Computing the First-Party and Third-Party Tie Ratios
A console's software tie ratio is the ratio of the total number of
software unit sales to the total number of hardware unit sales. This
gives an average number of software titles per platform owner.
Recently Anita Frazier, analyst for the NPD Group, has commented
that tie ratios "can be an indication of the health of a system",
but can also be used in misleading ways.
Moreover, "as a system
gets further along in its lifecycle and perhaps hardware sales start
to diminish, the tie ratio tends to go up because software sales are
the bigger draw. If a hardware system is doing gangbuster sales, then
the tie ratio can go down even if there are lots of overall sales."
Ms. Frazier's comment that a tie ratio could go down is
interesting because, while we didn't have direct evidence of it at the time, some
industry-watchers suspected that the Wii's software tie ratio had
been constant, or even going down, during the third quarter of 2008.
Using the above graphs and the known installed hardware bases for each
system during the first 23 months on the market, we can estimate tie
ratios relatively easily.
Keep in mind that the above figure is for the Xbox 360 after
September 2007 and for the PlayStation 3 and Nintendo Wii after
(Note that the figures shown above were estimated
from Nintendo's October 2008 presentation to investors, but the total
tie ratio for each platform corresponds to known values of each
platform's total tie ratio provided to the media by NPD.)
Nintendo's first-party software dominance is made manifest in the above
figure, showing that Wii owners have between two and three
Nintendo-published games in their libraries, on average.
comparison, by September 2007, Xbox 360 owners had between one and two games published by Microsoft. A PlayStation 3 owner in
September 2008 would have owned on average just one Sony-published
It is worth noting that Microsoft's current tie ratio after 35
months on the market is 8.1.
In addition to the figures above, we can examine the Wii's tie
ratio during 2008 and see how it has changed. Here are the Wii's
first- and third-party tie ratios graphed independently in 2008.
First, the effect of Super Smash Bros. Brawl, which sold 2.7
million units at release, is clearly visible in the increase of the
first-party tie ratio in March 2008. Second, the tie ratio for the
Nintendo Wii has been relatively constant since June.
hardware has been selling exceptionally well from June through
September, software sales must have been increasing in tandem with
the hardware sales to keep the ratio constant.
Moreover, the ratio
dropped just slightly from August to September, which is probably the
decrease to which Anita Frazier alluded in her recent remarks on tie
The author wishes to thank Joshua J. Slone for the use of his Garaph site, which is an indispensible source for various game industry data, including the Media Create and Famitsu sales data used in this article.