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PiperJaffray says this may be the last console generation

R

RSTEIN

Comics, serious business!
PiperJaffray just took a hatchet to, well, the entire video game industry after GameStop's recent quarterly results. Someone clearly woke up on the wrong side of the bed this morning.

I don't think I can copy the report but I will quote some key stuff:

On GameStop:
It's clear that business trends are negative & prospects are fading. July quarter results were only slightly short of expectations. We believe FY10 sales, store comps and EPS guidance appear achievable, but risk is to the downside. We expect the swift shift from off-line to on-line digital entertainment will continue as the current video game cycle continues to decline during the next few years. In our opinion, industry-wide packaged goods game sales peaked during 2008 and GameStop's ability to continue to take domestic share has become more difficult - company is already over-stored.

The recent acquisition of a social gaming company makes little sense to us and actually clouds our view of forward strategy. Although GME valuation and cash flow characteristics look attractive, we find it difficult to recommend a business in which we see little long-term earnings growth.

The company's digital initiatives are sketchy, but we expect the company will try multiple efforts to take share

We believe GME will experience peak income at some point during the next 18-months.
Click to expand...


On the Industry:
We remain cautious on GME given growth outlook of packaged goods video game sales: Each month it becomes more evident that interactive game sales are shifting from packaged goods to digital. Packaged goods game sales have declined from ~85% of category sales to ~70% during the past two years. We expect the shift to digital entertainment will continue as the current video game cycle declines during the next three years. We expect industry-wide packaged goods game sales peaked during 2008 and will decline over the next 3-year period.
Click to expand...

On console cycles:
The current video game hardware cycle is about to shift into permanent decline, in our opinion, and no new game consoles are expected to launch until at least 2013 - if ever. Second, 35% of cell phone sales during 2010 are expected to be smartphones and will take further share from sales of Nintendo DS & PlayStation Portable products. Third, increased use of single-use codes by game publishers is expected to ramp as they attempt to recover profits lost to the resale of their video game content. Even if retailers sell single-use codes, that alone presents risk to the sale of used games. We project that industry packaged goods game sales will be relatively flat during CY10 (0 to +5%) and decline ~10% during CY11/CY12. Simultaneously, we estimate that digital entertainment sales are growing at 30% and will account for 30%-plus of interactive entertainment sales during CY11 (up from 15% CY08).
Click to expand...

friday-damn.jpg
 
S

subversus

I've done nothing with my life except eat and fap
who the fuck is this guy?

(went googling)

edit: lol it's a bank

edit2: pretty sensible report, nothing's new here.
 
Z

Zuhzuhzombie!!

Member
That swift shift to digital downloads isn't as swift as he thinks it is.

Though he may be right about the 2013. To be honest, I could go to 2015.
 
K

krazen

Member
All ill say is; everyone saying that smart phones will steal market share from the proper portable gaming systems will regret their words in about a year.
 
S

Safe Bet

Banned
Tears For Fears said:
I don't buy DD stuff..
Click to expand...
I use to think the same way, but Apple and Steam have proven DD is the future.

IE

Steam storing my library and game saves for me?

Yes please...
 
D

Drkirby

Corporate Apologist
Yeah, to start with the obvouse I can't see Nintendo not make a follow up the Wii in 2013.

And that is just home console, he said game console so this man thinks the 3DS will be the last Nintendo Handheld (Going out on a highnote!), and Sony is just going to say "Well, we only sold 60 Million Units, and it is only the 8th best selling game console ever. We have fucking failed and we give up!"
 
S

subversus

I've done nothing with my life except eat and fap
my crystall ball predictions:

1)phones eat handheld market.
2)Nintendo's followup to Wii is the only successful console
3)Return to AAA PC market because of online, further STEAM improvement as a service and publishers marketing efforts (see Acti and MS soon).
4)DD rapes retail
 
A

astroturfing

Member
nah. we're gonna get a PS4, Wii 2/HD, and a new Xbox.

what else are they going to do? my fear is though that the next consoles won't be a huge jump in tech (except Nintendo)..
 
S

subversus

I've done nothing with my life except eat and fap
astroturfing said:
nah. we're gonna get a PS4, Wii 2/HD, and a new Xbox.

what else are they going to do? my fear is though that the next consoles won't be a huge jump in tech (except Nintendo)..
Click to expand...

like nothing

they'll save investors money and use it for more profitable businesses.
 
E

El-Suave

Member
Why on earth do analysts only talk about the American market when they make industry wide predictions? Sure, it's the biggest and most important market but to me it's extremely stupid to talk about corporations and markets that are worldwide strictly from the American perspective.
For once I would like one analyst to even mention Europe or Japan in their sweeping predictions.
 
