Opinion: Xbox 360 Software Attach Rate Is 'Alarming'

Razor05 · 11-22-2006, 05:24 PM

Ha, check out this article...sheeesh:

Opinion: Xbox 360 Software Attach Rate Is 'Alarming'

The latest issue of Jason Kraft and Chris Kwak's 'Video Game Journal' for the Susquehanna Financial Group examines the software attach rate for the Xbox 360, and explores why such an “alarmingly high” rate may not bode well for Microsoft's next-generation console.

Specifically, the report cites the recently announced Xbox 360 attach rate of around five games per console sold as confirmed by Microsoft in October, a number that was up from the roughly four games per console attach rate announced by the company at the console's launch in 2005.

While traditionally a growth in attach rate is considered to be a positive, the report suggests that such an increase could mean that even though Xbox 360 software continues to enjoy brisk sales, the hardware itself has not seen similar increases in consumer demand. In fact, it concludes: “We believe the unusually high attach rate on the 360 is a sign of an increasingly unhealthy console growth rate, and should be worrisome to publishers and investors.”

The analysts further explain their hypothesis by offering that a significant portion of the Xbox 360 consoles currently in circulation were purchased by hard-core gamers, who, by definition, purchase a lot of games.

Because of this, even if the hardware installed base were to remain relatively unchanged over the next 18 months, the software attach rate would continue to climb. Thus, while the numbers would seem to indicate a healthy consumer trend for the Xbox 360, the report concludes that “its growth will be capped fairly quickly without an ever-expanding hardware installed base.”

The report further adds that the Xbox 360's high software attach rate is “a damning commentary on the limited hardware installed base, most of whom are hard-core gamers.” The analysts add that what is actually needed by Microsoft for its latest console, as well as by third party software publishers, is “quicker adoption of hardware and a rapidly growing installed base on which to sell progressively more game units,” rather than just more games sold per existing Xbox 360 owner.

In conclusion, the authors state, “If the Xbox 360 sports an attach rate of ten by holiday 2007, it will probably be because it has failed to gather critical momentum. What does it benefit publishers and investors if ten games are being purchased by a total audience of 10 million 360 owners? 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."

The analysts also believe that a similar fate could await Sony and its recently launched PlayStation 3, adding: "We believe the PS3 could exhibit similar attach rate characteristics versus the 360. There is a chance the PS3 will have an even higher attach rate in its first year. Lest anyone conclude this is just the step-function trend of next-gen consoles, we caution that a high attach rate is likely a symptom of hardware shortages and a limited installed base. This is bad for publishers."

Link:

http://www.gamasutra.com/php-bin/new...hp?story=11796

Gideon · 11-22-2006, 06:34 PM

Im sorry, but that has got to be the stupidest article I have ever read. Why in the hell would people think that just because there is a high attachment rate that the consoles are not selling. I mean serious, what a load of crap.

Cygnus · 11-22-2006, 08:27 PM

Because the average person is not going to buy 5 games when he/she buys a new console unless it is a forced bundle. The article makes sense. M$ really needs to close the year strong with 360 sales in Nov and Dec. I expect Black Friday (this friday) to be big with so many 360 deals going on (e.g. Microcenter's $100 rebate on 360 that ends 12/03, CC's buy 360 and get any game free, EB/GS buy 360 and get COD2 and extended warranty free, amazon's 1000 360 Cores for $100 each that starts tomorrow, etc). There will be millions of ppl out shopping Friday and when PS3 and wii sold out, 360 should benefit with increased sales.

Quote:

Originally Posted by Gideon

Im sorry, but that has got to be the stupidest article I have ever read. Why in the hell would people think that just because there is a high attachment rate that the consoles are not selling. I mean serious, what a load of crap.

sufs · 11-22-2006, 08:49 PM

At first I agrred with gideon about it all being loaded with crap, but as I read cugnus's reply it seems to me like it could ring true. While I fully agree it will happen with the ps3 simply due to its price which can only attract hardcore fans and not regular joe. I for one have 14 games on my 360 and I have owned it since june, and have never bought this many games so quick. I have like 5 ps2 games untouched in the wrapper cause I just can't stand non HD games anymore.

