Microsoft sees supply chain success as key to winning the 2020 console war

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Microsoft will release its new Xbox Series X and Series S consoles on November 10. Two days later, Sony is set to release its first all-new console, the PlayStation 5, since 2013 on November 12. Microsoft is following a dual-console strategy, with the Series S being a cheaper model designed to compete with Nintendo’s Switch. While games, subscriptions and price points are all key to sales success, Microsoft’s head of gaming, Phil Specter, has stated that due to excess demand “for us and PlayStation, I think that the manufacturing supply chain is going to dictate [market] share more than anything else“, Kotaku reports.

Consumer demand for most electronics has surged during the pandemic, as outlined in Panjiva’s research of Oct. 19, while the long wait for the new consoles from Microsoft and Sony will act as a compounding effect. While early deliveries of consoles arrive by air, seaborne imports of associated products and later models can provide a guide to the development of the sector.

The absence of new consoles can be seen in U.S. imports of consoles which likely declined by 35.4% year over year in Q3, Panjiva’s data shows. Yet, there are signs that supplies are starting to pick up with imports in September having increased by 44.1% year on the basis of data for seaborne imports. 

Small pickup ahead of new consoles

Chart shows U.S. imports of video game consoles and accessories. Data for Sept. 2020 based on seaborne shipments only.   Source: Panjiva

Shipments linked to Microsoft’s Xbox have already started to increase markedly with a 48.8% year over year increase in September, which included the largest number of shipments for the month since 2016.

Imports linked to Nintendo’s Switch increased by 27.9% in September and by 16.5% in Q3 as a whole as the company shook off earlier production challenges during the pandemic. Shipments associated with Sony’s PlayStation meanwhile have yet to take off with imports having dropped by 1.3% in September.

Xbox returns to the high score position

Chart segments U.S. seaborne imports of video game consoles and peripherals on a monthly and three-month average basis.   Source: Panjiva

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