Bad news for consumers and PlayStation fans as Sony (NYSE: SONY) told a group of analysts that the PlayStation 5 is going to stay in short supply through 2022. In late April, Sony released some good news saying that, as of March 31st, 7.8 million consoles were sold and the number of PlayStation Plus subscribers became 47.6 million, which is a 14.7% increase from the previous year.
Sony said it was aiming to sell 14.8 million consoles by the end of the fiscal year, but that goal seems less likely now.
The Chip Shortage Strikes Again
By this point, we already know the cause of this continued shortage: the global microchip shortage caused by the COVID-19 pandemic. The pandemic caused many chip factories to shut down in an effort to slow the pandemic and the Chinese supply chain suffered as well.
Things are getting better with the economy slowly growing, but the demand way bigger than the supply with Neil Campling, a media and tech analyst at Mirabaud, saying that this is a “perfect storm of supply and demand factors…”
Financial news site Bloomberg managed to speak with people who attended Sony’s meeting, and according to these people, Sony’s CFO (Chief Financial Officer) Hiroki Totoki said “I don’t think demand is calming down this year and even if we… produce many more units… our supply wouldn’t be able to catch up with demand.” In that meeting, Totoki told a concerned analyst that ”We have sold more than 100 million units of the PlayStation 4, and considering our market share and reputation, I can’t imagine demand dropping easily.”
Playstation 5 has no limits, other than the number of consoles they can produce.
— itsagundam (@GundamIsHere) May 10, 2021
Social media is littered with people venting their frustrations and at the lack of available PlayStation 5 units, although going by Sony’s latest earnings reports, demand seems to be leveling off.
Since the earnings report on April 28, Sony’s shares have gone down around 8% and the company announced that it will buy back up to $1.8 billion worth of shares after March’s quarter profits fell short. Monthly active users on the PlayStation Network fell from 114 million users in an earlier sales quarter to 109 million at the end of March.
In light of these falling numbers, the PlayStation 5 is actually the fastest-selling gaming console in the United States in terms of unit sales and dollar sales.
Wide Area of Effect
Recently, Nintendo said that the shortages could production and had to lower its sales target to 25.5 million, down slightly from the previous year.
The shortage is also affecting semiconductor production and the loss in the profit has been pushed to the consumer as about 13% percent of people who bought a new car paid above sticker price. General Motors said recently that its new full-sized trucks now cost 10% more than the previous year; however, sales have gone up exponentially.
It looks like if there’s one thing to take away from all this, it’s that if people really want something, they’ll pay whatever it takes. Brand strength is nothing to scoff at.