How Will the Coronavirus Impact the Gaming Industry?

In late December of 2019, a case of pneumonia with an unknown cause in Wuhan was reported to the World Health Organisation, which was soon discovered to be the Coronavirus. Since then, COVID-19 has spread to over 200 countries and become a global pandemic.

As a result, the Coronavirus has harmed nearly every industry which isn’t considered essential, including the gaming industry. So what impact will COVID-19 leave on the gaming industry?

Social distancing and cancellations

Social distancing has become one of the most robust defences against the virus. Unfortunately, this has also led to the cancellation of E3 2020, and the postponing of the Game Developers Conference (GDC) 2020. GDC eventually resolved this issue by transforming GDC 2020 into a virtual event titled “GDC Vault”, uploading recorded versions of the planned talks for free onto Steam.

While GDC has done their best under the circumstances, it’s a high possibility that the games of independent developers will suffer. Indie devs run on a much stricter time schedule and budget than triple-A titles, and the combination of postponing the GDC and switching to an online alternative may squander their chances of publishing their game.

According to Rami Ismail, the co-founder of the indie dev team Vlambeer, “If you’re an independent CEO who’s been working on a game for a year and a half, had money for a year, but pushed through on no money at all for a few months to get a build ready for GDC so that you can pitch a publisher … now all those games may be dead. For a lot of [Independent studios], [GDC] is the one event they go to, this might be career-ending.”

But it’s not just events that are being postponed. On the 2nd of April, Sony Interactive Entertainment announced they would be delaying the launch of two heavily anticipated titles, The Last of Us Part II and Marvel’s Iron Man VR.

There’s also a chance that the release of the PlayStation 5 and Xbox Series X will be delayed. While neither Sony nor Microsoft has made announcements on the status’ of their next-gen consoles, DFC Intelligence claims that “Coronavirus is likely to have a significant short-term impact on the delivery of both systems.

“There is a strong likelihood one or both systems will not make a 2020 launch. If the systems do launch, supply will likely be constrained, and initial pricing could be higher than expected. Even if the situation clears up in a few weeks, the ability to manufacture and release a high-end new game system has already been severely impacted.”

Supply and Demand

A massive spike in sales for video games and their accompanying consoles. The fact that roughly 90% of all physical copies of games and consoles are made in China has led to a struggle to meet current demands. The threat of a broken supply chain has led to Sony preparing for an eventual plunge in PS4 sales, as well as the Nintendo Switch and Oculus Quest already selling out in several countries, particularly Japan.

While the spike in sales has left the gaming industry faring better off than other industries, the medium-term effects could cause issues with production as the major tech corporations struggle to keep up with the unexpected rise in global sales.

The impact of COVID-19 is still in its early stages, and so while it’s still unclear what the impact the virus will be on the industry. Sales will more than likely be negatively impacted for some time, while production attempts to play catchup, and gamers may have to wait a little longer for that title and/or console to drop. More alarming is the struggle that indie developers now have to consider facing, with the cancellations of E3 and GDC, the likelihood of getting their game off the ground has dropped, which can easily lead to a smaller studio going bankrupt.

Daniel Ahmad, a senior industry analyst at Niko Partners, says that major issues such as this could be avoided if the COVID-19 outbreak can be “contained within the next month or two.” But this is looking like less of reality by the day. Just like all other non-essential services, it appears that the gaming industry might need to prepare for the worst.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s