- The novel coronavirus outbreak is disrupting the global supply chain.
- Sony’s PlayStation 5 (PS5) could be at risk thanks to the disruption.
- Potentially weak demand could wreck the console’s prospects.
The grapevine suggests that Sony’s upcoming PlayStation 5 (PS5) console may be delayed due to the novel coronavirus (COVID-19) outbreak that has sent the global chip manufacturing supply chain into a tailspin.
Sony has consistently failed to reveal details about the pricing or launch date of its next-generation console even though AMD – one of its key suppliers – has indicated that the PS5 could see the light of the day this holiday season. But a closer look at the supply chain developments in critical industries indicates that even if Sony manages to launch the PlayStation 5 this year, it’s likely to struggle.
The biggest threat Sony’s PS5 faces
It has already emerged that the cost of manufacturing the PS5 console is going to be much higher than the last one.
The basic PS5 console may be priced at around $500, while a “Pro” version could be much more expensive at a price point that could be north of $600. But there’s a possibility that these price points may move higher as components could get costlier on account of novel coronavirus-led shortages.
Apple, for instance, has already announced that its supply chain is ramping up at a slower-than-expected pace. That’s not surprising as according to a report, 938 of the Fortune 1000 companies have suppliers based out of Wuhan, the epicenter of the outbreak. If there are fewer suppliers producing components for a device such as the PS5, the manufacturers who are producing them will demand a premium going by the basic principles of the demand-supply curve.
What’s more, producers of key components such as memory chips have already been curtailing their production levels and capital expenses for 2020 in a bid to boost prices. As a result, the price of critical components such as NAND flash memory could rise remarkably this year and make solid-state drives (SSDs) pricier. This is particularly significant as SSDs are a much-publicized staple within the next-gen consoles.
While the PS5’s SSD will enable faster load times, rising component costs could force Sony to increase prices. As such, the supply chain disruption caused by COVID-19 and the dynamics of the memory market could eventually make the console a pricey bet.
PlayStation 5 demand may take a hit
The novel coronavirus outbreak has dented the global economy big time. Goldman Sachs, for instance, has reduced the U.S. GDP forecast for the first quarter to 1.2 percent as compared to the prior forecast of 1.4 percent. That’s significantly lower than the 2019 growth rate of 2.3 percent.
The weak U.S. GDP growth forecast is bad news for Sony and the PS5 as this is one of its largest markets. The PS4 has sold over 35 million units in North America out of its global sales of over 107 million units. What’s more, OECD data predicts that global GDP growth could slip to just 1.5 percent due to the novel coronavirus epidemic as compared to the prior forecast of nearly 3 percent.
As it turns out, millennials are already altering their spending habits in light of the novel coronavirus outbreak – prioritizing essential items in case things get out of hand.
All of this means that the PS5 could be arriving at a really bad time when the console could be pricier than it ever has been and gamers may not have the affordability nor the will to buy the console.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.