Industry analyst Michael Pachter has claimed that the Nintendo and PlayStation business model of console exclusives no longer works.
During a recent episode of Pachter Factor, industry analyst Michael Pachter was asked why Xbox would release its first-party titles on other platforms if Game Pass had been doing well. In response, he stated that the reason it doing this is because the Nintendo and PlayStation model of console exclusive titles on proprietary hardware is, in his view, “broken”.
Pachter further explained that Nintendo and Sony’s model of associating their first-party games exclusively with their own hardware used to work, and that it used to make sense when it was PlayStation, Xbox, and Nintendo only. He added that Nintendo systems tended to not to offer FIFA, Medal of Honor, or Madden football. Therefore, Nintendo started this with proprietary titles on its proprietary platform because its a hardware company that sells hardware and makes compelling software to sell said hardware, and it makes money on both. He said that the strategy started in 1985, and it worked for 40 years. Sony emulated Nintendo’s strategy in 1995 with PlayStation exclusives, as did Microsoft in 2001 with Xbox exclusives.
According to Pachter, the strategy of exclusives worked for a long time, and then it didn’t. He compared a console maker managing distribution of its content exclusively on its platform to a movie studio owning a chain of movie theaters and them being the only to watch movies produced by it. He said that this strategy will work and it will make money, but it won’t make as much money as it would if it distributed those movies in six or seven different other ways, including television broadcast, premium cable, video on demand, streaming, and blu-ray release.
Pachter stated that the Netflix model of licensing or creating movies and only making it available on its own platform and excluding all others is the wrong model. As per him, the right model is to put those movies in a theater first and make 1/3 of all the revenue in the history of that film before it putting it onto Netflix to make another 1/3, and then distribute it in other ways to make the remainder 1/3. He said that Netflix doesn’t do this, but Microsoft is with Xbox Game pass. Therefore, he said that Microsoft is going to have timed exclusives that it will bring to PlayStation and Nintendo consoles sometime later.