Since the PlayStation3´s launch in Japan last Saturday, more consoles have been sold than games. Put differently, not every PS3 owner also bought a game to go with it. Famitsu publisher Enterbrain has done the maths, as Eurogamer reports:
The tie-in ratio of software to PlayStation 3 sales is 0.98 - less than one game per console.
The figure suggests that a portion of the 88.400 units sold were bought with the intention of selling [them] on as part of the 'grey market', the unofficial channel for second hand machines.
Analysts expect that two PS3 games will have been sold per system by the end of the year, Next-Gen reported a month ago, which is not an ideal figure either. The same analysts expect the Wii to have have a tie-ratio of 3 by year-end. Bear in mind that the main source of revenue for console manufacturers lies in software, accessories and license fees - not hardware.
Of course, tie-ratios are always low at the launch of a console. They are traditionally higher in Japan than anywhere else, but with such an expensive machine, buyers understandably go easy on games for the time being.
The original Xbox launched with only 1,45 games sold per console, according to GameSpot. The Xbox360 had accumulated a magnificent tie ratio of 3,9 by the end of 2005, according to Games Industry, but that result was in part due to the hardware shortage driving some retailers to prioritize customers who were willing to buy more games with the console.
Let us compare these figures with the tie-in ratios of consoles which are halfway through their lifespan. According to IGN, for the most part of 2003 those numbers looked like this:
The PS2´s tie-ratio has gone up to a staggering 11 last year, according to The Economist. So we see that the figures are naturally lower at launch.
But, of course, launching with a good tie-ratio is important to convince analysts and third-party publishers that the tie-ratio has potential. Because the tie-ratio is one of two indicators, alongside the installed hardware base, that money can be made on your platform.
Let us bear in mind, though, that the current numbers are so devastating largely because a whole number of people are planning to sell their PS3 on at a profit, because the demand for it is so high. Yet this raises another important point.
Why did Sony decide to lower the price of the 20GB model while re-including the HDMI port at a great production cost (and additional loss in share value)? They were sure to sell that measly launch shipment anyway.
And now the grey market prices show that customers are prepared to pay substantially more than even the original price. Those sellers are making a fortune and the extra profit they are making could have gone to Sony instead, if only they had stuck with their original prices.
Lowering the price in Japan was the economics of the madhouse. It is as simple as that.
Sources: Eurogamer, Next-Gen
Thanks to: Joystiq, PlayStation Team