D

Drkirby

Corporate Apologist
El-Suave said:
Why on earth do analysts only talk about the American market when they make industry wide predictions? Sure, it's the biggest and most important market but to me it's extremely stupid to talk about corporations and markets that are worldwide strictly from the American perspective.
For once I would like one analyst to even mention Europe or Japan in their sweeping predictions.
Click to expand...
To be honest, I somewhat expect Russia to come in and save gaming in half a decade, its a large nation where gaming has only tapped the surface.
 
P

Psychotext

Member
Drkirby said:
To be honest, I somewhat expect Russia to come in and save gaming in half a decade, its a large nation where gaming has only tapped the surface.
Click to expand...
...games play you. Or something. :lol
 
S

supermackem

Banned
El-Suave said:
Why on earth do analysts only talk about the American market when they make industry wide predictions? Sure, it's the biggest and most important market but to me it's extremely stupid to talk about corporations and markets that are worldwide strictly from the American perspective.
For once I would like one analyst to even mention Europe or Japan in their sweeping predictions.
Click to expand...

Theres a world outside of america shittttttteeee.:lol
 
Z

Zizbuka

Banned
Tears For Fears said:
I don't buy DD stuff, if that's the way it's going to be. I'll quit gaming, or buy all of my shit on steam when it's like two dollars.
Click to expand...

I think you contradicted yourself but I'm not sure. The placement of periods and commas is throwing me off. :D
 
D

Draft

Member
Bad times to be a console zealot worshipping at the alter of tiny plastic discs.

See you suckers in the digital future :)
 
C

cooljeanius

Member
The 3DS is coming out. This generation started with the introduction of the original DS, therefore we can consider next generation starting with the 3DS. He's wrong already.
 
M

Majine

Banned
cooljeanius said:
The 3DS is coming out. This generation started with the introduction of the original DS, therefore we can consider next generation starting with the 3DS. He's wrong already.
Click to expand...
I haven't heard 3DS in the context to Next Gen that much, even though it should be.
 
B

Brobzoid

how do I slip unnoticed out of a gloryhole booth?
The eastern European PC developers can weather any storm. who cares if casulol nonsense like consoles die out.
 
F

FoneBone

Member
Wii2 by Q2 2012 at the absolute latest. I stand by that.

I don't see PS4/720 coming until 2013, but I don't believe that they're not in the works.
 
K

Kai Dracon

Writing a dinosaur space opera symphony
Every single generation of consoles, some analyst looks at an alternative delivery system for game content that has appeared or is hypothosized and said "oh well, this new doohickey is newer and shinier, that wraps it up for consoles."
 
S

Shard

XBLAnnoyance
Kaijima said:
Every single generation of consoles, some analyst looks at an alternative delivery system for game content that has appeared or is hypothosized and said "oh well, this new doohickey is newer and shinier, that wraps it up for consoles."
Click to expand...


No kidding.
 
R

Ricker

Member
Very scary if all we have to look for in the future are casual IPhone games...what will I do with my 55 inch Super 3d HDTV at 2160p... /sarcasm :lol
 
S

subversus

I've done nothing with my life except eat and fap
Drkirby said:
To be honest, I somewhat expect Russia to come in and save gaming in half a decade, its a large nation where gaming has only tapped the surface.
Click to expand...


Gaming has tapped surface here more than 20 years ago. it has been a widespread popular legitimate hobby for many years now.

Except almost nobody buys games if 1) you can download it without loosing some of its features 2) the game doesn't strike some slavic cord (see STALKER, The Witcher). But russians are opportunists, that means that we are ready to pay for entertainment (Hollywood movies gross tons of money here even without a lot of cinemas to go, see boxofficemojo for last Shrek for example) but if we can get it for free we'll get it. There's no respect for other people labour here, especially creative labour (we inherited it from USSR where everything was people's property (this means in government property). So until some hardcore antipirate laws are implemented nothing will change. Also corruption on some projects (kickbacks and so on) is beyond any limit but it stems from current politic climate.

But yes, the potential is tremendous and we could rival japanese industry easily if people were buying games and current political climate was better. For now only crazy unprofessional enthusiasts are trying to do hadcore games for free and without any success. The first thing to be changed in order to succeed is to break down piracy. I had some retail numbers before 2008 crisis and they dropped like 10-20 times after recession kicked in. Retail is pretty much dead and a lot of trash (and not trash developers) went out of existence.

there are some companies doing good casual games for PSN and PC like but most of it is pure trash. Some good hardcore strategic games still emerge.
 
M

Mr. B Natural

Member
The future of consoles is probably something along the lines of a Tivo or Cable Box. You got the console AND it was built for DD or "digitally renting" games. They'll also be a lot cheaper, smaller and will, by result, be more saturated. Having all the consoles will be about as elite as having cable television. I'm talking a 50 dollar "console" that is twice the capabilities of the 360/ps3 and plenty of power for good looking games and pretty much maxing out developer needs, capabilities and desires.

