Is the Xbox 360's high attach rate bad?
by Justin Murray 
{ Nov 21st 2006 at 1:45PM }
The Xbox 360 has been riding high on a wave of good news. From boosts in stock performance to Sony's stumbles, it would appear all is happy in Microsoft Land. However, for every Candyland we find there's bound to be some tooth decay.
Susquehanna Financial Group has calculated that the Xbox 360's attach rate is currently a 5.2 (meaning there are 5.2 games circulating for every Xbox 360 console sold). While the number may seem impressive up-front, the high attach rate could ultimately predict the 360's failure. The idea is that casual gamers don't buy a lot of games, but there are many more of them; a high attach rate indicates a hardcore crowd. According to SIG, "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 [million]."
A high attach rate is a good thing early in a console's life -- publishers know they can pull a profit early on -- however, as time goes by, those same publishers will find that competing for those 5.2 units sold will become difficult when the install base doesn't grow. If the Xbox 360 still has a high attach rate, it is not outside the realm of possibility that it will be an enthusiast machine, not a mass-marketable product (SIG thinks the PS3 may be worse). However, if the console is selling for a major loss, a high attach rate may not be a bad idea.
Reader Comments (Page 1 of 2)
AnnieTaintUrWagon @ Nov 21st 2006 1:53PM
"However, as time goes by, those same publishers will find that competing for those 5.2 units sold will become difficult when the install base doesn't grow."
If the install base doesn't grow isn't that a problem all to itself? Of course it's harder to sell games when people start to flat out stop buying the console.
I am sure MS is jealous of Sony's position of having people buy consoles but not games.
dsr7997 @ Nov 21st 2006 1:55PM
And I am now dumber for having read that.
DesignerKid @ Nov 21st 2006 2:04PM
The fact is the hardware is still too expensive, games are too expensive and then to top it off to get the 'full' experience you're nickle and dimed by the publishers.
I can't see this hardware gaining mass market appeal anytime soon. Sure it does a lot of things, but I can't name any clear advantage over any other console out there. While some of the Live features are nice, the experience is ruined by the additional costs you incur once you do go on.
While I know many will defend the 360 (it's definitely got some nice things about it), I tend to liken it a machine made by SEGA.
Chris @ Nov 21st 2006 1:56PM
My girlfriend loves Live Arcade and would buy a system just for that if it were affordable. If Microsoft can get their Core down to 100 like they want then they can get a casual audience like Nintendo and the DS, but they are still too high.
I can't even begin to think about how PS3 hopes to succeed with this information.
Ben @ Nov 21st 2006 6:34PM
Problematically they don't take into consideration that nearly all of the hi-def games sold have been on the 360. Had there been other consoles out there, and users had other places to spend their money, the 360 would have had a lower attach rate.
Note that the 360 has yet to experience a price drop, something that normally dramatically increases sales to the non l33t. Wait for the 65 nm, the hard drive increase and the price drop in the spring. Then we will see the low attach rates skyrocket as people buy the system to download movies, and not games.
Also not taken into account is what an "attach" is. Is it an arcade game? Is it a new skin? Attached products have a much wider degree of price range than the previous generation.
raquor @ Nov 21st 2006 1:58PM
After 1 year an attach rate of 5 sounds pretty decent.
I've had my PSP for 2 years and have 5 games...
I've had my DS for 2 years or so and have 12 games...
PS2 for about 4 years and have 26.
Gamecube for about 4 years and have 13.
