Pachter: “Project Café Could Wind Up Like the Dreamcast.” Joe: “Nuh-uh.”

This also just in: it’s either going to rain or be sunny tomorrow. Or foggy. Maybe.

Noted industry analyst Michael Pachter (whose last name, I’ve just learned, is “PACK-ter” and not “PATCH-er”) has claimed that Nintendo’s next console could very well go the way of the Dreamcast and be doomed right out of the gate.

“It is an open question whether the Wii successor is an in-between console, much like Sega’s Dreamcast was back in the late ’90s—too late to compete with the PlayStation and N64, and not sufficiently advanced to compete with the PS2 and Xbox,” he said, according to Industrygamers.com.

It’s a concern that’s popped up a lot over the past weeks since it became apparent that Nintendo would be getting at least a two year head start with their next hardware configuration. Parallels to Sega’s Dreamcast were drawn immediately, dooming Nintendo’s still unknown console to the same fate as Sega’s last entry in the console races. However, there are plenty of factors at work here that can, in my opinion, guarantee that won’t be the case.

First off, I want to say that I have no personal problem with Michael Pachter. It’s his job to analyze the industry. He’s an analyst! If he’s not making predictions, then he’s not getting paid. However, I typically don’t put a lot of stock in his (or other analysts’) predictions.

The videogames industry is hard to predict. The success and failure of a product is entirely decided by consumer trends which are prone to changing with the wind. When Nintendo announced that they’d be releasing a console that was a generation behind in graphics capabilities with a TV remote as the controller, who would have said “This thing is going to absolutely smash the PS3 and Xbox 360”?

If you ask me, trying to predict this industry is like looking out your New York apartment window and guessing how the weather will be in Tokyo in four days. It brings to mind a quote, which I’m pretty sure is from the Simpsons, but Google is failing me right now: “Something good or bad may or may not happen to you in the near or distant future.”

Comparing Nintendo to Sega based solely on when they’re releasing their hardware is a kneejerk reaction and is absolutely no indication that Nintendo’s console will fail. Let’s take a look back at the Dreamcast’s launch and draw some more comparisons.

We’ll mostly be looking at US trends, since the Dreamcast fared much better in Japan than it did in North America.

Se-gaaaaaaaaaaaaa!

Poor guy never had a chance.

The Dreamcast launched in September 1999, four years and four months after the May 1995 release of the Sega Saturn, which gave the Saturn a relatively short lifespan as far as consoles go. Sega completely mishandled the Saturn in North America (again, the system DID sell much better in Japan),  performing a “surprise launch” in May (the system was scheduled to be released in September), angering many retailers and software developers in the process. Sega shot themselves in the foot before the 32-bit console wars even started, and as a result the Saturn never took off in North America. Sega’s name was tarnished, and Sony’s aggressive marketing campaign pretty much destroyed consumer faith in Sega’s products.

Sega tried to get a jump on the next hardware competition by releasing the Dreamcast a year before the first of its competition, the PlayStation 2. By this time, though, the PlayStation was wildly successful and Sony had become a major name in videogames. Sega never really recovered from the Saturn, and many players chose to just wait the year or so until the PlayStation 2 would be released. The Dreamcast wound up competing more with the PS1 and Nintendo 64 than the PS2, receiving upgraded ports of many 32- and 64-bit games.

By the time the Nintendo GameCube and Microsoft Xbox launched in the US in 2001, the Dreamcast was dead in the water. Sega announced on January 31, 2001 that it was discontinuing support of the Dreamcast in order to become a software developer.

The Dreamcast was an incredible system. Too bad no one bought it.

Looking back, it was much more than just when the Dreamcast launched that doomed it to failure. Sega was no longer the powerhouse that it was, and with the promise of a follow-up to Sony’s PlayStation on the horizon, most players couldn’t be bothered to come to Sega’s party. The Dreamcast to this day is still held in high regard by fans, but unfortunately high regard doesn’t pay the bills. Your stuff needs to sell.

Take a look at where Nintendo is right now. While the Wii was not the hardcore gamer’s dream people wanted it to be, it sold like wildfire, re-establishing Nintendo as a household word synonymous with “videogames”. They’ve just released a follow-up to their also hugely successful handheld system. They’re riding a huge wave of success right now, a far cry from the desperate grab for attention by Sega.

Sony isn’t the name that it was before, either, with the PS3 sitting in third place in the US install base behind the Wii and Xbox 360, and the recent PSN scandal not helping things. With their recent release of the PlayStation Move controller (and Microsoft’s “you are the controller” Kinect), both companies are locked into their current systems for several more years.

Meanwhile, on the PC side of things, developers have complained that console technologies (which are about five years old at this point) are holding back PC games as they are often developed with console ports in mind. Now you  have Nintendo coming out with a new home console that is reported to be quite a bit more powerful than the PS3 and Xbox 360, which is going to look VERY appealing to those developers.

On the one side, you have Sega, who put everything they had into one last hurrah, releasing their system as a last-ditch effort to show they had what it takes to hang with the new kids after destroying their own name.

