VideoGameAccountant said:
I think your point is a bit over optimistic. I wouldn't say the Fed is staying calm. It's more so the Fed is trying to correct the mess that they and Washington made. The reason I would be bearish overall is because there is no easy solution. Cut rates and we get hyperinflation, raise them and we get a recession. The Fed wants a recession because it knows that's the only way it can get back to its inflation target. On credit cards, it's 100% because people are being stretched too thin. Its not just debt that is increasing, but delinquencies, meaning people are past due on their payments. Usually, delinquencies increasing is bad new for the economy, as it hurt the lenders and limits their ability to lend. There are other indicators that we're heading for a hard recession. The yield curve is already inverted and will likely get worse. Car loans are going into delinquency. And of course, you have funny stories like this of people canceling golf memberships. I don't think you can peg whether or not a recession is happening solely on what these companies are doing. Remember, everyone and their mothers swore up and down inflation was transient and look where that got us. Hindsight is 20/20, and sometimes these companies make moves that were dumb at the time but would have been fine 2-3 years ago. We can certainly put Sony and Microsoft in that bucket as they launched their systems into a supply shortage (which is making the scalping problem worse). Its better to look at economic trends. It may seem like there wont be a recession based on what these companies are doing, but the yield curve doesn't lie. Even still, we can't ignore all the layoffs going on it tech too. Now, I think that's enough economic talk, so we can come back in a few months and see which one of us was right. I also see some Sony fans are upset that I insist to talk about macro trends. So I'll leave it with this: I think the 12-13 million predictions are about right, as I said earlier. It could be less depending on the scalper problem (this is one thing most people, analyst included, don't want to talk about because it means people are buying and not playing the console, and these consoles could come back in the market and hurt sales later). There should be less scalped consoles in the wild relative to the total number of PS5s. Still, if these people get behind on their credit card, car, house, they may sell them for a discount which would be very bad for Sony. I think when we'll find out is the summer. It takes a few months for someone to get 90 days+ and for collections to come, so we're still a few months out. I'm sure Sony will do fine in the beginning of the year and then hurt towards the back half. If the recession is bad enough, then I could see the sales trajectory be the same as the Wii's (raise up to year 2-3, then decline thereafter). But time will tell. Until then, try not to get too much debt and be flexible with your budget. Also keep some savings as layoffs are coming. |
I agree, a recession is far more likely the route taken, but the question will be how hard will it hit and for how long? A slow drawn out recession will leave enough people will enough money available to them to buy a console and some games or a sub. Just look at how many new users there are for some of the platforms all though covid. That'll likely expand with an upcoming recession, assuming it doesn't hit like a ton of bricks. If it does, then I could see your prediction being much more justified.
PS5 and Series launched at a horrible time, yet that hardware still sold phenomenal, considering the conditions they dealt with. Sony was even able to raise prices of both hardware and software, and MS is slowly following suit. Even Nin has said they plan to hold pricing on their 2017 hardware, in 2023. They could be wrong, or could be cashing in while they can, but it looks at though all 3 see only minor issues ahead as to the economy.
You're mostly right that the numbers don't lie, but the financial system isn't exactly science, especially when the worst comes true and you get a crash, then you just bail everyone out and keep going, for a while longer anyway. I can understand why some don't like using these numbers to make predictions but the truth is they are all relevant in some way. Which are more relevant and when, isn't easy to pin point.
Cheaper scalper hardware shouldn't be too much a problem. There aren't millions of those units and they know a cheaper PS5 is coming so they'd get rid of them asap. During a faster harder hitting recession, second hand sales could hinder first hand sales a bit, but the majority of those sales so far have been to the enthusiast crowd more so, and they won't be selling unless they have no choice. If it get's that bad all gaming is going to suffer immensely.
Assuming we aren't getting that, the majority will keep their hardware and buy some games or a sub because that will be dirt cheap long term entertainment during the recession. Then we have a new cheaper to manufacture PS5 coming later in the year, which should be no more than $399. Consumers should be able to spend $399-$449 total and be able to make good use of that for quite some time, years in fact, which is perfect during a recession. Even cheaper would obviously be better but the PS5 can only get so cheap without designing lesser performing hardware. A hard or soft recession would help Series S sales if MS leaves the hardware as is and just drops the price, which would also cut into potential PS5 sales the worse the recession was.
As you say, time will tell.
Last edited by ConservagameR - on 13 February 2023