Wii for about 3 days and have 3 games. (granted 1 is Wii Sports :-P)
I've also dumped about 20 games in the last month between all those consoles in preparation for the Wii
burnt_secondary @ Nov 21st 2006 1:59PM
Remind me to never listen to any advice from the Susquehanna Financial Group . . .
reguy @ Nov 21st 2006 2:02PM
oooo xbox 360 failure oooo
haha high attach rate = failure, sony wishes it could have an attach rate higher than 1, thank you very much.
with all the great games coming out for the 360 next year, im sure mircosoft is real worried. hell, even if they only had gta4 and halo 3 come out for it next year, it would still not be a failure.
heres hoping kojima is forced to port mgs4 to the 360
Game Artist @ Nov 21st 2006 2:04PM
So they'd rather have Sony's attach rate or less than one?
ymmv @ Nov 21st 2006 2:04PM
There's a logic flaw in that article. The high attach rate isn't a cause, it's a result of low sales with only hardcore fans investing in the system. *All* consoles in their first year sell to that market segment and have high attach rates compared to later years. The only thing MS should be worried about is flagging sales. As long as they keep their sales momentum going (and especially once they start cutting the price) the 360 should reach the mass market.
Marty @ Nov 21st 2006 2:58PM
This article is confusing. Generally speaking, if your analysis can be summed up as "this is the number, sometimes it can mean a bad thing, sometimes a good thing", it's probably not article worthy.
siro @ Nov 21st 2006 2:06PM
Complete bollocks. High attach rate = good. Low hardware sales = bad.
> @ Nov 21st 2006 2:08PM
Attach rate is misleading; if the install base stays the same or grows very slowly, then the attach rate will increase indefinitely as new software is released.
soccergm17 @ Nov 21st 2006 2:10PM
Reading Google News today, they state on various sites that Microsoft has cut production costs of the 360 by 40%. They are now making roughly $75 in profit on each 360 (before shipping costs). So Microsoft is in great position now to cut the price when they choose. And price cuts always give a nice bump in sales. Which will then drop the ratio to a lower number and dilute the attach ratio a bit.
Lone Starr @ Nov 21st 2006 2:13PM
"However, as time goes by, those same publishers will find that competing for those 5.2 units sold will become difficult when the install base doesn't grow."
You make it sound as if the attach rate will cause the install base not to grow, which makes no sense. There is very little reason to believe that the 360 will not sell considerably more units over the coming years.
copa @ Nov 21st 2006 2:13PM
At this point, the more important attach rate is consoles sold to happy consumers.
On the Wii posts here, you get dozens of ebullient users who talk about how much fun they have had with the games, how their family and friends got sucked into it, how it makes them happy to create Miis...
I just perused the comments thread on the most recent PS3 thread here. Out of 45 comments, two people said they own a PS3 right now.
One of them said he uses it only to watch movies, and asked if anyone knows when good Blu-Ray movies are coming out.
The other said he hasn't taken it out of the box yet, and hasn't decided if he will.
I'm not convinced that Sony's less-than-1.0 attach rate is going to translate into explosive market growth.
KaneRobot @ Nov 21st 2006 2:15PM
I see the guy's point, but it just seems like flawed logic to begin with. You can usually manipulate statistics to support just about any point of view.
The 360 will be fine. Next Christmas should be really good for them as long as the price is down, say, 100 bucks, and Halo 3 isn't late. I don't imagine MS would let it be late so that is probably irrelevant.
KineticOnline @ Nov 21st 2006 2:18PM
An attach rate of 5 after a year is pretty low is it not? Any gamer i know has alot more than that, meaning there are lots of casual gamers (the lowest anyone i know has i 9, most have 12+ not including live arcade games)
I wonder if they have consider that as gaming becomes more and more "mainstream" the casual gamer is going to be buying more games too (rasing the attact rate).
JD @ Nov 21st 2006 2:19PM
A lot of you ppl need to learn to read btwn the lines... The story is basically saying high attach rate could be a bad sign. But it doesn't tell you that the reasoning is because attach rate is just a ratio Games/Console... and a high rate could mean they haven't sold a lot of consoles (only to hardcore fanboi's). Now if console sales are equal, the highest attach rate is doing better... but as the article quoted:
"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 [million]."
Just because 8*50 = 400 Million Games Sold > 12*20 = 240 Million Games Sold... in that case the lower attach rate sold more games. The article is saying M$ and Sony PoS would rather have a lower attach rate with a higher number of systems sold... increasing the denominator to lower the attach rate. It's NOT saying they'd wish to have a lower attach rate with the same number of systems sold.
