Used 3DS Sales Double In Japan

[Treblaine]

Ah, attach rates.

You know, I tried to look up some attach rate figures to corroborate what this article is saying (probably because I own 18 Wii games... And thus find it a little... dubious.)

Then I saw this: http://arstechnica.com/gaming/news/2006/11/8273.ars

which made me laugh.

But there's some truth to this:

Let's ignore the loss-leading console bit for now, and make some estimates on what the real situation is:

If the attach rate is 4 games, that's better than an attach rate of 2 games, right?

Well, not so fast. Attach rate is "number of games sold / number of consoles sold".

So... is 4 games better than 2? Sure. In principle more is always better.

But... If you sell 100 million consoles, with an attach rate of 2 games, and your competitor sells 50 million consoles with an attach rate of 4 games...

Who has made more money? - Assuming neither a loss, nor a profit on the consoles, and equal amounts of profit per game, both have actually made the same amount of money.

So... The Wii has sold 87 million consoles, Xbox 360 sold 55 million, and PS3 52 million.

We already see that the attach rate for the 360 has to be about 58% higher than the Wii, and the PS3 67% higher.

When you note the Wii is sold for a profit, and just how large the loss on the PS3 actually was at launch, you can see the PS3's attach rate in particular had damn well better be 2-3 times higher than that of the Wii...

But anyway... The problem with this is that lower attach rates are fine, but only if you have a larger install base as a result.

And so far, the 3DS isn't looking that great in that regard.

But that is the WHOLE POINT of this story. The 3DS is NOT selling well like the Wii nor even NDS.

It is trudging along selling much less than expected with a VERY early and significant price cut and the used market flooding with trade ins while all everyone can talk about is how few games there are and how $40 is too expensive for them.

Low attack rates(?) LOW ATTACH rates (paging dr freud) are tolerable for Wii, but would be disastrous for 3DS.

Low attach rates would be bad for the 3DS considering it's current performance. But they only become truly disastrous if the console is selling at a loss as well.

I don't know if the price drop will do that, but it's a little premature to write off the 3DS completely.

(What made me laugh in the article I linked to though, was that it said high attach rates could in fact be a warning sign that your console is on it's way to being a niche product. - Though that's based on the notion that 'hardcore' gamers are inherently a niche audience.)

Still, one way or the other, there's no denying the 3DS isn't doing so well.

Pretty sure they can't sell the 3DS for $169 wthout making a loss. Not without a complete hardware revision which in itself has a high lump cost as the order has to be changed with manufacturers wanting to renegotiate for the inconvenience.

Also remember, even if it cost precisely $169 to manufacture, there are many more dollars along the way, many also lost to Japan's unfavourable currency conversion rates, import duties, retail mark up.

For the $169 you pay up front at the store, Nintendo may see as little as $120 of those dollars.

 

[Epona]

You don't announce a price drop 2 weeks in advance but that kind of mistake should be expected from a company who also made the mistake of launching the 3DS at $250 with a piss poor lineup.

 

[CrystalShadow]

Ah, attach rates.

You know, I tried to look up some attach rate figures to corroborate what this article is saying (probably because I own 18 Wii games... And thus find it a little... dubious.)

Then I saw this: http://arstechnica.com/gaming/news/2006/11/8273.ars

which made me laugh.

But there's some truth to this:

Let's ignore the loss-leading console bit for now, and make some estimates on what the real situation is:

If the attach rate is 4 games, that's better than an attach rate of 2 games, right?

Well, not so fast. Attach rate is "number of games sold / number of consoles sold".

So... is 4 games better than 2? Sure. In principle more is always better.

But... If you sell 100 million consoles, with an attach rate of 2 games, and your competitor sells 50 million consoles with an attach rate of 4 games...

Who has made more money? - Assuming neither a loss, nor a profit on the consoles, and equal amounts of profit per game, both have actually made the same amount of money.

So... The Wii has sold 87 million consoles, Xbox 360 sold 55 million, and PS3 52 million.

We already see that the attach rate for the 360 has to be about 58% higher than the Wii, and the PS3 67% higher.

When you note the Wii is sold for a profit, and just how large the loss on the PS3 actually was at launch, you can see the PS3's attach rate in particular had damn well better be 2-3 times higher than that of the Wii...

But anyway... The problem with this is that lower attach rates are fine, but only if you have a larger install base as a result.

And so far, the 3DS isn't looking that great in that regard.

But that is the WHOLE POINT of this story. The 3DS is NOT selling well like the Wii nor even NDS.

It is trudging along selling much less than expected with a VERY early and significant price cut and the used market flooding with trade ins while all everyone can talk about is how few games there are and how $40 is too expensive for them.

Low attack rates(?) LOW ATTACH rates (paging dr freud) are tolerable for Wii, but would be disastrous for 3DS.

Low attach rates would be bad for the 3DS considering it's current performance. But they only become truly disastrous if the console is selling at a loss as well.

I don't know if the price drop will do that, but it's a little premature to write off the 3DS completely.

(What made me laugh in the article I linked to though, was that it said high attach rates could in fact be a warning sign that your console is on it's way to being a niche product. - Though that's based on the notion that 'hardcore' gamers are inherently a niche audience.)

Still, one way or the other, there's no denying the 3DS isn't doing so well.

Pretty sure they can't sell the 3DS for $169 wthout making a loss. Not without a complete hardware revision which in itself has a high lump cost as the order has to be changed with manufacturers wanting to renegotiate for the inconvenience.

Also remember, even if it cost precisely $169 to manufacture, there are many more dollars along the way, many also lost to Japan's unfavourable currency conversion rates, import duties, retail mark up.

For the $169 you pay up front at the store, Nintendo may see as little as $120 of those dollars.

You might be surprised just how small the retail markups on consoles can be. But on the other hand, the supposed profit to Nintendo of the original revision Wii was only $5.
And while there's every reason to suspect the margin on a 3DS might have been a lot higher, it's true that it's very unlikely to be large enough to cover a drop from $250 to $169...