Xbox 360 Software Attach Rate Is 'Alarming'

The latest issue of Jason Kraft and Chris Kwak's 'Video Game Journal' for the Susquehanna Financial Group examines the software attach rate for the Xbox 360, and explores why such an "alarmingly high" rate may not bode well for Microsoft's next-generation console.

Specifically, the report cites the recently announced Xbox 360 attach rate of around five games per console sold as confirmed by Microsoft in October, a number that was up from the roughly four games per console attach rate announced by the company at the console's launch in 2005.

It concludes: "We believe the unusually high attach rate on the 360 is a sign of an increasingly unhealthy console growth rate, and should be worrisome to publishers and investors."
The analysts further explain their hypothesis by offering that a significant portion of the Xbox 360 consoles currently in circulation were purchased by hard-core gamers, who, by definition, purchase a lot of games.

In conclusion, the authors state, "If the Xbox 360 sports an attach rate of ten by holiday 2007, it will probably be because it has failed to gather critical momentum. What does it benefit publishers and investors if ten games are being purchased by a total audience of 10 million 360 owners? It doesn't take effort to see that a console with 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 mln."

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It was my understanding that more games = more money. If Microsoft can't get more people to buy 360s what does that matter? So long as those who have 360s keep buying games it should make no difference...

What ??
Not sure what math you (the author) are using.
Your installed base will continue to rise.
To keep a attach rate at 12 or even 10 as it rises
would be good. It sounds as if the author doesn't expect any more 360's to be sold. Also how long will it take to get a installed base of 50 million for any console and keep such a high attach rate ?
SPIN, SPIN, SPIN

I do understand the idea that more people owning a 360 = more prospective game buyers; but anyone who buys a 360 and 1 game will never give Microsoft the profit they are looking for; since all companies lose money on consoles.

If they lose 100 to 150 dollars (speculation) per console, then to make that back they'd need to be selling 5-10 games per console just to break even (I don't know how much money Microsoft itself earns from game sales, but I bet it isn't much).

And another thing that doesn't make any sense is, why should it matter how many games CURRENT console owners are buying; they already have the console and chances are won't be buying another; so how is this analyst's report even remotely indicative of anything important in the world of gaming?

This author has got it all wrong; the Xbox360 needs a large software attach rate AND a large fanbase. Because 70 million console owners buying 10 games a piece is far better than any of the numbers that person came up with...