About: Software tie ratio   Sponge Permalink

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History shows having a high tie ratio and therefore high software sales are absolutely crucial in order for a console to be successful. Not only does software generate a large amount of revenue, high software sales encourages publishers and developers to release games for your console. Using tie ratios, we could estimate how much revenue each system is generating from software, using approximate average software prices. However, tie ratios are not published every month and are only revealed periodically by insiders, analysts or NPD. Misinterpretation of tie ratios:

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  • Software tie ratio
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  • History shows having a high tie ratio and therefore high software sales are absolutely crucial in order for a console to be successful. Not only does software generate a large amount of revenue, high software sales encourages publishers and developers to release games for your console. Using tie ratios, we could estimate how much revenue each system is generating from software, using approximate average software prices. However, tie ratios are not published every month and are only revealed periodically by insiders, analysts or NPD. Misinterpretation of tie ratios:
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  • History shows having a high tie ratio and therefore high software sales are absolutely crucial in order for a console to be successful. Not only does software generate a large amount of revenue, high software sales encourages publishers and developers to release games for your console. Given hardware sales and tie ratio, absolute software sales can be calculated easily by the following equation: Software units = tie ratio * hardware units. Take the hardware sales for a given period (say 400,000 PS3s a month) and multiply by the hardware to software tie ratio (say, 4.1). The result is 400,000 * 4.1 = 1.64 million software sales in a month. This same method can be used to calculate total software sales for a system using its LTD sales and tie ratio. Its possible to have a lower tie ratio and move more software units. The Wii pushed a lot of software within its first 14 months on the market (more than 360's first 14 months), but because the Wii sold extremely well, it effectively brought its tie ratio down (ratio = software/hardware) (lower than 360's first 14 months). Sometimes, what looks bad for software is probably actually a side effect of good news for hardware. Using tie ratios, we could estimate how much revenue each system is generating from software, using approximate average software prices. However, tie ratios are not published every month and are only revealed periodically by insiders, analysts or NPD. Misinterpretation of tie ratios: * the larger the userbase, the harder it is to have a huge tie ratio. The tie ratio on a console with larger install base can often be smaller. * software does not scale linearly with hardware. * while these sales trends are interesting from a predictions point of view, it’s the actual number of games sold that publishers ultimately care about. Note: Bundled games are not included when calculating hardware to software tie ratios.
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