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It’s no secret that the PS5 and Xbox Series X|S have been nearly impossible to find over the last six months, and many of those looking to jump into the next generation haven’t been able to do so. The consoles are almost never available in retail stores, and online supply has been limited–and often quickly snagged by those who plan to sell it later for a higher price. But just why does the problem seem to be this bad compared to other console launches? Is it the pandemic, massive demand, or something else entirely? We spoke to the experts to get a clearer picture of the problem and when it might be resolved.
The world doesn’t just provide you with chips
According to IDC’s gaming research director, Lewis Ward, low inventory of microprocessors and Intel’s slower transition to the 10nm process for semiconductors (though both new consoles use AMD chips, which were also affected) played a role in supply issues more generally in the tech industry. And for Microsoft and Sony, the targets they set in place for console production were thrown into a “semi-chaotic state” by the pandemic.
“As a general rule, it’s pretty tough to radically change production schedules and related contract terms,” Ward told GameSpot.
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Speaking to GameSpot, NPD’s Mat Piscatella echoed Ward regarding the inventory issues related to semiconductors, adding that during normal conditions, increased demand for these components could be met by ramping up production, but this is much more difficult during a pandemic.
Semiconductors have been in such short supply that the Biden administration announced it would be looking into the situation. The components are used in a wide variety of industries, including video games as well as automobiles. Electric vehicles were hit particularly hard by the shortage, and the 100-day review of the problem is ongoing. Since 2020, the problem has gotten worse, with major automotive manufacturers decreasing profit projections as a result.
In the past, Microsoft has said it’s trying to ramp up Xbox Series X|S production to better meet demand, talking to production partners like AMD to see what can be done about the situation. Only Nintendo uses Nvidia for its chips, and though Nvidia isn’t immune to the same sort of problems facing AMD, the Switch’s technology is also older. For now, Nintendo has enough supplies to keep making the system, though that could change later this year. Neither Nvidia nor AMD see a clear end to their GPU supply shortage, with Nvidia predicting it will last until the end of 2021 at a minimum. Even PC GPU cards are currently hard to find, with older models being offered to help keep up with customers’ demand.
A loss on every console sold
A failure to make enough supply to meet demand is not exactly the end of the world for Microsoft or Sony. With early profit margins often very small–and the PS5 confirmed to be selling at a loss right now–neither company has much to gain by overextending itself to acquire the components it needs to supercharge production. Making more consoles will obviously let more players buy them, but that also means losing another small amount of cash every time it sells a unit (though it also opens the door to earning revenue on games and services). And with demand still so high, it may make more sense for the companies to stay conservative until component costs have dropped enough for each sale to be profitable.
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“Both companies, I believe, think that those buyers will still be there in late 2021 and 2022, at which point their profit margins on hardware bundles made will be more favorable,” Ward said.
Bots and re-sellers ruining everyone’s fun
Should demand still be high by the time supply does start to increase, it could finally spell doom for the re-sellers who have made use of bots to scoop up limited supplies and mark up the prices during the system’s first six months on sale. They’ve shown little sign of slowing down, with the console still listed for hundreds of dollars above their MSRP and retailers like GameStop offering them in expensive bundles with accessories and games you probably don’t want. Those who can find one at the standard price are generally refreshing listing pages to purchase them as soon as they’re in stock again.
In the past, re-sellers have even taken advantage of loopholes in certain retailers’ systems to let them buy consoles before they went on sale to everyone else, such as at the UK-based Argos. By the time they were scheduled to go on sale, they were already gone.
Were the systems being sold widely in retail stores, this would be less of an issue. The pandemic has limited this, and for 2020, several stores pledged not to sell the Xbox Series X|S or PS5 in brick-and-mortar locations at all. As long as COVID limits in-person shopping, re-sellers will continue to have an easier time getting the consoles first.
An unpredictable future
Neither analyst is certain when the situation will start to resolve itself, but the consensus seems to be that it won’t be soon. For the remainder of 2021, both could be scarce, though Piscatella views the more flexible company as the one that will fare the best here.
“Things continue to change quickly. Those companies that can best adapt to these incredible challenges will have the most success,” he said.
That success could take many forms. As of now, despite the pandemic, the PS5 has sold more units in its first five months than any system in US history, with about 7.8 million sold so far.
Microsoft, meanwhile, has a more multifaceted strategy, selling multiple systems and pushing its Xbox Game Pass service, and though one analyst has suggested only one Xbox system is being sold for every two PS5 systems, gaming revenue is way up for Microsoft. Even for those without a console, they can still play games via xCloud streaming. That feature just so happened to start a beta period for iOS users this past week, keeping them up to date on new Xbox games before they’re able to play them locally on a console.
Though the consoles are still hard to come by for many, one piece of solace for interested players could be the game lineup. Problems brought on by the pandemic and work-from-home setups have caused many games to get delayed. By the time you get a console, there might actually be a more steady stream of games to play on it.
