PlayStation 5 Scalpers use robots to hunt down scarce consoles

Photographer: Paul Yeung / Bloomberg

Sony Corp. has created one of the most popular devices of the year on PlayStation 5, but its launch has been affected by scalpers who buy scarce supplies and threaten the long-term health of the company’s most important product.

Heaters, which buy devices at retail and then sell at a higher price, have long been a challenge in the gaming business. But the problem is particularly acute this year because the coronavirus has slashed production and boosted more online console sales, where scalpers use sophisticated bots to buy PlayStation 5 and Xbox from Microsoft Corp.

Furious players call resellers to charge $ 1,300 or $ 1,400, nearly three times the retail price, in places like eBay i Twitter. “This is a launch disaster,” a post on Twitter he declared, promising not to fall into usurious prices. “Heaters can keep them.”

The threat is that Sony’s struggles during the first few weeks of launch could hurt its ability to attract gamers and developers to the new platform, undermining profits over the next few years. The debut of a console is supposed to trigger a virtuous cycle of consumers rushing to buy the devices, while developers debut games that take advantage of the new capabilities of graphics and processors, which increases the demand of both parties. Sony risks suffering the opposite.

“The PlayStation 5 could miss a critical opportunity to enter a good upward spiral of hardware and software,” said Kazunori Ito of Morningstar Research. “The peak of the platform is likely to be low and the total revenue from the platform will not be as strong as we expected.”

Climbers implement robots that constantly monitor online stores for changes in inventory and supplies, and then place orders automatically and check in seconds when devices are available. The technique is based on familiar crawling or scraping technology, but specifically designed for e-commerce and can sometimes jump to the front of the queues.

Evidence of problems is clear in what is known as a tie ratio or in the number of games sold for each console. A healthy ratio for a new console is around one, which means that every person who buys a machine also runs with at least one game. The figure is important because PlayStation 5 sells at a loss, while games are lucrative.

So far, Sony seems to see sales of about one game for every three devices, convincing evidence that climbers are accumulating consoles. Estimates for the first month of Japanese famitsu show that Sony sold around 213,000 PlayStation 5 consoles in the country, while the first three titles sold less than 63,000, excluding digital downloads. Sony’s Spider-Man and Demon’s Souls were the best games, while the third was an external software company. By way of comparison, Nintendo Co. sold half a million Switch consoles in its first four weeks in the domestic market, and the first three titles accounted for approximately the same number.

“Even if we take into account digital download software purchases, the percentage of PlayStation 5 actually sold in use is not that high, which means that current demand is limited by resellers who make a profit,” said Hideki Yasuda , an analyst at the Ace Research Institute. The PS5 is compatible with the PlayStation 4 game and comes with Astro’s Playroom pre-installed, so gamers may not be forced to buy new titles immediately.

Sony’s scalp headaches are getting worse due to struggles in production. The company has said it plans to sell more than 7.6 million PlayStation 5s by the end of March, surpassing the performance of the previous generation console.

But the pandemic has created a shortage in the entire supply chain of the industry, reducing the capacity of companies from Sony to Apple Inc. will increase production. Key suppliers included MediaTek Inc., has said that the availability of chips will be limited until the first half of 2021. The strong demand from electric vehicle manufacturers, among others, has been consuming capacity for some parts used in the PS5 , according to people familiar with its supply chain.

Of particular concern to Sony, the production performance of the PS5’s custom-designed main processor remains inconsistent and has hampered its ability to meet demand, people said, asking not to be named because the details are private. The company may need to rely more on air travel to deliver consoles to retailers, further reducing their profits, they said.

“By air it’s at least ten times more expensive than by sea when the world is in normal condition and the gap is likely to be bigger now,” said Yasuda of Ace Research.

One person said that Sony’s latest shipping forecasts still exceed 7.6 million, although they are not as high as previously pointed out.

Sony declined to comment specifically on production figures or climbers.

“While we don’t release details related to the manufacture, nothing unexpected has happened since the mass production of PlayStation 5 has started and we haven’t changed the production number of PS5,” a spokesman said.

An inadequate supply risks the cycle of a successful introduction of the console, with new software titles that in turn catalyze the interest of the hardware. According to someone familiar with the conversations, one of Japan’s leading publishers was quite frightened by the market’s first response that held internal discussions about whether to delay its PlayStation 5 games.