Tuesday, November 14, 2006

More PS3 consoles sold than games



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:

PlayStation2: 7,1

Xbox: 5,8

Gamecube: 5,7

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

12 comments:

Falafelkid said...

As a little post-script to the post, the GameSpot article also notes that the Xbox360 sold 62.135 units at its launch weekend in Japan. So Sony only managed to sell around 25.000 more than Xbox360 - on their hometurf, no less.

Of course, there were plenty more Xbox360 consoles sitting on the shelves after its launch - and Sony would have been able to sell at least twice as many units, I believe, if only the production process would have allowed for a bigger shipment.

But economically it also makes sense to compare sales figures without considering the reasons. And beating the virtually non-existant Xbox360 by such a small margin is an embarrassment, no matter how that came about.

Falafelkid said...

Oh, and if any of you would like to see what a PS3 looks like when opened, go check Japanese site Techon or watch the video clip, courtesy of Kotaku.

some guy said...

“But economically it also makes sense to compare sales figures without considering the reasons. And beating the virtually non-existant Xbox360 by such a small margin is an embarrassment, no matter how that came about.”

I will have to respectfully disagree with you on this issue. How is this an embarrassment? Sony sold out completely; not to mention it has only been a few days. Currently in Japan there is a huge demand for the PS3; there was never demand for 360 nor have there been lines of people waiting for hours if not days to pick up the console. The fact that you are intentionally excluding/ignoring that there is a shortage of PS3s I must admit is disturbing.

Note: I am not being cynical, just respectfully disagreeing with your analyst.

Falafelkid said...

Hi Some Guy.

How is this an embarrassment? Sony sold out completely; not to mention it has only been a few days.

Might I, in turn, disagree with you (though just as respectfully, of course)? ;) No, I completely understand your argument and that is just why I originally wrote that ´it also makes sense´ to see things this way.

Basically, the angle is the same as Reggie took at the pre-E3 press conference in 2005 when he was comparing DS and PSP sales figures. He noted that the DS being ahead was also due to the fact that the PSP had not yet launched in Europe, but disregarded that aspect, saying "That's Sony's issue, not my problem."

So do you see his point? Why should we make excuses for Sony´s launch when we could just look at the hard facts and see they only sold 25.000 units more than Xbox360?

I am not saying that this is the only way of looking at things. It is, of course, important to note that Sony would have sold more if they could. But you cannot take a conditional clause like the one above to the bank and cash it.

Falafelkid said...

And in case you are interested:

"GameCube sold more than one-half million units during the first week of availability," according to IGN. Nintendo claimed that that made the Cube the "fastest selling console in history."

So I guess that goes to show that a launch is important but not everything.

Anonymous said...

.....and also the fastest console to loose all 3rd party support.

some guy said...

I see that point of view and understand it; I think that is how the Nintendo PR people will spin the issue at least (Reggie). But the reality of the situation is that Sony cannot manufacture enough PS3 units, not that’s consumers aren’t interested in the console (as was the case with the 360). Now what Sony should be embarrassed of is the lack of Blu-Ray drives they have available (causing the PS3 shortage). Sony had more then enough time to manufacture these drives and they have been aware that they are an essential part of the PS3 for the past few years. It is just funny that it took something small like blue laser diodes to slow production down to a crawl.

Also regarding the 360 sales in Japan; they still haven’t hit the 300,000 units sold mark yet and it has almost been an entire year. Just to put things into perspective.

On another note let me say that I don’t think that the success or failure of the PS3 will have any affect on Wii, but will mean everything to Microsoft.

Anonymous said...

to think people went to a shop parted with good money for a 1996 control pad and a unproven buggy movie disc player

beyond belife why in late 2006 would you buy a console with long loadtimes and a very very very outdated controller

if i was a shop assistant id be crying with laughter at there pitifull mentallity

its psp fanboys allover again convinced that pile of crap was going to compeat with DS could us more inteligent nintendo gamers get it thru there thick heads it was a rotten pile of poo and DS would kick its arse

psp is currently the lowest selling game device in usa and DS THE HIGHEST

wii shall DS the ps3 its all in thre commonsence do i wiimote or button bash not a hard desition

Anonymous said...

Don't fool yourself , PS3 will sell like hotcakes, even at a $600 price !, you know why !? because it has tons and tons of 3rd party support, the 360 is starting to de well in this area, Nintendo a little bit especially when it comes to Kiddy games , that will release also in the other consoles, at the end nintendo have only mario and zedla and they are building an empire around them.

Falafelkid said...

Anonymous.

Don't fool yourself , PS3 will sell like hotcakes, even at a $600 price !, you know why !? because it has tons and tons of 3rd party support, the 360 is starting to de well in this area, Nintendo a little bit especially when it comes to Kiddy games , that will release also in the other consoles, at the end nintendo have only mario and zedla and they are building an empire around them.

There are so many things wrong with what you said, I do not have the time to pick out every single aspect. But when you look at Sony´s third party support, that has been crumbling significantly.

GTA4 is already no longer an exclusive, nor is Assassin´s Creed. And plenty of titles, like NBA Live 07, have been cancelled (check this page, although the guy seems to be a fanboy, the facts appear to becorrect).

And I am sure that Square Enix (FF) and Konami (MGS4) are considering going multi-platform. Do you know how much money they need to make with their respective games in order to recoup the loss of PS3 development?

Of course, the PS3 still has a lot going for it, even given the tide of bad news. But what you wrote is just plain ignorant, I am afraid to say. As far as third party support is concerned, Nintendo have gained significantly (just consider Ubisoft) and Sony has lost. And Nintendo has quite a number exclusive third party titles, while the PS3 seems to get less and less.

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