Analysis: Why Next-Gen Consoles Will Likely be Delayed

The COVID-19 pandemic has had a terrible social and economical cost on practically every industry. First and foremost, our hearts go out to those who have been afflicted with the virus. The overbearing issue on all of us is the death rate of the virus and how that will impact so many families out there and the top priority of every persons should be limiting the spread of the virus to save lives.

Recently, we have been given assurances from both Sony and Xbox that they plan to go ahead with the release of their upcoming next generation consoles in Holiday 2020. 

Dutch website LetsGoDigital confirmed as much when they spoke to PlayStation’s Dutch PR:

“BAAS, the Amsterdam PR agency for Sony Interactive Entertainment Benelux, has informed LetsGoDigital that the corona virus has not yet delayed the launch of the PlayStation 5 for the time being.”

As for the upcoming Xbox Series X, Phil Spencer recently spoke to Ryan McCaffrey on Unlocked 437 and had this to say on the matter:

We have nothing right now that says we’re not going to make the dates that we’ve been planning.”

“But this is real time stuff, and I’m going to put the safety and security of the teams at the top, along with a quality product. I don’t want to rush a product out if it’s not ready.

“The thing that I’m going to put front and centre is safety and security of the team.

“There’s no decision I will make, or frankly, anybody at Microsoft could even ask me to make that would compromise the safety and security of the teams for a near-term either financial or product gain. The teams are the most important thing.”

So, what we can infer is that both companies are planning on shipping their respective next gen consoles and not giving too much alarm that they won’t be able to fulfil this undertaking. However, both statements leave open the door for there to be delays. For instance, the Sony PR statement says COVID-19 has “not yet” delayed the PS5. Likewise, Phil Spencer acknowledges it is “real time stuff” and an evolving situation whereby the possibility of a delay exists.

What we have seen so far is that multiple video games have suffered delays as a result of the impact of COVID-19. Most recently, the highly anticipated The Last of Us 2 suffered an indefinite delay with no new release date. It’s not alone however. Game studio Naughty Dog blamed logistics as the reason behind the delay in an official statement released on their Twitter channel. 

The official statement from Naughty Dog re: The Last of Us 2’s delay.

We can infer that logistical issues mention pertain to the physical release of the game and manufacturing all the components that go into making the case etc. Moreover, we can also assume that another logistical issue they were facing is delivering the copies to stores all across the globe. This is by no means the first, or even the last game to be delayed due to COVID-19 but it is the most high-profile and represents a massive disappointment for a game that was already delayed to give the developers more time to crunch. 

The reason we pose the question if next generation consoles will follow suit is that if a game like The Last of Us 2 is being delayed due to logistics – this is surely a much greater issue for console manufacturing. After all, it is a much larger undertaking to manufacture and ship consoles than it is a video game. Now, the consoles are expected to launch some 4+ months after The Last of Us 2 was scheduled for so there’s a better chance of them releasing on time but it’s far from a given at this point. 

When it comes to console manufacturing, it’s not much of a secret that it’s largely done in China. The pandemic saw its first outbreak in China and in the earlier stages it was the worst hit country in the world. Since then, China has seemingly managed to get the virus under control somewhat. However, as reported by UK news website The Guardian there’s a chance of a second-wave affecting China: 

Wang Zhonglin, Wuhan’s Communist party chief, said the risk of a rebound in the city’s epidemic remained high due to both internal and external risks and it must continue to maintain prevention and control measures.

A second-wave of the virus is now one of the biggest challenges that Asian countries could potentially face with a rush of panicked people racing home to beat border closures and quarantine orders. As reported by The Guardian:

A study in the Lancet Public Health Journal said the extreme restrictions on Wuhan helped control the outbreak, and lifting them now could see a second wave by August. Dozens of new cases are reported daily in mainland China, almost all imported. However, there are accusations of coverups, and it was not until this week that Chinese health authorities included asymptomatic people who tested positive – estimated to be 18-31% of cases – among its reported number.

As reported in The Guardian. Read the full article here.

The trap we cannot fall into, and this applies in an infinitely larger context than the video game industry, is to underestimate this virus. We have seen how failures to lockdown early have resulted in rampant spreading of COVID-19 and the reality of this not going away anytime soon is hitting hard. In fact, those saying it’ll be over by the Summer make me remember those who thought the Great War would be over by Christmas.

That’s not to say that there will still be a great deal of disappointment if next-gen consoles do face a delay. After all, the excitement of a new console is something to look forward to during these dark times. But we need to dissect the issues that could be faced in meeting the deadlines to manufacture and ship these consoles, as well as the cost – both human and financially.

After all, it was being reported earlier in the year that Sony was already facing manufacturing issues before the pandemic took over. Bloomberg published a revealing article on Sony’s issues in the manufacturing of the PS5:

Scarce components have pushed the manufacturing costs for Sony Corp.’s next PlayStation to around $450 per unit. The company’s biggest headache is ensuring a reliable supply of DRAM and NAND flash memory.

We know there was already a financial issue for Sony to consider and with COVID-19 only worsening since that report, I can only imagine that headache has worsened also.

Not much at all has been revealed on the PS5’s manufacturing. We know for the PS4 Pro, Sony used Foxconn and Pegatron. A factory worker for said companies gave an interview at the end of February revealing what it was like in the factories at that point. As reported by Forbes:

an interview by NPR with a factory worker that works for smartphone makers Pegatron and Foxconn noted that the two firms normally employ more than 1 million people across China. “Most of them have not returned… One production line used to have 4,000 people. Now there are about a dozen.”

Foxconn did reopen factories in the middle of March in China. However, Chairman Young Liu had told investors that the factories were operating at 50% capacity. In a conference call at the start of April, Foxconn said [regarding iPhone development]

“But if there’s a further delay in the next few weeks, months, then you probably have to reconsider launching time. It’s still possible.”

Whilst this is in reference to the upcoming iPhone, what we can infer from this is that consoles likewise will not be exempt from delays should production lines be delayed, say by a second-wave of COVID-19 hitting China.

It seems that all it would take to put the nail in the coffin of a holiday 2020 release of the new consoles would be factories having to shut down again, even just for a few weeks or a month. Commenting on the impact of the shutdown in February, Rui Zhang, general manager at Lorom, which makes cords and is listed as a top supplier to Microsoft told The Washington Post:

“Most suppliers pretty much stopped supplying the whole of February,” said Zhang. “We are missing a whole month. All of the supply chain managers I talked to … It will probably take them two or three months to recover.”

The supply chain relies on transparency and punctuality and those two foundations are not reliable right now. Right now, the PR speak is that Sony and Microsoft are confident hoping that the factories and supply chains will be sufficiently working at a capacity to facilitate the development of enough new next-gen consoles by holiday 2020. However, with the threat of a second-wave hitting China looming, it’s looking increasingly likely console delays may be on the horizon, or at the very least some significant supply shortages.

Written by
Head writer and PR guy for @TGGamingReviews. Business Inquries: charlesoakley@thisgengaming.co.uk

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