The race to get new consoles was one accomplished by Microsoft and Sony, at least in getting their next-gen video game systems to market in the first place. Actually buying Microsoft’s Xbox Series S or X, or Sony’s pair of PlayStation 5 devices, however, is proving to be a much more challenging feat in the first week of the next-gen console war.
Initial preorders for devices saw some early fan frustrations, but launch day sales and subsequent drops from other retailers have seen frustrations grow from players unable to see Assassin’s Creed Valhalla or Spider-Man: Miles Morales in crisp next-gen detail.
If the frustrations of OUT OF STOCK warnings and empty avenues to ray tracing seems like you’re suddenly battling thousands of others on Nike’s SNKRS app, well, that’s because in a way you are.
According to some analysts who spoke to CNN, the scarcity of next-gen Xboxes and PS5 may be about more than just high demand for the consoles. Some think current console scarcity is a combination of a few things, including more demand than may have been expected and a decision not to “overproduce” costly consoles ahead of an uncertain holiday season.
Profit margins on the new PS5 and Xbox Series X are probably “thin or even outright in the red,” according to IDC’s research director of gaming Lewis Ward, so it made sense to set production limits. Sony and Microsoft likely considered production levels that wouldn’t put huge stress on the manufacturers and the supply chain and that could help them limit any revenue losses, he said.
Sony isn’t making much money on the PS5 and didn’t want to overproduce the console heading into a recession, said Michael Pachter, a Wedbush analyst. This theory lines up with an April report from Bloomberg that said Sony was planning to limit output of the PS5 in its first year. The company did not respond to a request for comment.
In other words, for one reason or another Sony and Microsoft may not have made as many consoles in time for launch. And those reasons may not be as nefarious as they may seem. Manufacturing anything in a pandemic has proven difficult, especially when it’s moving across continents to reach consumers. There have been countless markets impacted by supply shortages, manufacturing shutdowns and logistical issues that have limited the quantities of countless appliances and other devices in 2020.
All that said, while the debut of each console was delayed for multiple reasons, both Microsoft and Sony insisted they would not have any hardware delays in getting consoles to market. That’s something Microsoft reiterated to CNN in a statement.
Microsoft told CNN Business that its new Xbox hardware production wasn’t affected by the pandemic and that it “set out to produce as many new consoles as it could.” The company added that the consoles, including a cheaper Series S, launched in 40 countries and it “will sell every new Xbox” it is able to produce this year.
“We’re building new Xbox consoles as fast as we can to meet demand,” Microsoft said.