Wedbush analyst Michael Pachter has spoken out against Nintendo president Satoru Iwata’s comments on mobile gaming services providing a less rewarding and immersive experience than traditional console games.

“I think that Nintendo is right that mobile and social games generally provide a less immersive and less rewarding experience than most console and handheld games. However, when compared on a price-to-value ratio, mobile and social games are a bargain, and they allow access by many people who may otherwise not be inclined to purchase console or handheld games. Obviously, anyone with a cell phone or a PC can access mobile or social games, while access to handheld or console games requires the purchase of a console or portable gaming device. The dedicated purchaser of gaming devices is Nintendo’s core customer, but there is a lot of overlap with PC owners and mobile phone users, and when a young person spends time playing a mobile game or an older person spends time playing a social game, there is less time to play a Wii or DS game (or any other type of game, for that matter).”

“As a parent of 11 year-old twin girls, I see this first hand, as my kids each have a cell phone, and we have both an iPad and a Galaxy Tab in the house, along with every current gaming device. My kids spend more time playing mobile and iPad games than they do playing console and handheld device games, and that’s a departure over the past two or three years. I think that the all-in cost of mobile and social gaming is sufficiently low to pose a threat to Nintendo’s dominance in the handheld area, although they will certainly survive and thrive with their superior product offering. They just won’t sell quite as much software as in the past, since consumers have so many other choices that present a fair price-to-value proposition.”

“I’m not sure that Nintendo can do much to stave off competition from mobile and social games; I view Mr. Iwata’s presentation to game developers at GDC last month as analogous to a record company president speaking to recording artists 10 years ago and lamenting that Apple’s iTunes store would lead to their demise, as it cheapened the value proposition of music CDs by offering $1 downloads. This would have been a true statement at the time (to my knowledge, it didn’t actually happen), but such a plea wouldn’t have had any impact on Apple at all. Like the music analogy, Mr. Iwata’s plea to developers won’t stop Apple, and the success stories of developers like Rovio and Zeptolab will encourage further development by people hoping to launch the next Angry Birds or Cut the Rope.”

- Michael Pachter, industry analyst

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