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Analyst: No new console cycle before 2013 (CVG 2/5/09)

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Analyst: No new console cycle before 2013 (CVG 2/5/09)




Wedbush Morgan analyst Michael Pachter doesn't expect a new hardware cycle to begin before 2013.

"We do not expect a "new" console in 2010 (other than the long-rumoured high definition Wii, which is likely to upgrade the Wii to current console technology)," he wrote in an industry newsletter.

"We do not expect the 'next' generation to begin before 2013, if at all," he added.

"We remain convinced that the publishers will resist the introduction of any video game hardware technology that requires a refresh of software, as the publishers have as yet to capitalise on the immense investments made in being competitive in the current cycle.

"We therefore think it is likely that the 'next' generation will begin after 2013, meaning that software sales are likely to grow by a compounded annual rate of 6-10 percent for another five years.

"Because R&D costs are likely to flatten out with the benefits of a learning curve, we expect earnings leverage as the publishers are able to exploit R&D investments. In brief, we think that investors have it wrong so far this cycle, and think that investment in video game publishers will bear fruit for many years."

Earlier this week Ubisoft CEO Yves Guillemot said the publisher was already preparing for the next generation of consoles, which he expects to launch in the next few years.

"We need to get ready for the future generation of consoles," he said. "In the next few years, there will be new home and handheld consoles, and if you don't invest... you will not be able to cope with both [the existing and new generation consoles]."

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