Unimental @ Nov 21st 2006 2:24PM
The whole gamer point system has to have some sort of impact on this statistic, especially considering the more hardcore gamers that purchase during the first year of a console's life. I myself will admit to purchasing a couple of games for this reason.
BklynKid @ Nov 21st 2006 2:36PM
I myself own 11 games after one year. That doesn't include the arcade titles I've bought.
m3mnoch @ Nov 21st 2006 2:36PM
"Complete bollocks. High attach rate = good. Low hardware sales = bad."
that's what it's saying guys. the high attach rate indicates low hardware sales.
m3mnoch.
Danny Champlin @ Nov 21st 2006 2:40PM
Here's what I just read:
"All the positive news from Microsoft, let me see if I can make something up negative to say, you know, cause we are the press"...
beaker @ Nov 21st 2006 2:38PM
Unimental has a good point.
With the 360 there is considerable peer pressure to buy the (multiplayer-capable) games that your friends have. Everytime I sign on to my 360 I can see what everybody else is currently playing. If half of the people on my friends list are playing Gears Of War, I feel like I'm missing out on something and NEED TO GET THAT GAME. The community aspect of Live cannot be discounted. I honestly think this is the reason for the high attach rate for the 360.
Logic Bus @ Nov 21st 2006 2:39PM
The 8/50 12/20 comparison is completely arbitrary. I could just as easily say that an attach rate of 2 against an installed base of 1 billion would be superior to an attach rate of 12 and an installed base of 20 million.
The only thing that matters is the bottom line. Does Microsoft's take on all games sold outweigh Microsoft's loss on all systems sold? Show me a chart with current numbers and projections and we'll talk.
Dario @ Nov 26th 2006 7:45AM
how about the attach rate for downloadable content or for just using Xbox Live? Right now Xbox live is the world's largest platform for downloadable hd content and it is not all 60hr+-a-week-players that do that. Seems like a pile of crap from a financial analyst who is looking to come up with a new angle to spit out predictions...right or wrong they make money anyway....
m3mnoch @ Nov 21st 2006 2:39PM
"An attach rate of 5 after a year is pretty low is it not?"
from the report:
Console Launched Attach Rate
PS2 Oct. 2000 3.6
XBX Nov. 2001 4.6
GCN Nov. 2001 4.1
360 Nov. 2005 5.2
so, nope. 5.2 is retarded-high.
m3mnoch.
FSK405K @ Nov 21st 2006 2:44PM
I was FINALLY convinced to buy a 360 a few days ago when I saw that Gears had a 9.6 on Gamespot and had overtaken Halo on XBL. And thank you Joystiq for telling me about the $100 rebate at Microcenter.
My sole two games: Gears and Dead Rising. I don't forsee buying any other 360 games until Blue Dragon. After that, nothing yet sparks my interest.
As for XBLA, I've only paid for Geometry Wars. Everything else I want is on consoles I have lying around.
So what am I doing to Microsoft's numbers? I don't think I'm helping them much.
(Incidently, I bought my 360 on Nov 20th...three new systems for me on three consecutive days...imagine that bundle on EBay?)
LunarDuality @ Nov 21st 2006 2:44PM
I am reading between the lines here and see that they are saying the attach rate could seem "inflated" because the hardware isn't selling as well as expected. Less hardware means a lower number to divide the number of software titles sold...thus, a higher (but inflated) attach rate.
However, does this take into account Arcade games? Because I would imagine the number would be significantly higher if it did...even if Arcade games were considered a fraction of a retail title. People aren't just buying 5.2 games anymore and attach rate is become marginalized. People are buying a game and then buying add-ons, customizations, expansions, etc. And they are also buying small arcade games to pass the time. We need a wider scope to understand the true "health" of the 360 as a platform.
A low attachment rate can never really be a good thing...but a high one doesn't indicate a success *or* a failure necessarily.
Thryon @ Nov 21st 2006 2:46PM
I can't help but wonder how much I bring up the average. I have two consoles and 36 games.
