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Analyst: Nintendo must now play 'catch up'

Wedbush analyst Michael Pachter believes time has come for Nintendo to "play catch up" as its top competitors, Sony and Microsoft, start gaining on it in motion-gaming space.

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Nintendo might be leading the gaming space in market share, but at least one analyst believes the game company is behind when it comes to technology.

"Nintendo now finds itself in a position of having to play catch up," Wedbush analyst Michael Pacther told Industry Gamers in a recent interview. "Kinect and Move will have an installed base of 8 to 10 million by the end of 2010, and a base of 20 to 25 million by the time Nintendo launches its 'next' generation console."

Pachter told Industry Games that he thinks Nintendo will launch the Wii 2 by the end of next year. The only problem is, Nintendo could have some trouble selling its current customers on getting its new console, he said.

"If the Wii 2 is just a Wii on steroids, with technology similar to the PS3 or 360, it's going to be hard to tell current Wii customers that they should trade up, especially if the Wii 2 is priced close to the 360 plus Kinect or the PS3 plus Move, both of which I think could be offered at $249 by holiday 2011," Pachter said.

It goes beyond price for Pachter. He said that even if the Wii 2 features HD capabilities--which he believes it will--the console will offer "only a catalog of standard definition content." In contrast, Pachter said, "the competitive consoles have deep libraries of content available in HD."

Realizing that, Pachter doesn't necessarily believe that the Wii 2 will kick off the next generation of consoles. Instead, he sees it more as a product that aims to get the Wii console up to speed with the Xbox 360 and PlayStation 3.

"I think that their next console will be on par technologically with the PS3 and Xbox 360," Pachter said in the interview, "and don't expect them to advance technology at all with their next offering."

Pachter's claims, while difficult for Nintendo and its fans to hear, speak to the difficult position the venerable game company finds itself in.

Earlier this year, Nintendo reported that it lost $24.6 million between April and September due to slumping Wii and DS sales. In an effort to improve sales, the company offered several bundles to drum up demand for the console. And although it touted strong sales during Black Friday week (November 21 through November 27), selling 600,000 Wii units and 900,000 DS units, the company didn't do enough to best Xbox 360 sales in November, which topped the console market with 1.37 million units sold. Nintendo sold a total of 1.2 million Wiis in November.

However, that figure isn't anything to scoff at. The fact that the Wii continues to attract that kind of demand is impressive. And it speaks to the quality consumers see in the console. But Pachter's comments are well-founded. The Wii does have some serious shortcomings, especially related to HD content. And now that it's facing popular motion-gaming competitors in the PlayStation Move and Kinect, it will be more difficult for Nintendo to capitalize on that sector of the market.

Nintendo did not immediately respond to request for comment.