Supply chain issues have plagued international markets for the last few years, and gaming has been no exception. Parts shortages and limited stock have severely hampered console sales since the start of Covid-19.
Sony’s PlayStation 5 (PS5) and Microsoft’s Xbox Series X consoles were both released in November 2020. Since then, eager gamers have faced endless obstacles in trying to purchase them. Some consumers are still on retailer waitlists, while others have turned to forums to hunt down stock. But despite the consoles’ turbulent first two years on the market, both companies have still found ways to make profits.
Gaming companies have suffered major supply setbacks
The ongoing semiconductor shortage has squeezed supply in every industry, from gaming production to car manufacturing. Demand for electronics surged during the pandemic, as consumers were stuck at home and wanted to upgrade their tech. But the numerous factory shutdowns and shipment delays made it difficult for chip suppliers to meet mounting demand.
President Trump’s trade war with China during this time, and the war in Ukraine – which Sony has blamed for impacting logistics and parts inventory – have added further political complexities to the problem.
Nevertheless, the problem isn’t just the lack of chips. There’s also the escalating problem of limited suppliers. In spite of the computerisation of everyday products, such as smart home devices, there are now fewer chip suppliers than there were two decades ago. This is partly because big chipmakers, like AMD, now outsource their manufacturing. The combination of all these issues has resulted in painfully-long waitlists and limited stock of the PS5 and Xbox Series X, two years on from their launch.
Sony and Microsoft have almost entirely cut their bundles
Console bundles and special edition releases are customary in the gaming industry. Gaming companies usually release bundles for the recommended retail price (RRP) of the console, which essentially means that consumers get a game (or two) for free. Bundles are a great way for consumers to save some money, since a new console typically costs £450 on its own (for the standard disc version). However, data analysis by GamingDeals.com reveals that both Sony and Microsoft have dramatically rolled back their bundle offerings.
In 2013, Sony released the previous generation PlayStation, the PS4, and Microsoft launched its Xbox One. During the two years that followed, the tech giants released a combined total of 27 bundles to the market. In fact, Sony released seven official PS4 bundles in 2014 alone. Meanwhile, Microsoft released four for its Xbox One in the same year, including Madden 15 and Sunset Drive bundles. Both consoles also had a special edition model within the first year.
In comparison, consumers have been offered just three official PS5 and Xbox Series X bundles in the two years since their release, an 89% decrease. We’re also yet to see a special edition PS5 console. By offering consumers fewer official bundles, Sony and Microsoft are able to make maximum profit from every console sale.
Several retailers have created their own bundles, by pairing consoles with accessories, such as headphones and additional controllers. However, these bundles are often incredibly expensive. With limited availability of these consoles as standalone items, consumers are forced to buy additional accessories they may not want.
Sony has hiked up the price of the PS5
On 25 August 2022, Sony increased the RRP of its PS5 in a number of international markets. The manufacturer cited “challenging economic conditions” as the reason for the price hike, which took effect immediately.
In the UK, the new price of the PS5 has been set at £479.99 for the disc version, which is a £30 increase. Sony applied a €50 increase to the same model elsewhere in Europe, taking its price up to €549.99. The price increases are most likely a response to the company slashing its 2022 sales target for the console in May, from 22 million down to 18 million.
It’s clear that while consumers struggle to get hold of new consoles for affordable prices, gaming companies are still profiting. And Sony’s latest price increases shows that there’s little chance of gaming companies stepping in to remedy the situation. Phil Jones of GamingDeals.com says: “These are unprecedented times not just for consoles, but the gaming market as a whole. While the future is unclear, Microsoft and Sony are benefiting from the stock shortage. For the foreseeable future, if a consumer wants to purchase a PS5 or Xbox Series X new, they will have no option but to buy it as part of a bundle at an unnecessarily high price.”
Photo by Kerde Severin