That is an attach rate of 18 per console, no to mention 6 wireless controllers, two wireless headphones, 1 memory card, 1 HD DVD drive, and about 7 faceplates.
Trying to find a reason to get the wireless wheel now.
NATO_Duke @ Nov 21st 2006 3:30PM
Seems people could even find a bad way to look at winning 1 million in the lottery.
Justin @ Nov 21st 2006 2:48PM
The idea behind the article is that if the attach rate is rising, the hardware sales are not matching it.
The data can be taken in two ways:
1. Microsoft is not selling hardware and any additional unit of software sold contributes to a higher attach rate.
2. New 360 owners are prone to pick up 5 games upon purchase.
Option 2 is not particuarly realistic.
Product cycles have four phases: introduction, growth, maturity, and decline. When it comes to consoles, if the product is selling well, the attach rate should be low in the introduction and growth stages. In these stages the console is selling well and due to various constraints (time and economic), the attach rate will be low.
When the console reaches the maturity stage, the sales will begin to drop, albeit slowly, which will allow the attach rate to either stagnate at a low level or begin to climb up. The decline stage is when the attach rate should begin to increase.
While I don't have any numbers, I would wager that the PS1's attach rate rose significantly after the PS2 hit retailers.
Microsoft's relatively high attach rate could be an indication that they're having difficulty selling hardware.
m3mnoch @ Nov 21st 2006 2:50PM
"We need a wider scope to understand the true "health" of the 360 as a platform."
i don't think it's necessarily the "health" of the system. just the market it's in. being a year ahead, nobody (well, nobody referring to mr. mainstream) really wants to commit to hardware until they have all the options.
the people who do commit early? hardcores.
the people who buy the most games? hardcores.
the reason the attach rate is high? hardcores.
by christmas 2007, all this will be straightened out and we'll have a clearer indicator of long term attach rates.
between now and spring, tho, the ps3 will be hampered with these "bad" inflated attach rates because the hardware is so hard to come by.
well.
either that, or it'll stay normal because everyone who buys it is just running redhat on it.
m3mnoch.
RoroCo @ Nov 21st 2006 2:56PM
Let me break this down to you guys...
7,211,000 X360 sold *
5.2 attach rate =
37,497,200 X360 games owned
267,000 PS3s sold *
1 attach rate =
267,000 PS3 games owned
See the picture in the gaming industry right now? Secondly...attach rate does not mean people are keeping the same games. As new games come out, people will sell their old games to get them... assuming they are better games.
A high attach rate and an established base is a great thing for Microsoft... Spinning it any other way is just idiocy.
Thryon @ Nov 21st 2006 2:57PM
"2.New 360 owners are prone to pick up 5 games upon purchase.
Option 2 is not particuarly realistic"
Considering that most recent promotions for Xbox 360, include 2 to 4 games. And as I indicated in a past post, my local store had a promotion that allowed to purchase an extra game for only $10 more, so that would have been 5 games with the purchase of one console. Option 2 is very realistic.
DCFC Fan @ Nov 21st 2006 3:19PM
This article isn't confusing if you read carefully. None of these theories are definitive, just projection and extrapolation.
#1 - AnnieTaintUrWagon - Yeah, MS is jealous of Sony customer's buying a console (causing Sony to take a loss) and no software. That way, they lose as much money as possible. MS is very jealous of that, I'm sure. Asinine.
futanari futanari futanari @ Nov 21st 2006 3:36PM
I used to live in Pennsylvania, and let me tell you, *nothing* good comes out of the Susquehanna.
You've got to love big business, don't you? It's only there where selling a lot of your products means that you're going to fail.
Triforceowner @ Nov 21st 2006 3:35PM
I feel like dsr7997. This article goes under the presumption that people are just going to either flat out stop buying the 360 or flat out stop buying the games. It kind of irritates me, but on the other hand, as this is my console of choice, if this is the biggest "toothache" the 360 will be better than I expected.
bubbastump @ Nov 21st 2006 3:35PM
Or it could just mean that the 360 is breaking ground getting it's users to purchase more games. Even the original Xbox had a very high attach rate...so the 360 just continues that trend and exceeds it.