Cygnus · 11-22-2006, 09:05 PM

Its kinda worse for PS3 due to PS3 "eBay investors" because many of them won't buy a single game and put the console up for auction. For example, japanese PS3 launch had a .9 console/game attach ratio; in other word less than 1 game was purchased for each PS3 sold. 3rd parties won't be pleased at that. BTW, thats another reason why stores have forced bundles at launch...

Quote:

Originally Posted by sufs

At first I agrred with gideon about it all being loaded with crap, but as I read cugnus's reply it seems to me like it could ring true. While I fully agree it will happen with the ps3 simply due to its price which can only attract hardcore fans and not regular joe. I for one have 14 games on my 360 and I have owned it since june, and have never bought this many games so quick. I have like 5 ps2 games untouched in the wrapper cause I just can't stand non HD games anymore.

Razor05 · 11-22-2006, 09:18 PM

I can hardly wait to hear the attach rate for Blu-Ray movies.

**bruceames** · 11-22-2006, 09:28 PM

I'm sorry, I fail to see why game sales to hardcore gamers affect console sales. How are they linked? Maybe if the gamers buy too many games, then they won't have the dough for a second console?

Razor05 · 11-22-2006, 09:39 PM

Quote:

Originally Posted by bruceames

I'm sorry, I fail to see why game sales to hardcore gamers affect console sales. How are they linked? Maybe if the gamers buy too many games, then they won't have the dough for a second console?

I think they're trying to say that since the majority of the 360's sold were to hardcore gamers, who make the attach rate so high, it would seem that hardware sales are sluggish. Whereas if the attach rate was less, that would mean that there would be greater hardware sales, showing that there wasn't just hardcore gamers buying the 360. So their perfect scenario is showing the 360 with a small attach rate until the market is saturated would be my guess.

**bruceames** · 11-22-2006, 09:48 PM

But while it's true that the 360 is preferred by the hardcore crowd, price (and previously, availability) is the main reason the 360 hasn't sold more units. I think once it gets down under $300 (for the deluxe) and preferably under $250, then you'll see it selling seriously mainstream.

A high attach rate would seem to be normal given the high end price. Lower the price and the rate will go down. I still see no connection, just an explanation.

Razor05 · 11-22-2006, 09:51 PM

Yes that is their reasoning for the high attach rate. But what if the 360 is just doing great, and the attach rate is high across all people buying the system?

**bruceames** · 11-22-2006, 10:00 PM

I think the 360 will continue to do just fine, both in new console sales and game sales. Why wouldn't it? With such a healthy attach rate, it would seem that developers are tripping all over themselves to get a 360 game out. Then, with a healthy supply of 360 games, a prospective buyer would probably choose the 360 over the ps3/wii because of the greater game selection (given that everything else was equal).

junehhan · 11-22-2006, 11:36 PM

Quote:

Originally Posted by bruceames

But while it's true that the 360 is preferred by the hardcore crowd, price (and previously, availability) is the main reason the 360 hasn't sold more units. I think once it gets down under $300 (for the deluxe) and preferably under $250, then you'll see it selling seriously mainstream.

A high attach rate would seem to be normal given the high end price. Lower the price and the rate will go down. I still see no connection, just an explanation.

That's exactly how I feel. They are not establishing a connection at all. They wrote that article 2 months too soon, as they shouldn't spout their mouths till after the holiday season, at which time they'll have actual real hard numbers to use in their analysis. I see their explanation, but I really fail to see how the numbers connect with each other. At a price tag of $200 below the PS3, they just might have a lot more money for buying games.

MDChris1971 · 11-23-2006, 03:54 PM

IMO these guys are morons. I for one tell all my friends about how great the 360 is and all the cool features like wireless controllers the live camera the updates which make the system perform more useful functions. Not only are they buying the premium system but several games and accessories. I think a new trend is beginning with people buying more stuff for there new toys. Looking at me for example I bought the 360 in april with 4 games. Since then I have built my library to 16 games not counting the 3 I bought at burger king the most in such a short period of time for any system. I have also bought the wireless adapter,vision camera,19 arcade titles and a brand new tv to play all this on. In addition I have kicked up renting games a lot more. I think as more people find out just how cool the system is it will reach a more mass appeal audience. Not to mention all the people I have hooked by telling or showing the nekkid women of UNO. Seriuosly though I think the 360 is really gaining momentum and this xmas season will be another huge influx of new players! I think a price drop will come when sony drops it's price!