On the other, you have Nintendo, a consistently successful company with a well-respected name who are constantly innovating and moving the industry forward, releasing a new console that will outperform anything currently on the market and attract third-party developers while the other two of the “big three” are still years off from even announcing any new products.

I just don’t see the similarities. I guess that’s why I’m not an analyst.

Share Your Thoughts: What do you think? Is Nintendo primed for another home run-touchdown-slam dunk, or is Sega waiting to welcome them into the club?


Comments
6 Responses to “Pachter: “Project Café Could Wind Up Like the Dreamcast.” Joe: “Nuh-uh.””
  1. Sebastian Force says:

    Man, I was with you for a lot of this article. You absolutely have the differences between Sega and Nintendo right, Sega was on its last legs as a company, while Nintendo is (was, I think? I’m not sure how they’re doing in sales now, still probably a whole lot.)

    But I do think Pachter has a point even though I don’t think he’s saying the entire company would go down like Sega did. Nintendo is rolling in cash and there’s no way that would happen. But that doesn’t mean that Project Cafe will be a success, either.

    Because they’re releasing it so early, by the time PS4 & (I’m not calling it the Xbox 720 cause that sounds dreadful) come out, they’ll in effect be miles ahead of Nintendo’s new console. And that, then, as you say now, will be mighty interesting to developers. Cause new stuff is always interesting. I’m not exactly sure I agree with this, because I think Nintendo will always find a way to remain profitable, but I will say that they are certainly putting themselves in that sort of situation, even though it won’t be exactly the same. So in a roundabout sort of way, I do think you’re right, but at the same time he’s kind of right too.

    • Joe Walker says:

      Yeah, but in a way, by going into a “half-gen” cycle, Nintendo will only be slightly behind them from a technical standpoint for about two and a half years before they put out their next console (assuming graphics technology can even get much better than what we’re looking at).

      The key here for Nintendo is that they don’t JUST rely on graphics; they make each console uniquely “Nintendo” as a way to separate themselves in more than just how the games look. If half the things I’ve been hearing about Café are true, then Sony and Microsoft will REALLY need to up their game.

  2. dcbronco says:

    I actually think what Nintendo is doing is really smart. It’s what I thought MS would do but on a more extreme level. Sony might lose a ton of money because of their problems with PSN. In addition to the extra cost of hiring a security professional. MS is selling a ton of Kinect units right now. They may plan to milk the 360 and Kinect for another three years. So now is the perfect time for Nintendo to reinsert themselves into the hardcore market. A machine that is really just a souped up 360. Similar CPU and GPU. Add better RAM and the tweaks that go along with AMD and IBM having a better understanding of those chips capabilities and Nintendo has two years to retake the hardcore market. And sice their machine will be an even larger jump over the PS3 than the PS3 was over the 360 and the devs already know the parts since they are very familiar with the 360. Nintendo should take the lead quickly. Plus if they can keep parts cheap since they are basically old parts, they might be able to come in at close to Wii launch prices while offering the best product on the market.

    • Scott Carmichael says:

      I’m not going to use PSN anymore. My PS3, from here on out, will remain largely offline. I’m done with them. Can’t trust ’em and they don’t value me as a customer or my personal information (as evidenced by their insulting “compensation”).

      So, I think that very much rules out me getting a PS4 or even an NGP (a system I was really looking forward to) unless I am just absolutely floored by the games or price for them. (Which I doubt)…

      I think the next Nintendo will be a very good buy, considering there won’t be Xbox/PS successors until at least 2014. Even if the Wii HD will be inferior to Sony/Microsoft’s next systems, for the first two years of release, it’ll be on-par or better than what we currently have.

  3. Scott Carmichael says:

    I love the Dreamcast and I’m glad you took the time to actually touch on several key points that led to its early death. Here are a couple very significant things you missed though:

    • Sega of Japan and Sega of America had a lot of problems, from Bernie Stolar wanting the US launch price to be $199 to SoJ choosing NEC Power VR over SoA’s 3DFX Voodoo Dreamcast design. The “feuding” even went back to Saturn and Genesis days when SoJ refused to let SoA have access to the NiGHTS engine for Sonic X-treme to the 32X/Mars fiasco in which SoA had to launch the system even though SoJ was planning on launching the Saturn a year or so later.

    • SoJ did not like that SoA and SoE were doing quite well with Dreamcast sales while the system was doing poorly in Japan. This reminded them too much of the 16-bit era when the Genesis was extremely popular in America and SoJ had to start thinking about “a foreign market” when making decisions. When the time came to kill of the Dreamcast, SoJ did it without even considering the success of the system abroad.

    • The Dreamcast sold extremely well for the amount of time it was on the market (in the US, the system was out for a mere 17 months before SoJ killed it. Any person knowledgeable about system sales could tell you there is absolutely no way a system will recoup its losses (in R&D, marketing, etc.) in a mere year and a half, regardless of “when” it was released. Meanwhile, if we look at SoJ, they gave the Dreamcast about a year extra to sell (released in ’98). This once again proves the final decision was based more on SoJ wanting to do “whatever it wanted” rather than take into account foreign success.

