Most analysts predict that Sony will be able to handle production and shipping demands, despite disruptions from Covid-19. But if there’s another glitch in the process, we could see the PS5 console become a lot more expensive.
First, here’s the good news. Despite Nintendo having obviously struggled to meet demand over the past few months, it doesn’t look like Sony will face the same difficulties.
“Sony will most likely not be in this situation unless something unpredictable happens between now and product launch,” says Chirag Uphadyay, a Senior Analyst at Strategy Analytics. “They have been managing two console strategies smoothly since the launch of PlayStation 4 Pro back in 2016.”
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Having that two-console strategy means that the company is used to sustaining demand across products while continuing to support different console generations. This is actually a rare scenario where it works out nicely for both consumer and vendors. Consumers can opt to spend less on upgrading and vendors get better revenue for their newest console, explains Upadhyay.
And unlike Nintendo, Sony has seen demand decline in recent months, so it shouldn’t suffer the same shortage problems.
“Demand for PS4 games and hardware had been ramping down over the past year since Sony announced PS5 was on the way for the holiday 2020 shopping season,” says Lewis Ward, IDC’s research director of gaming, eSports and AR/VR. “In some ways, it wasn’t strategy so much as timing and luck, if you call anything related to COVID-19 lucky. ”
Sony probably isn’t expecting sales to go through the roof with the new console, but Uphadyay predicts it will at least outsell the Xbox Series X: “According to our latest research, Sony will ship around 2 million units of PS5 in the first quarter thanks to hardcore gamers and tech enthusiasts. In the current financial climate, I am sure Sony is keeping its expectation low.”
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There seems to be a cautious optimism around the PS5, with analysts predicting Sony is in a comfortable position, albeit not quite as comfortable as the company would like. However, there’s always a slim chance that something unexpected will disrupt production, which could mean that demand outstrips supply.
“There’s still plenty of room for a “second wave” outbreak to throw supply chains into disarray (not to mention U.S.-China trade tensions),” says Ward. “But as of right now I’m pretty confident that both systems will be at retail stores and available online by the millions this holiday season”
Sony is currently ramping up production for the PS5, with the systems expected to ship in the next few months and arrive on shelves before Christmas. As such, the company isn’t completely out of the woods just yet. And if something does disrupt that supply chain, then you might have to dig a little deeper in your pockets if you’re desperate for the next gen console.
“Sony and Microsoft have an indirect means of moderating demand – they could raise wholesale costs to retailers and practically all of them would pass that on in the price, driving down demand,” says Ward. “That’s a potential fallback position in case there’s a big supply chain disruption in 3Q, but it’s an unattractive option to be sure.”