**bruceames** · 11-23-2006, 04:08 PM

I think the price drop will come when the PS3 stops being hard to find, probably by next spring.

11-22-2006, 05:24 PM	#1
Razor05 HD = 65 beautiful inches Join Date: Jun 2005 Location: Canada Posts: 3,296	Opinion: Xbox 360 Software Attach Rate Is 'Alarming' Ha, check out this article...sheeesh: Opinion: Xbox 360 Software Attach Rate Is 'Alarming' The latest issue of Jason Kraft and Chris Kwak's 'Video Game Journal' for the Susquehanna Financial Group examines the software attach rate for the Xbox 360, and explores why such an “alarmingly high” rate may not bode well for Microsoft's next-generation console. Specifically, the report cites the recently announced Xbox 360 attach rate of around five games per console sold as confirmed by Microsoft in October, a number that was up from the roughly four games per console attach rate announced by the company at the console's launch in 2005. While traditionally a growth in attach rate is considered to be a positive, the report suggests that such an increase could mean that even though Xbox 360 software continues to enjoy brisk sales, the hardware itself has not seen similar increases in consumer demand. In fact, it concludes: “We believe the unusually high attach rate on the 360 is a sign of an increasingly unhealthy console growth rate, and should be worrisome to publishers and investors.” The analysts further explain their hypothesis by offering that a significant portion of the Xbox 360 consoles currently in circulation were purchased by hard-core gamers, who, by definition, purchase a lot of games. Because of this, even if the hardware installed base were to remain relatively unchanged over the next 18 months, the software attach rate would continue to climb. Thus, while the numbers would seem to indicate a healthy consumer trend for the Xbox 360, the report concludes that “its growth will be capped fairly quickly without an ever-expanding hardware installed base.” The report further adds that the Xbox 360's high software attach rate is “a damning commentary on the limited hardware installed base, most of whom are hard-core gamers.” The analysts add that what is actually needed by Microsoft for its latest console, as well as by third party software publishers, is “quicker adoption of hardware and a rapidly growing installed base on which to sell progressively more game units,” rather than just more games sold per existing Xbox 360 owner. In conclusion, the authors state, “If the Xbox 360 sports an attach rate of ten by holiday 2007, it will probably be because it has failed to gather critical momentum. What does it benefit publishers and investors if ten games are being purchased by a total audience of 10 million 360 owners? 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." The analysts also believe that a similar fate could await Sony and its recently launched PlayStation 3, adding: "We believe the PS3 could exhibit similar attach rate characteristics versus the 360. There is a chance the PS3 will have an even higher attach rate in its first year. Lest anyone conclude this is just the step-function trend of next-gen consoles, we caution that a high attach rate is likely a symptom of hardware shortages and a limited installed base. This is bad for publishers." Link: http://www.gamasutra.com/php-bin/new...hp?story=11796 __________________ Panasonic TH-65PZ850U Sony KDL37XBR6 Panasonic TH-37PX50U Cambridge Audio Azur 640R & 740C Paradigm Studio 60's, 20's, CC-590 & Seismic 12 Panasonic DMP-BD35 Toshiba HD-XA2 & A35 Motorola VIP1200 Monster HTFS1000, PB2100 AA 1154a MW2 LE Xbox 360 & Halo3 LE + HD-DVD GT: Razor59 Sony PS3 slim GT:Razor_59 Sony PSP

11-22-2006, 09:18 PM	#6
Razor05 HD = 65 beautiful inches Join Date: Jun 2005 Location: Canada Posts: 3,296	I can hardly wait to hear the attach rate for Blu-Ray movies. __________________ Panasonic TH-65PZ850U Sony KDL37XBR6 Panasonic TH-37PX50U Cambridge Audio Azur 640R & 740C Paradigm Studio 60's, 20's, CC-590 & Seismic 12 Panasonic DMP-BD35 Toshiba HD-XA2 & A35 Motorola VIP1200 Monster HTFS1000, PB2100 AA 1154a MW2 LE Xbox 360 & Halo3 LE + HD-DVD GT: Razor59 Sony PS3 slim GT:Razor_59 Sony PSP

