While the next-generation consoles are slated to arrive at the end of this year, we’re not so sure that it’s going to actually happen.
With the world in quite an interesting place at the moment every industry is experiencing uncertainty. But somehow, both Sony and Microsoft seem rather adamant about launching their next-gen consoles this year. While it’s an exciting prospect, I’m starting to think it’s nothing more than a dream at this point. Much as it pains me to think about, there are a few reasons why the next consoles will, most likely, be delayed.
Best case scenario right now, the curve flattens and we get in a stable situation within a month or two in terms of handling this virus. Businesses can start opening again by June, and things start to “normalize” by July. Granted that is the absolute BEST case scenario at this point. Multiple states have yet to feel the wrath of the virus and are getting hit at later times, and this could linger on even longer.
For the sake of this argument, let’s go with the best case scenario…now what? Well the hard part begins and we need to repair all the damage that’s been done. The economy is basically entirely shut down at the moment and a quick stimulus package is nothing more than a Band-Aid. People have lost jobs, with the unemployment numbers doubling in less than a month. Businesses (potentially even GameStop) are going to be gone when these numbers eventually catch up to them.
So while we can celebrate stabilization, and freedom to roam around again, we will feel the effects of a recession extremely fast. People most likely are not going to rush out to buy a new TV, or drop 500 dollars on a video game system right away. If we are talking about reintroducing the world in July, that only gives these new consoles maybe 4 months time for recovery, and anything can happen in those 4 months. Expect a lot of changes to come from this. People will be scared to be in groups for some time, and stores will need to adapt. Malls will be impacted heavily, and if things aren’t normal by Black Friday then there will be a lot of doom to be had.
The Pandemic Could Go On
We talked about the best case scenario, but the worst case is this continues to go on or even get worse. Like I mentioned some areas still really haven’t been hit by this virus, including major travel areas like Phoenix. When the weather changes, the people migrate away from, or to, these areas. Snow birds start moving about, and this virus can easily become more widespread.
Say lockdown ends and this virus just re-appears in a wave that ultimately proves worse? Or, more terrible, it never goes away? If we are still not flattening the curve by June we can wish all intentions of a “normal life” by the end of this year goodbye.
Beyond the economic devastation, it means nobody is going to go line up for these new consoles. We saw this happen already with Samsung’s new phones. They released the S20 just as the Pandemic was beginning to happen and sales have been absolutely terrible. There are no phone stores open, and electronic stores are barred to “curbside pickup” so nobody is roaming by the big Samsung display and playing with the new gadgets.
The same thing can easily happen with consoles. GameStop is trying everything they can to stay in business right now, but how will we line up to get a new console? Everything is closing, and what is open is prohibiting in person sales of “non essential items.” Personally I couldn’t even find a modem because it wasn’t deemed “essential” so I doubt consoles will fall into that category. Online systems are easily hacked, and pre orders will be dismal until at least August when everyone finds out if they still have a job.
A good way to sell a new console is to let people play it. This is especially true if VR is going to stick around. If people are scared to be within 6 feet of each other, then sharing controllers and headgear for VR is probably 10 times scarier, no matter how much someone wipes them down between plays. Trade programs are also extremely vital for letting people upgrade new tech. Phone companies do this yearly where people can trade in their own phone toward a new phone. The same goes for consoles, where people will be trading in the current generation consoles to get some sort of discount on the next generation. Bad news here, all trade programs are closed at the moment due to health concerns….
No Major Events
A lot of media and news has been pushed online, but there’s still a need for major events. Gamescom, PSX, E3, etc…. it gets a lot of people in one place to try new things. Companies can have representatives there, the media is on hand to provide impressions, and most importantly fans get to try hands-on experiences. This sells consoles. Nothing fully digital will ever grab as many people marketing wise. There is just something about press conferences that hypes people up, and we have none.
Similar to the economic situation, people are going to be hesitant to return to large groups after this Pandemic. Being told for months to stay away from people, and not being sure if the virus is controlled yet, will make people stay away. Again passing around controllers with a group of people who may not be up on their hygiene requirements (anyone who’s been to SDCC or E3 will vouch) is probably not a good idea.
I have a feeling the reason Sony’s PS5 reveal has been a bit clunky, is due to all of this. There were strong leaks leading to a PSX event in late February to early March, but once the Pandemic started kicking in, Sony quickly cancelled all events.
Manufacturing Is A Big Deal
The most assuring concept of this whole ordeal has been “manufacturing is running again!” Things ramped down due to the Chinese New Year, as expected, then the virus hit almost directly after. This meant manufacturing never really got a chance to recover like usual, and the backlog these companies built for the short period of time were gobbled up rather fast. Things have slowly been ramping back up over the past month, and the major companies have stated their supply chains are okay, but there is a lot more at play here.
Consoles play just a small fraction of the parts needed to build them. Both consoles are going with SSD’s, they need chips and boards, etc…. and there are multiple companies aside from them, fighting over these parts. While an initial launch could very well be comfortable for the console makers, the follow up could lead to yet another shortage.
It’s already hard to get a new console shortly after launch due to demand, but the shorted supply chain is more likely to hit them as sales ramp up and demand increases after launch. Granted the economy is in full swing by the holidays, that means everything is going to be selling in high numbers, not just consoles.
Granted the consoles could still release with this constraint in play, but the downside will fall on consumers as the units will cost more. If the consoles still release this holiday we can expect a new variation the following year with new internal parts, and a dramatic price decrease (or extensive sales) within months as supply for the parts becomes more readily available.
Why Wait to Announce a Delay
With everything going on, and a delay almost guaranteed at this point, why are the console makers so “sure” units will release this holiday? Investors, that’s why. The holiday release is very important for many reasons, but the biggest reason boils down to holiday dollars. These consoles will without a doubt sell out whenever they release, but releasing in the holidays carries a big media following as the massive crowds spend months trying to find one on shelves.
That’s not all. These consoles have already been “sold” to investors by both major companies. These investors of course are gambling with these consoles being big and returning a big investment this year. It has helped stocks stay strong as new consoles always spike investments and high value. If you need to understand this better, simply go look at Sony’s stock over the years.
Each time a PlayStation was talked about, their stocks increased dramatically, then slowly flattened over time. This is happening now as well. PS5 is potentially more important to Sony than Xbox Series X is to Microsoft, but they both are seeing an increase in value based on their promise to deliver this year. Any announcement of a delay is going to make their stocks, especially Sony’s, crumble extremely fast.
So Sony’s hands are tied to a holiday release, or at the very least, Sony is waiting until the very last minute to talk of any sort of delay. This is exactly why Sony will shut down any hint of a potential delay within days of it coming up. Would they risk low sales for what is their most vital product in an attempt to please investors? Probably not, but they also are not going to say anything 6 months out.
Which leads us to Microsoft which has been struggling immensely in the console war and needs to do everything perfectly. They know the cards in play, and while not as reliant on the Xbox they also know they can’t be the first to announce a delay. Let’s say Sony pulls through and does release this holiday, Microsoft simply cannot afford to lag behind and release months later. If anything, Microsoft’s objective is to release first so if anyone is going to eat the high cost of short supply it will be Microsoft.
Do I think the consoles will be delayed? That depends on when we pull out of this pandemic. We will have to see what happens when restrictions are pulled and which route the virus takes. If it spreads again, the consoles will be delayed. If the virus slows, we’ll still need to watch the economy as we’re walking a fine line between “things will get better” and total devastation. Hopefully we’ll know something sooner rather than later.
What do you think will ultimately happen with the PlayStation 5 and Xbox Series X releases?