If you’re looking for ways the coronavirus outbreak in China can have a negative impact on the U.S. economy, look no further than consumer electronics and the video gaming industry.
Gaming’s biggest titans when it comes to console production and sales, Microsoft (Xbox) and Sony (PlayStation), are scheduled to release their long-awaited next-gen systems in November 2020 right as the holiday shopping season kicks into full swing.
Though, that swing may not be so “full” now, thanks to the coronavirus.
Sony’s PlayStation 5 and the Xbox Series X, like much of the world’s consumer electronics, are made in China, where nearly 600 people have died already and nearly 30,000 people have been infected. The country’s manufacturing sector has been hammered and Foxconn, which produces Apple’s iPhone, has had to quarantine workers, which could delay delivery of the next iPhone that typically comes out each September.
And with Sony and Microsoft gearing up to deliver their highly anticipated next consoles, which only come out once or twice a decade, there could be big delays or at least minimal supplies leading to back orders.
“The video game sector is currently manufacturing, or beginning to, a once-in-several-years’ product generation change for the 2020 holiday season,” Jeffries Group wrote in a note to clients this week. “If shutdowns exceed a month or so, game schedules will be delayed. New consoles may likewise suffer supply issues from a prolonged disruption, ahead of their Fall 2020 planned launches.”
The holiday season is when the gaming titans release their consoles, and it’s also the season for the biggest games of the year. Most games are made in the U.S., Japan and Europe, but big chunks of the game-building process are outsourced to China.
Per the note, as much as “30-50% of art creating in Western games in done in China.”
The third titan in gaming, Nintendo, has already announced delays for shipments of its Nintendo Switch.
“We will work hard to deliver the product as soon as possible, while keeping an eye on the effects of the new coronavirus infection, and we look forward to your understanding,” Nintendo said in a statement.
We’re delaying @OuterWorlds on Nintendo Switch due to the coronavirus impacting the Virtuos team working on the port, to provide them enough time to finish development. We’ll now be releasing the physical version on cartridge. Once we have a new launch date, we’ll let you know!
— Private Division (@PrivateDivision) February 6, 2020
So delayed consumer electronics is just one way the coronavirus will likely impact the U.S. economy and hurt growth in 2020.