Will COVID-19 Delay New Console Launches, TV Sports Seasons?
Microsoft and Sony are planning to launch key new video game consoles during the 2020 Holiday season, but whether or not those products will arrive in time could be dictated by any further disruptions from the COVID-19 pandemic, according to a CE market impact report from research organization Futursource Consulting.
Component production delays caused by factory shutdowns in China and elsewhere could also slow further reductions in the average selling prices for large-screen TVs this year, according to the analysis, which might mean less savings for entertainment device gift giving.
Microsoft has announced the planned launch of its next-generation Xbox Series X console at the same time that Sony is slated to launch its PlayStation 5, in the fourth quarter of this year. Both devices were expected to be considerable drivers of consumer electronics sales in the critical fourth quarter selling period.
“However supply-side constraints may make a release delay inevitable, resulting in one or both brands missing the important holiday product release period,” according to a “Futuresource Perspective — COVID-19” analysis released this week. “Meanwhile, TV vendors also face significant supply shortages. With the majority of panels made in China, vendors will potentially see the recent over-supply of large panels diminish. A range of industries are already reporting concerns over Q4 supply of key holiday season products, and supply shortages later in the year are a real industry concern.”
Futuresource pointed out that new TV panel (LCD and OLED) factories have generated an over-supply situation that is serving to drive down both the price of the components and the average selling prices (ASPs) of finished television sets. However, the delays imposed for several weeks by mandatory factory shutdowns has somewhat reduced the buffer within the supply chain for larger TVs, and could restore the overall bill of materials costs for TV manufacturers, taking away any savings that were expected to contribute to lower average selling prices.
“Continued disruption could stop this trend in the short run,” Futuresource said of the supply directed price decreased. “The eventual return to normality will likely see this trend return, as panel vendors rely on operating at full capacity for their profitability.”
Of course, no one can tell yet when or if the “return to normality” will occur. In addition, precautions against spreading the virus further has forced the suspension of games for key sporting leagues around the world, which are typically big drivers of large-screen television sales. Still unclear is what impact the virus might have on the 2020 Tokyo Olympics, where is traditional a key driver of television purchases.
On the plus side, compared to the SARS epidemic of 2003, Futuresource said “the Chinese state is in a much more advanced position to deal with the COVID-19 outbreak. Despite this increased capacity to control the spread of the virus, social media and deeper population connectivity has enabled rapid spread of information and misinformation, causing scepticism and overall fear of non-isolation. As a result of forced quarantine in the epicentre of Hubei province, individuals can leave only to purchase the essentials, limiting time spent outside the home.”
“While this means consumers will look to their devices for entertainment, with digital entertainment platforms the main beneficiary, other sectors within CE and the wider economy, such as travel or hospitality, are set to struggle,” Futuresource said.
Another factor benefiting the consumer electronics market is the growth of ecommerce, which “is having a significant impact on the domestic retail sector” across many of the major cities in China.
“As one of the largest and most productive economies on the planet, declining [soccer] is causing substantial decreases in consumer electronics demand in China, which accounted for 22% of worldwide CE expenditure in 2019,” Futuresource observed.
Key retail stores, which generated in-store purchases accounting for 34% of Chinese CE volume in 2019, had closed to prevent the spread of the virus. In-store retail purchases made up only 34% of Chinese CE volume in 2019.
The outbreak is expected to boost ecommerce’s share of Chinese retail in the short term, with e-tailers satisfying the deficit in CE demand.
Hopefully the forthcoming warm weather will return to weaken the spread of the virus and return things to normal.
Online purchases made using links provided on this site might generate a small commission for HD Guru.com. We thank you for your support!
By Greg Tarr
Have a question for the HD Guru? HD GURU|Email
Copyright ©2020 HD Guru Inc. All rights reserved. HD GURU is a registered trademark.