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The dangerous paradox that threatens the throne of the PlayStation 5

spydernews by spydernews
May 3, 2021
in Applications, Camera, Computers, Gear, Review, Security
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The dangerous paradox that threatens the throne of the PlayStation 5
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Sony has sold 7.8 million PS5s, compared to the 7.6 million it sold for the PS4 during the same time period. However, its future is threatened by shortages and the success of its competition such as the Nintendo Switch, a direct competitor that has become the best-selling console in the US in 2021

A priori, the latest balance released by Sony on PlayStation sales invites optimism: it has sold more than 7.8 million consoles since it went on sale on November 19 and has closed its fiscal with profits of 3,140 millions of dollars. A sales figure that, in addition, exceeds by 200,000 units the 7.6 million units that its predecessor, the PS4, had sold between its launch and March 31, 2014.

However, more than 4 months after its launch, the four main problems and doubts surrounding the launch of the PS5 seem to have become chronic: the demand for the PlayStation 5 continues to exceed its supply, Sony (as well as many other technology companies) It is facing production problems due to component shortages, its competitors are outpacing it in some of its major markets, and the console lacks great exclusive titles.

Some problems that, in a way, are alleviated thanks to the spectacular growth of PlayStation Plus (its subscription payment system), which has experienced a significant year-on-year increase of 14.7% reaching 47.6 million subscribers throughout the world.

THE CONSOLES, GATEWAY TO FIXED EXPENSES

As we already explained in this article, the large console manufacturers such as Sony work with slim profit margins as a result of the sale of these devices during the first months / years after their launch. That is, during the first months or years that a console like the new PlayStation 5 hits the market, the manufacturer does not make a profit from the sale of this product itself. However, the sale of a PS5 is the gateway (or loyalty for users who previously had a PS4) to a series of fixed expenses (payment of subscriptions such as PlayStation Plus) and eventual (purchase of physical games, controllers and other peripherals) where they have a higher profit margin, from which they really get money.

Placing as many PS5s in homes around the world in the shortest amount of time is a challenge to maximize the long-term benefit that Sony faces from two tough competitors: Microsoft and Nintendo.

In this sense, the PlayStation 5 has seen the first red lines in the North American market. So far in 2021, the Nintendo Switch has become the best-selling console in the US, ahead even of the PS5, according to data from the NPD.

PS5 DEMAND EXCEEDS SUPPLY

Nintendo’s advance to Sony in the North American market is closely related to another of the most serious problems that threaten the PlayStation 5: a demand that exceeds supply.

An expression of the world of economics that means that it is extremely difficult to get hold of a console in a physical or virtual store in important markets such as Europe and North America. In fact, on the websites of large stores that sell hundreds of these products (such as El Corte Inglés or Media Markt) we find the label “Temporarily sold out” when trying to buy the latest Sony console.

The underlying problem, as recognized by Sony itself, is a shortage of chips and semiconductors that, in addition to the production of PlayStation 5, affect its rival Xbox, graphics cards, the production of CPUs for computers and even to car assembly lines in Spain. The readjustment of the production of this component -which to make matters worse costs close to one euro, as explained by Bloomberg in this article- has no prospect of being solved in the short term, so it is a problem with which sectors such as the automotive and the technology will still have to grapple for a while.

However, the horizon also houses good news for the PS5 and it is although little by little, the exclusive games for this platform, although little by little, will be arriving during the coming weeks and months. Returnal is scheduled to launch on April 30 and DeathLoop will do the same on May 21.

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