We’re over a year into the PlayStation 5’s lifecycle and Sony still can’t make anywhere near enough of them. It hopes that could change soon. The company is promising to sell 18 million more PS5s in the next year if the current covid lockdown in China only lasts a couple of months. With the global pandemic continuing to hang around, that remains a big if.
Sony released its 2021 earnings Tuesday and they fell short of analyst estimates. The ongoing PS5 shortage remains a big reason why. The company revealed it only sold 11.5 million units last year, far below its target of 14.8 million and only a little bit higher than the 7.8 million sold during the PS5’s initial launch window. These numbers put it behind where the PS4 was during a similar point in its life cycle due to ongoing supply constraints the older console didn’t face.
Selling 18 million more PS5s in 2022 would effectively double the console’s current install base, no small feat especially when major tech production centers in China remain in lockdown following the latest outbreak in covid-19 cases. The country’s “zero covid” policy means manufacturing in dozens of cities like Shanghai has recently ground to a halt again.
“A downside risk would be if there is a further worsening in the supply chain, including the potential widening of lockdowns in China,” Sony chief financial officer Hiroki Totoki said during a concerned call.
The company is basing its future sales figures on current lockdowns being limited to three months, which one analyst told Bloomberg was a big risk since no one knows how China’s pandemic response may play out in the future. Even with vaccination and boosting, the Biden administration recently suggested that there could be as many as 100 million new covid cases later this year in the U.S. alone.
The ongoing supply chain issues and uncertainty around covid, which have hounded the new generation of consoles since they launched in 2020, can have all sorts of cascading effects as well. Early adoption helps drive sales of new games and services. Sony reported PS Plus subscription numbers remain in slight decline ahead of its big revamp in June.
Cross-gen compatibility has been a huge boon to PS4 and Xbox One owners. It’s helped ease the transition, but that’s coming to an end. Warner Bros. revealed just today that one of 2022’s biggest games, Gotham Knights, will be exclusive to PS5 and Xbox Series X/S. God of War Ragnarök, meanwhile, appears likely to be Sony’s last major first-party game to also be available on PS4. The company is also expecting to spend more in 2022 as it invests hundreds of millions more in its studios known for developing gorgeous but expensive blockbusters. Those costs have roughly doubled every console generation. Sony needs to sell a lot of PS5s to support them.
Sony’s current PS5 stock projections also don’t take into account the possibility of a major recession. Deutsche Bank is currently predicting one in a report to its clients, and recent declines in Meta, Amazon, Tesla, Netflix and other companies has investors worried about a potential tech bubble bursting. To keep its investors happy, Sony is promising up to another $1.5 billion in stock buybacks, or the equivalent of 3 million PS5s.