Consoles are already doing this but they're still mainly disc playing devices that CAN do online dd, and not machines that are meant to be DD but can play discs.

Sooner or later the "console" will be hidden either by being so small or by being integrated into the tv. This is already happening with Netflix and it's bound to happen with games.

That or the future of gaming is pure gimmick. Non-stop gimmicks to try to keep the interest from waning.
 
R

RSTEIN

Comics, serious business!
seaandthebells said:
What's the source on these quotes?
Click to expand...
An analyst who works at PiperJaffray. It's available on the web but you need a password. I don't think I can copy & paste report.

Mr. B Natural said:
The future of consoles is probably something along the lines of a Tivo or Cable Box. You got the console AND it was built for DD or "digitally renting" games. They'll also be a lot cheaper, smaller and will, by result, be more saturated. Having all the consoles will be about as elite as having cable television. I'm talking a 50 dollar "console" that is twice the capabilities of the 360/ps3 and plenty of power for good looking games and pretty much maxing out developer needs, capabilities and desires.
Click to expand...

Yeah, I agree with this. Consoles aren't going away but what exactly a console is will get very blurry. My child will not know what a "console" is just like any teen who buys a cell phone today has probably never used a phone that is, well, just a simple phone. It's still a phone, sure, but at the same time it's not. You can text message, surf the web, play music, etc. Texting is probably used more than voice :lol

So as high speed penetration gets up there and the cost of storage goes down, the future looks pretty obvious to me. It's not a console, it's a Sony Entertainment Unit or Microsoft Home Hub or something like that. Terabytes of storage, music, movies, downloadable games, etc. We're halfway there already.
 
I

I <3 Memes

Member
We remain cautious on GME given growth outlook of packaged goods video game sales: Each month it becomes more evident that interactive game sales are shifting from packaged goods to digital. Packaged goods game sales have declined from ~85% of category sales to ~70% during the past two years. We expect the shift to digital entertainment will continue as the current video game cycle declines during the next three years. We expect industry-wide packaged goods game sales peaked during 2008 and will decline over the next 3-year period.
Click to expand...

2iixio.gif


Not only did I call this one a long time ago, but I said exactly why.

PC gaming is the leader in innovation. From gaming genres to online gaming to voice com, and now to DD, PC gaming had led the way. And the best part is that companies like gamestop are the reason DD exists. When they stopped carrying all but a few token PC titles they left PC gaming nowhere to go except DD. They in fact launched their own demise.

Now console manufacturers have seen that consumers will buy games through DD channels. They dipped their toes in the water with smaller arcade type titles and are now jumping in cannon ball style with some full sized game releases.

Publishers love the idea because it solves the problem with the re-sale market for them. The next generation of consoles will not be fully DD due to bandwidth caps and broadband penetration but expect the industry to offer some sort of bonuses to the people that do buy DD titles.
 
A

AirBrian

Member
Dear Nintendo, in light of these recent events, please get a jump on the competition and start making your games for the iPhone. Thanks!
 
A

aristotle

Member
Yeah this analyst seems to make no mention whatsoever that there is less disposable income compared to 2 years ago. Consoles and games on disc will see a definite jump in sales when the economy gets better. Some analyst they got there. :lol
 
A

arstal

Whine Whine FADC Troll
Zuhzuhzombie!! said:
That swift shift to digital downloads isn't as swift as he thinks it is.

Though he may be right about the 2013. To be honest, I could go to 2015.
Click to expand...

Big Cable is going to balk at it. I'm expecting a nasty war between Valve+Microsoft+Sony vs big cable over bandwidth caps in a few years.

ToxicAdam said:
As long as there are spoiled 10 year old boys, there will always be gaming consoles.
Click to expand...

And that console will be the 3DS.
 
S

Steppenwolf

Member
It's from the perspective of gamestop. Of course they are panicking. The next generation of consoles will come definitely but i believe that it will be the last generation that will have any kind of disc drives and it will already be much more focussed on DD (i already predicted that two years ago and i still believe it).
 
A

arstal

Whine Whine FADC Troll
Steppenwolf said:
It's from the perspective of gamestop. Of course they are panicking. The next generation of consoles will come definitely but i believe that it will be the last generation that will have any kind of disc drives and it will already be much more focussed on DD (i already predicted that two years ago and i still believe it).
Click to expand...

Also, given Gamestop's reputation/gouging, my guess is they don't have that much goodwill- when people are able to dump Gamestop, they will.

In ten years we'll be talking about Gamestop the way we talk about Blockbuster today, maybe less.
 
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