It’s not unusual for newly released gaming consoles to be hot commodities, but a multifaceted supply chain disruption is only complicating matters for gamers seeking the Sony PS5. Since Sony released the console on Nov. 12, a worldwide semiconductor chip shortage couched inside an ongoing pandemic has led to limited console supply amid high demand. To better understand the factors behind the shortage, when supply chains could normalize, and how these disruptions are impacting gamers and developers alike, we spoke with experts in gaming and logistics.
PS5 shortages and supply chain bottlenecks
As TechRepublic previously reported, there are myriad factors behind the current semiconductor chip shortage including COVID-19-related closures, global politics, and more. In the 21st century, semiconductor chips are critical to a vast spectrum of industries and consumer products ranging from smartphones to smart cars. This means console manufacturers are now vying with new industries for chip production space.
“Modern cars, especially with the powertrain changes toward electrification, are basically smart devices on wheels and are more semiconductor hungry than ever before,” said Gabriel Werner, vice president and EMEA solutions advisor at Blue Yonder.
Renee Gittins, executive director at International Game Developers Association, said two Japanese factories involved in the chipset supply chain had fires last year, and this further stressed both the Japanese and global chip supply.
“The massive demand for PS5s combined with the chip shortage may have hit Sony particularly hard as Japanese companies tend to follow just-in-time manufacturing standards that dissuade gathering stocks of components prior to the need for them, making them more susceptible to supply chain disruptions,” Gittins said.
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How long will the shortage last?
To score a new console, many avid gamers have little option other than to scour online retailers and refresh websites throughout the day as new shipments become available. So how long could the chips shortage and limited PS5 continue?
Gittins said the semiconductor shortage isn’t likely to be “fully relieved” until next year, although she said the situation should “improve throughout 2021.” Although it is possible these shortages could continue into the winter holiday shopping season.
“The PS5 demand will remain high for quite some time as Sony seems keen to move at least 15 million units, so I suspect we will see challenges with distribution until after the holiday sales boom of this year,” Gittins said.
Puneet Saxena, global vice president of Global Manufacturing Sector at Blue Yonder, offered a comparatively more optimistic forecast and said the situation may take between three to four months to be resolved. Either of these estimates won’t help logistics and deliveries in the next few months.
“There is short-term frustration for gamers on the road ahead,” Saxena said.
Impact on gaming developers and studios
Whether the shortages will exist as a short-term challenge or a lingering logistical constraint remains unclear. However, the current dearth of semiconductor chips and the diminished supply of PS5 consoles could affect developers and studios in this space.
“The profit margins of the average game are quite small or even negative. While we see many blockbuster hits, the average studio is constantly struggling to make ends meet, so this disruption may very well cause studios to go under that would have succeeded,” Gittins said.
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The shortages and limited console availability are causing game developers to miss out on marketing and sales opportunities, Gittins said, although many developers are releasing projects on previous console generations. For the time being, gamers are the ones most impacted by the supply shortages, she said.
“With both the PS5 and current generation graphics cards in short supply, avid gamers will find themselves struggling to acquire a platform to enjoy the high quality graphics and gameplay of the newest game releases,” Gittins said.
AI forecasting and future supply chains
Necessity breeds inventions, as the old adage goes. So, how will the lessons learned during this supply shortage impact the way organizations forecast supply and production in the future? In the age of accelerated digital transformation, some companies could look to take automated tools to streamline workflows.
A “revised approach” to consumer electronics supply chain management focused on resilience has “become the central topic of discussion across the entire electronics value chain,” according to Saxena. Rather than predicting consumer demand with traditional methods, Saxena said some manufacturers are examining the use of artificial intelligence to “sense changes in demand patterns much faster.”