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Wednesday, November 17, 2021

The PlayStation 5 and Xbox Series X will be even scarcer than experts previously estimated

With the shopping season nearly upon us, some of the year’s most sought after gifts will once again be Sony’s (SONY) PlayStation 5, Microsoft’s (MSFT) Xbox Series X, and (NTDOY) Nintendo’s Switch.

And if you thought those consoles were hard to get before, as our own Ihsaan Fanusie pointed out, buckle up, because, according to at least one industry analyst, the system makers are expected to sell some 3.34 million fewer units this calendar year than previous estimates indicated — dropping the total expected sales from 44.3 million to 40.9 million.

“There's been a reduction in 2021 of shipments in my model from July to November that's down about 3.34 million units,” IDC research director of gaming Lewis Ward told Yahoo Finance.

That expected reduction in sales, a result of the ongoing chip shortage, means that a year after the consoles launched, gamers will still have a hard time getting their calloused thumbs on them. And that's unlikely to end any time soon.

Sony and Nintendo have cut forecasts

With the ongoing supply chain crisis and global chip shortage, experts have generally advised that the best way to get what you need this holiday season is to buy as early as possible. And while that might work for things like sneakers, pots and pans, and bicycles, game consoles have been in short supply year round.

Ever since they launched in November 2020, the Series X and PS5 have been incredibly difficult to find. According to Mat Piscatella, video game advisor at NPD Group, both consoles are selling at historic or near historic rates.

“When compared to historical benchmarks, supply has been good. PlayStation 5 has been the fastest selling PlayStation to date, and the Xbox Series is very close to being the fastest selling Xbox,” he said. “However, while at this point in previous cycles hardware was more widely available, what we're seeing this generation is elevated demand that supply has thus far been unable to meet.”

I’ve seen this scarcity firsthand. Since last year, I've been trying to help my friends get a pair of PS5s. I’ve set up Twitter alerts, followed news posts saying that stores have them in stock, and scoured retail websites — and still haven’t been able to grab one.

Each time I get to a website, the systems are sold out. And that was before Sony and Nintendo revealed that they were cutting the number of consoles they expect to ship this year.

According to Bloomberg, Sony was originally expecting to ship more than 16 million units by March 2022. But the company cut that number by 1 million, meaning it now expects to ship 15 million units by March. That will only compound the availability problem for shoppers.

“Our partners are performing really well for us, but the chip shortage is definitely a challenge that we are all navigating,” Sony Interactive Entertainment president and CEO Jim Ryan said back in July.

Nintendo, meanwhile, cut its full year sales expectations for its Nintendo Switch line by 1.5 million units, from 25.5 million to 24 million. Microsoft, for its part, doesn’t release sales figures for its Xbox hardware. The company’s consoles have been just as hard to come by as Sony’s.

It’s all about the chips ... and the supply chain

So what’s keeping the consoles from store shelves? You guessed it, the global chip shortage. Oh, and you can toss in a dash of the supply chain crisis, too. See, game consoles have been among the most sought after means of entertainment since the start of the pandemic. So when the new consoles hit smack in the middle of the pandemic, demand shot through the roof.

But the chip shortage, which kicked off as consumers sought out everything from computers and webcams to cars, has kept the supply of those new consoles incredibly tight. It didn’t help that bots designed to snatch up consoles from online stores, were beating out real people who wanted the systems.

All of that adds up to a year in which it was seemingly impossible for people to buy the consoles they wanted.

Then there’s the supply chain crunch. Slamming the brakes on the gears that power global manufacturing is hard enough. But getting it up and running again is even more difficult. Getting goods to manufacturers that can be turned into things like consoles is taking far longer than it otherwise would.

It doesn’t help that U.S. ports have been functioning about as well as a kinked hose, with too many goods coming in and only a few trickling out to stores. As a result, game consoles that are built and ready to go are unable to get to stores fast enough to meet consumer demand.

The shortage in available consoles has sent aftermarket sellers’ prices through the roof. We’re talking about a PS5 with a manufacturer’s suggested retail price of $499 selling for as much as $1,200 on eBay. Or an Xbox Series X, also priced at $499, selling for $1,000. And that’s not counting limited edition versions of the console, which can sell for $1,500.

And in case you’re wondering, those prices are outrageous. Sure, the consoles are fun, but the majority of new games are still available for last-generation's PlayStation 4 and Xbox One X. Shelling out an extra $500 isn’t worth it when you’ll eventually be able to get the new consoles.

So when can I get those consoles?

The biggest question for anyone hoping to get a console for themselves or someone they love is, “When will they be available?” And unfortunately, there’s no truly clear answer. The PS5 and Xbox Series X both use AMD (AMD) chips, and AMD CEO Lisa Su has said that the chip shortage should be less severe by the second half of 2022.

That’s just the chips, though. That means you’ll still have to wait for them to be dropped into consoles and have those shipped around the world.

So if you were hoping to grab a console this holiday season, chances are you’ll be out of luck.

Piscatella advises hopeful consumers to follow retailers’ social media feeds for news of when they’ll have new consoles in stock and then try their hand at snagging one. But, he adds, don’t expect to just walk into your local Best Buy or other retailer to get one from the store shelf.

In a few months, however, supplies should start to catch up with demand, and you’ll be able to grab one without having to fight everyone else on the internet, or overpaying by an exorbitant amount.

For now, hold on to your old consoles and enjoy them for one more year.

By Daniel Howley, tech editor at Yahoo Finance.

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