In November 2020, Sony and Microsoft finally unveiled their new consoles; the PS5 and PS5 Digital for one and the Xbox Series X and S for the other. Unfortunately, getting one or the other console was complicated from their launch. For some, this was the result of a marketing strategy for manufacturers, a sort of shortage organized to create the buzz and keep players in suspense. But it still amounts to making a risky bet since disappointed customers could turn to an easy solution and turn to the competition. But other elements beyond the control of Sony and Microsoft could explain the shortage of consoles in 2021 and why this situation should not change for several months, or even before 2022.
A global pandemic
Although console manufacturers kick off production long before the presentation of their new baby, it was quite difficult for Sony and Microsoft to predict that a global pandemic would turn their plans upside down. The health crisis that the whole world has been facing for more than a year has had an impact on many industries, especially the gaming industry.
In an attempt to stem the spread of the virus, many factories have closed their doors for several days or even weeks, fatally causing delays in orders. However, the delay at a certain level in the production chain of nextgen consoles necessarily had a domino effect and therefore led to other delays at various levels.
But the health crisis has not had an impact only at the level of the production of PS5 and Xbox. Global transportation has also been disrupted, particularly due to the increase in the number of online orders.
An almost global shortage
The impact of the pandemic was obviously not limited to the gaming sector. The entire technology industry has been affected by the health crisis. At first it was stopped for a while, then it boomed. With the introduction of telecommuting and containment, the demand for computers, laptops, tablets and more has soared. However, all these devices require components that are found in the nextgen consoles from Sony and Microsoft.
This is particularly the case of semiconductors, which have experienced a major shortage for many months. However, these semiconductors are necessary for the production of processors and graphics cards found in the PS5 and Xbox Series. Without these components, no consoles, which once again slows their production.
Sony and Microsoft could push their suppliers to go to great lengths to provide them with the necessary parts, but in reality that would not be possible. Manufacturers of semiconductors and other essential components are few in number, unlike technology companies (smartphones, PCs, car manufacturers) who use their service. There is therefore a strong demand from many players and gaming consoles do not seem to be a priority for suppliers.
Besides semiconductors, processors and graphics cards, other components of the PS5 and Xbox Series are also missing; ABF substrate – insulating film used in the manufacture of processors -, silicon wafers, etc.
And this shortage of components and consoles was certainly not helped by the blockage of the Suez Canal by a freight ship. The latter remained blocked for several, preventing delivery of the goods it was carrying, but it also prevented many other ships from delivering their containers to their destination.
A lucrative shortage for “scalpers”
These different elements mean that the number of consoles offered for sale is particularly small. And as if that were not enough, the PS5 and Xbox Series are victims of “scalping”. This practice consists of buying hard-to-find products wholesale and selling them at high prices on the web. A phenomenon which obviously does not only concern the consoles of Sony and Microsoft. Moreover, the previous consoles of the two manufacturers were also victims of this practice, but the shortage of components only accentuates the lack of consoles.
PS5s sell for a high price on eBay.
Scalping enthusiasts do not hesitate to use various tools and bots to empty the stocks of consoles offered for sale online, in order to maximize their profits. Stocks are obviously emptied more quickly without decreasing demand. At the same time, online and second-hand sales sites are full of PS5 and Xbox, but the latter are offered at twice the price announced by their manufacturers. It just blocks the console market a bit more.
A “favorable” context for gaming
Every time a new console is launched, it’s the same thing: it’s out of stock. But often, this shortage is quickly corrected by console manufacturers. In addition, today, Sony and Microsoft have smart tools to predict what will be the demand for their consoles when they are released and can therefore forecast a volume of available copies accordingly.
However, due to the coronavirus pandemic, gaming – and entertainment in general – has never been so popular. A significant portion of the population has indeed turned to video games to pass the time during confinement. We can therefore imagine that the strong demand for the PS5 and the Xbox Series was influenced by the context linked to the pandemic, reinforcing the shortage of consoles.
The strategy of Sony and Microsoft to launch their respective consoles in new markets also played in the balance. The American firm has decided to offer its console in 37 new countries, while the Japanese company has doubled the number of countries in which the PS5 has been launched compared to the PS4.
A lack of voluntary communication from distributors
The feeling of scarcity is also reinforced by the lack of communication from distributors. At no time does Amazon, MediaMarkt or Fnac indicate when they will receive consoles and when they will be put on sale on their site, quite simply because they do not wish to overload their servers and their site crashes. This would have an impact on their other customers who came to order a raclette or a camera on their site. A strategy that we can completely understand. Despite this, and thanks to word of mouth, it still happens that the sites crash when a batch of consoles is available. Unfortunately, there isn’t something for everyone.
Physical stores also do not communicate when selling consoles in their stores, to avoid chaos on the shelves. A situation that must be avoided at all costs in these times of pandemic.
You will understand, the elements that come into account in the production chain and in the delivery of the PS5 and Xbox Series are numerous, as well as the number of stakeholders. This is why the supply of consoles is a real headache for Sony and Microsoft. This particular period does not help matters and it should go on like this for many more months.