11-22-2006, 09:51 PM	#10
Razor05 HD = 65 beautiful inches Join Date: Jun 2005 Location: Canada Posts: 3,296	Yes that is their reasoning for the high attach rate. But what if the 360 is just doing great, and the attach rate is high across all people buying the system? __________________ Panasonic TH-65PZ850U Sony KDL37XBR6 Panasonic TH-37PX50U Cambridge Audio Azur 640R & 740C Paradigm Studio 60's, 20's, CC-590 & Seismic 12 Panasonic DMP-BD35 Toshiba HD-XA2 & A35 Motorola VIP1200 Monster HTFS1000, PB2100 AA 1154a MW2 LE Xbox 360 & Halo3 LE + HD-DVD GT: Razor59 Sony PS3 slim GT:Razor_59 Sony PSP

11-22-2006, 10:00 PM	#11
bruceames Moderator Join Date: May 2006 Location: San Rafael, CA Posts: 10,166	I think the 360 will continue to do just fine, both in new console sales and game sales. Why wouldn't it? With such a healthy attach rate, it would seem that developers are tripping all over themselves to get a 360 game out. Then, with a healthy supply of 360 games, a prospective buyer would probably choose the 360 over the ps3/wii because of the greater game selection (given that everything else was equal). Last edited by bruceames; 11-22-2006 at 10:04 PM.

11-22-2006, 06:34 PM	#2
Gideon High Definition: euphoria Join Date: Sep 2006 Location: Somewhere between earth and hell... Posts: 880	Im sorry, but that has got to be the stupidest article I have ever read. Why in the hell would people think that just because there is a high attachment rate that the consoles are not selling. I mean serious, what a load of crap.

11-22-2006, 08:49 PM	#4
sufs Generation HD Join Date: Sep 2006 Location: Lebanon Posts: 1,019	At first I agrred with gideon about it all being loaded with crap, but as I read cugnus's reply it seems to me like it could ring true. While I fully agree it will happen with the ps3 simply due to its price which can only attract hardcore fans and not regular joe. I for one have 14 games on my 360 and I have owned it since june, and have never bought this many games so quick. I have like 5 ps2 games untouched in the wrapper cause I just can't stand non HD games anymore.

11-22-2006, 09:28 PM	#7
bruceames Moderator Join Date: May 2006 Location: San Rafael, CA Posts: 10,166	I'm sorry, I fail to see why game sales to hardcore gamers affect console sales. How are they linked? Maybe if the gamers buy too many games, then they won't have the dough for a second console?

11-22-2006, 09:48 PM	#9
bruceames Moderator Join Date: May 2006 Location: San Rafael, CA Posts: 10,166	But while it's true that the 360 is preferred by the hardcore crowd, price (and previously, availability) is the main reason the 360 hasn't sold more units. I think once it gets down under $300 (for the deluxe) and preferably under $250, then you'll see it selling seriously mainstream. A high attach rate would seem to be normal given the high end price. Lower the price and the rate will go down. I still see no connection, just an explanation.

11-23-2006, 03:54 PM	#13
MDChris1971 High Definition is the definition of life. Join Date: Sep 2006 Location: Baltimore,MD Posts: 51	IMO these guys are morons. I for one tell all my friends about how great the 360 is and all the cool features like wireless controllers the live camera the updates which make the system perform more useful functions. Not only are they buying the premium system but several games and accessories. I think a new trend is beginning with people buying more stuff for there new toys. Looking at me for example I bought the 360 in april with 4 games. Since then I have built my library to 16 games not counting the 3 I bought at burger king the most in such a short period of time for any system. I have also bought the wireless adapter,vision camera,19 arcade titles and a brand new tv to play all this on. In addition I have kicked up renting games a lot more. I think as more people find out just how cool the system is it will reach a more mass appeal audience. Not to mention all the people I have hooked by telling or showing the nekkid women of UNO. Seriuosly though I think the 360 is really gaining momentum and this xmas season will be another huge influx of new players! I think a price drop will come when sony drops it's price!

11-23-2006, 04:08 PM	#14
bruceames Moderator Join Date: May 2006 Location: San Rafael, CA Posts: 10,166	I think the price drop will come when the PS3 stops being hard to find, probably by next spring.