- you said that the Switch’s momentum in 2018 is contingent entirely upon the release of Smash Bros. But what about Pokemon? Assuming Pokemon does come out next year on Switch, what do think its potential for success is as the first console Pokemon game ever?

You know, Pokemon will come out and sell well. It’s an interesting question, because I don’t think of Pokemon as a system seller for consoles- I think of it as one for handhelds. So this brings us back to whether we consider the Switch as a console or a handheld. I know Nintendo views it as both, but I personally think of it as a handheld. And I also think that at $300, it’s way too expensive for a handheld, which means that once the hardcore fans have bought one, it’s going to be viewed as an expensive handheld because of the price. And if that’s the case, I don’t think Pokemon pushes it over the top. I think Pokemon has mass appeal, and it sells tons of millions of copies to a lot of people- but I don’t think that those people will spend $300 on one game, while I think that Smash Bros. fans will spend $300 for the one gam that pushes them over the edge. So, no, I don’t think Pokemon will be a system seller for a $300 console. Yes, it is one for a $129 handheld- but not for a $300 console.

"“I don’t think Pokemon will be a system seller for a $300 console. Yes, it is one for a $129 handheld- but not for a $300 console.”"

Okay, so this brings us to the question of price. Do you think the Switch, PS4 Pro, and Xbox One X might get price cuts any time soon?

PS4 Pro I think you will get a price cut for next year. I think they will take the Slim to $199 permanently and knock the Pro down to $299 after that. I don’t think the Switch gets a price cut until October 2018, mostly because I don’t think Nintendo has a big profit margin on it. So once economies of scale kick in and production costs fall, then I can see the price dropping. Xbox One X, we’ll see. I don’t think it can sell tens of millions of units at its price. My guess is it is $400 this time next year- but that still feels too expensive.

Alright- and for my final question, which 2018 game are you personally looking forward to the most?

Probably for me, Red Dead Redemption 2. I think that’s coming at about the right time. I’m not a big Anthem player, I don’t play games like destiny. Not a Battlefield player, Black Ops is not my favorite of the Call of Duty series… to be honest, the first game I will play next year will be Far Cry. I love that series, and this new one looks special. So that will be the first game I play. But I will definitely play Red Dead as well.

Hopefully it lives up to all the expectations!

Yeah, Rockstar does great work. I don’t think there’s a chance Red Dead isn’t 90+ rated.

Well, thank you for your time!

No problem, thank you for the chat.

You’ve probably heard all there is to hear about the Xbox One X and how powerful of a console it is. Perhaps unsurprisingly, developers have been jumping on board to enhance their titles for the console. From what developers have been saying, it doesn’t even take that much effort to properly optimize a game for Microsoft’s platform. So it’s good news for the company, right?

However, a rather interesting twist is how the Xbox One X could possibly be helping the PS4 Pro with developer support as well. Whether it’s by proxy or from public pressure (which goes both ways – remember the backlash against Destiny 2 when it was thought to support the PS4 Pro but not the Xbox One X?), it seems Sony is benefiting from the Xbox One X as much as Microsoft. Right?

We posed this question to Wedbush Securities analyst Michael Pachter who said that even though this is the case, the lower price of 4K TV sets are also a major factor.

“I think that the PS4 Pro also has the benefit benefit of being priced lower, and it seems to be selling a bit better, though that is a bit hard to tell with retail, because we don’t know exactly how many Xbox One Xs were shipped; they’re probably sold out for a few weeks. But yeah, I think that as opposed to the Xbox One X helping the PS4 Pro, I think the very low price of 4K TVs now is helping both.

“So if you’re going to buy a new TV now, say it’s time to replace your main TV, it no longer makes sense to buy 1080p TVs. The difference in price between 4K and 1080p screens is now negligible, literally a hundred bucks. So it just doesn’t make sense.  So if you’re a gamer, and you’re playing on a 40 inch TV, the difference in price is literally negligible.

“So once you make the decision to get a 4K TV, you might as well get a PS4 Pro or an Xbox One X – and I know the Pro is not actually 4K, but that is how it is marketed. So, yes, I think all these things are connected. More 4K TVs lead to more sales for PS4 Pro and Xbox One X, and more sales for those systems lead to more developer support for both. And you’re right, once you make a game enhanced for Xbox One X, you might as well do it for the PS4 Pro. So sure, you’re definitely right.”

Once again however, will it be enough to help Microsoft rally Xbox One sales against the PS4? Time will tell but let us know your thoughts in the comments below.

If you haven’t heard, the PS4 has been dominating the global console market. It’s sold more than 70 million consoles worldwide, had perhaps the best exclusives line-up this year next to Nintendo and is poised to have an even bigger 2018 with titles like God of War, Days Gone, Spider-Man and Detroit: Become Human. And those are just the games we know of.

However, what about the Xbox One which has a number of titles like State of Decay, Crackdown 3 and Sea of Thieves? Will that be enough against the mighty Nintendo and Sony? GamingBolt spoke to Wedbush Securities analyst Michael Pachter about the same and he believes that there’s “too much emphasis on exclusives” sometimes.

“I think this late in the console cycle, I mean, the consoles launched in 2013, who doesn’t own one of them yet? Sony is something like 70 million, and Microsoft is 35 million, so I guess they are two thirds of the way through. The only people who haven’t bought a console yet who will buy one are working people, or very young kid whose parents will get one for them. And, I guess, exclusives will bring some people back in who haven’t played Mario in a while, to the Switch, which is still new. But not something like Halo 6 – if you like Halo, you got an Xbox One for Halo 5.

“Halo 6 will definitely sell a lot to its fan base who already own an Xbox One, but it’s not gonna drive new hardware sales, it’s very different this late in the console cycle. So the reason I think the Switch is so popular is that they launched two giant games with Zelda and Mario, plus two really good games with Mario Kart and Splatoon. And that’s enough for Nintendo fans to say ‘I have to have this device,’ which is why the Switch is sold out…”

That being said, Pachter didn’t underestimate the importance of an exclusive like Halo to Microsoft’s roster. “To answer your question, yes, any Microsoft lineup with Halo in it is better than any Microsoft lineup without Halo. But, for example, if they had had Halo this year, I would still have said Nintendo wins by a mile. Mario and Zelda in the same year? I can’t remember that happening, ever. This year Nintendo won by a mile, but I can’t expect them to to do that next year.

“Next year, Microsoft with Halo coming out, I think it’s coming out, looks strong. And, Sony’s lineup looks fine, I mean their lineup over the next several years looks good. But I don’t think either their line-up or Microsoft’s makes a difference anymore, people have already made their minds up, and it was probably driven by, ‘If I want early access to Call of Duty DLC, I’ll buy a PlayStation.'”

Pachter raises a good point – the majority of consumers who purchased a PS4 did so on the basis of third party timed exclusive DLC like Call of Duty and Destiny, exclusive access to franchises like God of War, and the Sony brand as a whole (especially considering how badly Microsoft damaged the Xbox One out of the gate in 2013). While Nintendo will make its mark in the long run, it’s going to come down to what’s special about the Switch along with the games it has rather than either factor alone, at least in my opinion.

What are your thoughts on the matter though? Let us know in the comments.