VampireHunter Z @ Nov 21st 2006 3:43PM
Why can't you have both a high attach rate and a high installed base. Casual gamers or not, I think the 360 can maintain that 5.2 regardless of how many consoles are sold. People like Thryon will makeup for the casual gamers.
Mario Elenes @ Nov 21st 2006 4:57PM
Is it me, or is the analyst forgetting that the 360 was (and possibly still is, to a smallish degree), a loss leader? Attach rate is the only thing that can save the console.
Having a .98 attach rate and selling a billion zillion consoles is not success, is bankrupcy. Selling a fraction of those consoles with six times the attach rate is success. Niche success, but success.
Jason Lynx @ Nov 21st 2006 4:01PM
I've never read a more retarded article in my life.
tracked @ Nov 21st 2006 4:17PM
5.2 = Average number of games each 360 owner has.
7,214,729 = Most recent Nexgenwars estimation on the number of 360s solds.
59.99 = the price of 360 games
(5.2 x 7214729) x 59.99 = $2,250,620,280
2 billion is good. I don't know how much Microsofts cut is but if it is $10 per game then it would be $375,165,908 for them.
uglyteeth @ Nov 21st 2006 4:21PM
Could it be that the 360 has a lot of good games for it? I have about 10 360 games, and they are all great games. There are more AAA titles for the system that I can't even afford.
People also have to remember that these games for the 360 create experiences for a gamer that are sometimes new and unique: voice chat, online, incredible graphics, achievements, hd. I have a decent pc but I have never experienced games in the past like I do on the 360. This has led me to buy more games than I usually do.
TMS_ @ Nov 21st 2006 4:25PM
Does it include results of XBLA? You cant simply go by games sold when you have subscription services involved plus ability to download content for additional revenue.
Freakhead @ Nov 21st 2006 4:26PM
HIgh attach rate just means the 360 is a hardcore machine so far. IT remains to be seen if it's loved by the casual types.
Rob @ Nov 21st 2006 4:57PM
@41: 41. Could it be that the 360 has a lot of good games for it?
Ummm, no. I'm sticking with last gen probably for at least a year since there aren't enough good games for me for the 360.
achiLEEs @ Nov 21st 2006 5:02PM
@22 Logic Bus: Very good arguments and points.
@m3mnoch: Missed your posts last couple of days. Good to have a voice of reason back.
On topic: I am curious as to whether or not the attach rate is still as reliable an indicator as it once was. With revenue streams such as arcade games, unlockable content, movie and television downloads, etc. becoming a larger focus for companies and undoubtedly having greater profit margins, are attach rates still as relevant? Also what about attach rate of accessories which have a much higher profit margin than games?
whatever @ Nov 21st 2006 5:27PM
Hmm, 5.2 attach rate @ ~7 million consoles vs 0.9 attach rate @ ~600,000 consoles. MS must be kicking themselves, for releasing and selling so many consoles and having such a high attach rate.
When/if they can prove that the 360 market doesn't grow, then it's news worthy. I dont' think there is any collation between high attach rate and market not growing.
More to the point, I think MS is doing an amazing job at courting 3rd party devs. And it's showing by the amount of exclusives they have snatched away from Sony. 360 users are never bombarded with so many high quality software than before.
It's a very impressive for MS to play with that equation. One they could either lower the price of the console to get more market share, however doing so would mean taking a bigger loss. So instead they're finding ways to increased attach rate. And the same time, attracting other users into buying a 360 for the games.
Ben @ Nov 21st 2006 6:16PM
I would challenge this assertion, and claim that rather than catering to a hardcore crowd, the mainstream appeal of the 360 is exactly what has led to this high attach rate. I work in retail, and I see completely atypical gamers buying 360 games two and three at a time and constantly coming back for more. I think that the high quality of Xbox Live, the ongoing incentive for playing more games that is supplied by the achievements system, and the overall mainstream selection of software is what actually has contributed to such a high attach rate. Of course, it may be the other option, but I truly believe that this is nothing but good news for the 360.