When High Attach Rates are Evil

the excellently brilliant guys over at susquehanna financial group — jason kraft and chris kwak — have just published a paper on how high attach rates show weakness in hardware sales.

makes total sense. they nail it:

It doesn’t take effort to see that a console with an attach rate of 8 and an installed base of 50 million is superior to a console with an attach rate of 12 with an installed base of 20 mln.

what does that mean for the xbox 360 with its 5.2 game attach rate?

well. to me, it means the games are good. it’s not just a market flop *cough* psp *cough* with a crap hardware run rate AND a crappy attach rate.

so, why are hardware sales so… well… meh? they’re not bad. everyone agrees on that, tho, they certainly aren’t stellar.

it’s the “wait and see” tactic. now that they are “software entrenched” microsoft was right to want to hurry along the launch of the ps3 and the wii. from microsoft’s point of view, it’ll be nice to see the marketplace recognize hype when they finally see it. and, it’s always good to compare apples to apples — not apples to photos of apples you may get some day.

that being said, it’s the end of the wait and see period. everything is on the table now. so, expect the 360’s tie ratio to drop and the ps3’s to rise. (the wii will always have a terrible tie ratio. that’s just the kind of console it is. tho, for nintendo, it doesn’t matter — they make money on the hardware.)

and, in their conclusion, they posit this:

The only metric worth focusing on is the console installed base, as this metric drives all others.

which, is absolutely true.

that’s why i get soooooooo goddamn irritated when i see uneducated comments in forums where people say they are going to get a ps3 because it’s about the “games.”

folks. i hate to break this to you, but, there are a few truths coming out about this generation of consoles vs. the last:

  1. sony is pissing on software partners.
  2. microsoft is wooing and loving on software partners.
  3. last generation, sony had “all the games” because they had the install-base. this generation, the 360 has the install-base.

sony’s saving grace is old, established franchises like final fantasy, mgs and gran turismo. however, those are NOT games that the mainstream plays.

these are the top games of the last 12 months: madden, cars (yes, from the movie), need for speed, tony hawk, wwe, pro evo, fifa, lego star wars, gta….

seeing the trend? yep. all cross-platform.

the large majority of people can play the same game on hardware that costs 60% of the playstation 3. not only that, but the third fastest-selling game on the planet right now (behind the soccer … er… football games) is gears of war — an exclusive.

so, yeah. in the past, sony had the games. that’s because they had the install-base. this time around, they guaranteed themselves a tiny install-base by pricing their console at $600.

thank god sony’s got blu-ray, tho. john madden will totally thank them.


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