ConservagameR said:
The fed also has to deal with the government and get's a lot of pressure put on them. I remember reading about how much Trump was always on their case. Just because the fed waited doesn't mean a whole lot. It can be an indicator, but the fed tends to wait things out and react vs get ahead of what moves they think they may need to make. I don't believe anything necessarily, but at this point little surprises me when it comes to what's really going on behind the scenes. In terms of what things look like, if the rumors are to be believed, Sony having the new PS5 (Slim) being manufactured by April and out by September suggests to me that Sony just may see a recession coming and sooner than later. Sony usually launches during the holidays. Typically November. While they are a little behind and would want to catch up, if the console is also as rumored, a digital only model with an optional disc drive accessory, this also says to me that they are going the extra mile to get the price down for consumers. Add to that how cheap an online sub can be for all the gaming you get, and I can't help but wonder if Sony is prepared for what they see coming. It would also explain the rumors of little to no Pro talk and mostly PS6 talk in terms of future hardware. There's no point in a Pro if we get a year or two recession, or worse a crash. Now I'd also assume if Sony saw a crash coming, they'd make a new PS5 (Slim) and have it ready asap, but also make an XB Series S competitor. A $349 PS5 would be a tougher sell during a crash, though a $249 Series S competitor would be much easier along with a sub to add to that. Now if it's just a slower drawn out recession, a $349-$399 PS5 will still sell well. You'll just likely see a continuation of less game sales yet higher Plus subs instead. PS4's are not much cheaper new and have limited stock, but obviously they are if used. If most people kept their PS4, then anyone else looking to get into gaming would pretty much have to buy new, so mostly PS5 then. I could see gamers keeping their PS4's with a $500 PS5, but at $349-$399, plenty will trade up to the new model. Cross gen games are about over, at least for first party. Some third party will be going present gen only. Switch supposedly isn't getting price cuts, so the new PS5 won't look that expensive in comparison. I would agree game sales per unit probably wouldn't get any better but more Plus subs instead would make up for that a bit. We haven't heard a peep about a new Series X, but have heard whispers about a slightly upgraded Series S remaining at $299. This wouldn't be good for MS in a recession because X would be dead in the water and S would have more competition with a $349-$399 PS5. |
To your first point, its indicative that the fed is reactionary (as you point out, the Fed likes to wait). The real reason, I'd argue, the Fed didn't want to raise rates was because it would hurt the stock market. The Fed was trying to raise rates earlier, but a 25 basis point increase would result in huge sell offs. If the Fed likes to wait, then they aren't going to stop raising rates until its too late. This isn't good if you are hoping there will be a soft landing.
I don't see the Slim helping much. Since everything has been cross gen, there is little reason to buy a PS5. Everyone is going to cut there spending, so they aren't going to be rushing out to get new consoles. Even if the Slim is $349, its still too expensive. Right now, we are seeing massive credit card debt. This indicates people are using credit to make ends meet, as prices are just too high (and economist like to ignore food inflation, opps). ZeroHedge sums it up well
The combination of record high credit card debt and record high credit card interest is nothing short of catastrophic for both the US economy, and the strapped consumer who has no choice but to keep buying on credit while hoping next month's bill will somehow not come. Unfortunately, it will and at some point in the very near future, this will also translate into massive loan losses for US consumer banks; that's when Powell will finally panic.
The article also notes that credit card debt is some of the highest its ever been. People aren't going to rush out and buy a new console, especially when a lot of the games are already on the PS4 and PC. I don't think cross gen games are over as you say. If anything, they will get more prevalent. Games are a 3-5 year process, so any game that comes out at the end of this year could have started between 2018-2021, which were far better markets for games. With high cost and low demand, expect everything to come out on PS4, if not the PC. This is bad for the PS5 as has little in the way of exclusives and third parties are going to be far more gun shy about committing to next gen.
The reason I think Microsoft is in a better spot than Sony is because Microsoft is focused more on Game Pass than their console. If you don't buy a console, that's fine by them as long as you are getting their games somewhere else. Microsoft can also easily release a budget game pass which is $30 a month and focuses on smaller titles. Sony only has the ability to sell consoles, so they are in a worse spot. And since we're talking about the other guys, Nintendo has a large install bases with Switch and could just weather the storm by delaying their next system. It also gives them time to make more games and have a bigger launch when things recover. All three will be in trouble since I don't think we'll see an economy like 2017-2018 for a long while. We're looking at a worse version of the 1970s here. But I'm more bearish on Sony since they going into the recession with fewer safety nets as oppose to Microsoft and Nintendo.
Visit my site for more
Known as Smashchu in a former life