    • The Dreamcast hardware launched in 1998 – by the time it came out in the US in ’99, consumers were ready for the switch to DVD. A DVD-version of the Dreamcast was rumored (along with a ZIP drive and MP3 player VMU) but it never was released because at that time, DVD hardware was still too expensive to cram into a $200 system. And in Japan, many consumers bought a PS2 specifically for DVD playback functionality because back in the 90s, even though many DVD players came from Japanese companies, DVD players themselves in Japan were extremely expensive ($500+). Dreamcast simply couldn’t launch in ’98 or ’99 with a DVD player – and that was a huge selling point for the PS2.

    • The failure of the Saturn sales-wise led many retailers to outright ignore WHATEVER Sega came out with next. Video rental chains wouldn’t even carry Dreamcast games (if I remember right, Hollywood Video would, but Blockbuster would not). Sega did a really bad job of marketing and releasing the right type of content for the Saturn and it left a bad taste in many consumers’ mouths. (I personally liked the system, but I’m weird)

    ————————————————————————————————–

    Now, in regards to Prachter – I think that guy is full of crap. I’ve watched many of his clips about what he sees going on and the stuff is either just common sense easy to figure out or completely retarded nonsense.

    His prediction that the next Nintendo console will be a Dreamcast is in the latter category — if he means that it will be so bad it will force Nintendo out of the console business.

    NO.

    NO IT WON’T.

    However….

    The Wii was a commercial success…but it was mainly a success because it attracted casual and non-gamer consumers. I don’t thin anyone saw that coming and I highly doubt it will happen again. Why? Because we already know how those casual and non-gamer people viewed the Wii months after purchasing – as a glorified paper weight. They wanted Wii Sports, a Mario game or two and that’s it.

    So because of that, I think it’s doubtful the Wii HD or whatever will come anywhere close to the Wii in sales.

    Now, I will say this: If the Wii HD is as much of critical/consumer bomb (in terms of unhappiness) as the Gamecube, I think we’ll see ONE more console from Nintendo. If they don’t get that one right either, THAT will be their final console. They’ll still do the handheld thing…but the console will be a thing of the past.

    But the odds of that are slim. Back in the Gamecube era I had that same prediction. the Gamecube wasn’t doing well at all and there was zero interest from the gaming community. Oh, it sold well…but despite that, no one seemed to care. And while it sold “well” it was still very much in 3rd place. I remember saying to myself and others that if the Revolution (which became the Wii) was as bad as the Gamecube, I give Nintendo one final system after that before they leave.

    The thing is, I just don’t see this next Nintendo system being a disappointment. I think there will be a return to excitement and creativity by Nintendo, mainly because they are finally upgrading their technology to something usable. And since Sony/Microsoft aren’t doing anything until 2014, that’ll give them about 2 years to do what needs to be done to ensure they can stay around for a long time. It’s not like the Dreamcast when it launched here in ’99 and within a year the most hyped up console ever would be released. I don’t think anyone is going gaga over the PS4 or XBox 720.

    I mean, I’m all for new systems (it’s time to move on from what we have) but I’m not super excited about any of them. However, I am glad Nintendo is finally joining the ranks of HD/next-gen capable hardware with their new system. Sony and Microsoft can offer Move/Kinect bundles all they want – most gamers don’t really give a hoot about either of them – they got their motion control “fix” in 2006-2007. Prachter, yet again, is just full of crap.

  4. ouch says:

    Arrrgh! I understand both side of the coin’s logic and reasoning in this discussion, however I’ll add my own take!

    From the previous generation (ie GameCube, PS2, Xbox) to the current generation (PS3, Wii, Xbox360) Nintendo for me at least went from having my favourite console in that generation (GameCube) to my least favourite console in the current generation, which is odd considering how similar the hardware is between the GameCube and the Wii! And whilst I played the hell out of Zelda when Wii first launched and loved it, over time with the exception of a handful of games I started to realise I really wasn’t the audience that Nintendo were catering for this Generation, hence to say my Wii collects dust for the most part!

    Now with that out of the way I believe Nintendo are in a really tricky position for their next generation console, why? Because they have to find a delicate balance between catering for Casual and Hard Core, and with saying that I doubt the Grandmas and Grandpas who already have a Wii are willing to buy Nintendo’s next console unless they have some fundamentally better way of playing a next gen Wii Sports than what’s currently out there, and if the supposed leaked information about the controllers are correct, I feel this will confuse and alienate elderly people from buying one!

    The beauty of Wii is in its simplicity of design, which is what attracts the older generation and people who play games on a more casual basis, so what is Wii’s greatest asset this generation, may prove to be Nintendo’s greatest curse in the next generation. The question has to be asked, who is Nintendo’s Target Market come next gen? There is little to no garantee that the casual players will buy or even have a need for wii successor, in general they are not the tech savvy, graphics whores of the hardcore gamers, needing faster this and prettier gaming equipment!

    So the way I see it there’s really 2 options for Nintendo:

    1) A true successor to GameCube – A mature console that can holds it’s own against Sony and Microsoft’s consoles not only in hardware but as well as in mature software and online functionality

    2) Raise the bar again and make something truly unique that blows us and the competition all away!

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