Speaker A
No disc, no buy. It's that simple. Or at least it was that simple not too long ago. Because you see, even if Sony brings back discs at this point, there may not be a Sony left to buy them from.
Sony faces severe hardware shortages and rising costs, threatening the future of consoles amid industry-wide supply chain crises.
Ask about this video. Answers come from its transcript only — with the timestamp, so you can check them.
Generated from the transcript and can be wrong — check the timestamp.
Key Takeaways
- Severe hardware shortages and price inflation threaten the viability of future gaming consoles.
- Sony's traditional console dominance is at risk due to supply chain and market changes.
- The next generation of consoles will be significantly more expensive, potentially limiting consumer adoption.
- Data center demand is monopolizing memory production, squeezing out gaming and other consumer tech sectors.
- Industry-wide shifts require companies to fundamentally rethink business models to survive.
What the video covers
- Sony may struggle to survive due to ongoing RAM shortages and hardware supply issues impacting console production.
- Next-gen consoles for PlayStation and Xbox are expected to be extremely expensive, potentially over $2,500, driven by the need for higher specs than Steam machines.
- Sony's CEO admits there is no set release date for PlayStation 6, with estimates pushing it to 2028 or later.
- The global memory market is dominated by data center demand, with nearly all production sold out through 2027, causing price surges.
- DDR5 RAM prices have increased by 500% in a year, severely impacting the cost structure for gaming consoles and other tech products.
- PC shipments have declined for the first time in years, signaling a broader downturn in consumer hardware demand.
- Sony is perceived as shifting away from its traditional Japanese consumer-first approach to a more Americanized corporate model.
- The console market faces a potential death sentence as consumers may not upgrade if they recently purchased previous generation consoles for major game releases like GTA 6.
- Smaller companies and manufacturers are struggling to absorb cost increases, threatening their ability to operate sustainably.
- The entire tech industry is undergoing a fundamental business model shift due to supply constraints and rising component costs.
Chapters
- 00:00Sony's struggle with disc and hardware shortages
- 01:29Console specs and pricing challenges
- 02:43Sony's corporate shift and consumer impact
- 04:04PlayStation 6 release delays and market timing
- 05:27Sponsorship and channel support
- 06:41Industry supply chain worsening and retail impact
- 08:10Market trends and PC shipment declines
- 09:32Business model changes and industry survival
Full Transcript — Download SRT & Markdown
Speaker A
If things keep going the way that they are. Remember when I said that Sony is going to be begging for forgiveness and that we return? Well, maybe they're not even going to have that chance at this point because the RAM shortages, the
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hardware issues, they're not stopping anytime soon. And it's pretty much a certainty. Now, people were upset that the Steam machine cost 1.4K. That's a lot of money, and it's not a lot of power. But you see, the math is there.
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The new generation of consoles for Xbox and PlayStation are going to be ridiculously expensive.
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We are talking 2.5K minimum, minimum at this point, and it's probably going to be more because you see if the Steam machine is 1.4K and the Steam machine's biggest issue is power. But for a normal average person, the Steam machine's kind of okay. They
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don't really see too many issues with it. It can run most of the stuff they care about. It's the hardcore or above average gamers that care about the Steam machine specs.
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And, well, PlayStation and Xbox need their specs to be way higher than the Steam machines because otherwise, if it's even remotely comparable to it, then why the hell would you buy an Xbox or PlayStation if you can just buy the
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Steam machine? It's better bang for your buck. It's that simple. So, these new consoles because of the Steam machine need to be good and they're going to be ridiculously expensive because of it.
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And even the lower versions of it are probably going to be super expensive. Consoles are cooked. Not survive this landscape. Those are the damning words of Sony CEO answering questions on the PS6 and what the data center crisis is
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doing to their operations. Which does all sound rather grim, doesn't it? What we see is the what the f I'm suddenly a fan of data centers in my neighborhood. Wowee woah.
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Entire hardware industry is shifting and struggling. PC shipments are down. Business models are being rewritten.
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They have to be. The unit economics underpinning them have completely changed. And the biggest players are working out how the hell they can keep their profits up. But if Sony of all companies can't survive without changing, well, what does that mean for
Speaker A
everyone smaller? Sony is no longer the company you once loved. They're no longer the Japanese consumers first. I'm the CEO of Sony. I am going to take a hit to my salary so my employees can get a good life. No,
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it's a fully Americanized company where they're 5 seconds away from wearing Darth Vader outfits at, you know, doing press releases like Biden. It is not looking good.
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Perhaps, uh, more importantly, what does it mean for us? This all kicked off when Sony's CEO Hiroki Totoki told the Wall Street Journal that the company has still not settled on a release date for the PlayStation 6, which in a way isn't
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new news. Back in May, he told investors the very same thing. Six years on from the PS5's launch, there is no sign of a replacement, even though development for that replacement likely started as soon as the PS5 shipped, just like it has for
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every console before it. Now, factoring in a co slowdown, estimates have been pointing to a 2027 or 2028 window. 2027 looks extremely unlikely. 2028, it's going to be after GTA.
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It's probably going to be a fair bit after GTA 6 because these consoles obviously, uh, see GTA 6 as a possibility to make some extra money. But I think it's going to be a double-edged sword because yeah, people are going to buy
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consoles just to play GTA 6. You know, animals going to animal at the end of the day. But yeah, not a lot of people are going to buy the next generation of console if they just bought the previous
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one to play GTA 6 on. That's going to be, I think that's going to be their death sentence. I have been saying this for a while now. Clip it and ship it, boys. I think that's going to end consoles.
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Is up in the air. There's a simple obvious reason why the AI data center crisis is still going. The buildout is happening and it's gobbling everything up. Now, DigiTimes spoke to their industry insiders and basically they say
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that all memory production from Samsung, Micron, and SK Hynix is sold out through 2027 and almost all of it is earmarked for data centers. Tom's Hardware has got those are, by the way, uh, RAM and storage device manufacturers. Why? Because I'm
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buying that stock, boy. You know it. DDR5 RAM prices up 500% in a year. And it seems this stuff is not going to stop anytime soon. And that leaves the entire tech industry, especially luxuries like gaming consoles facing two questions. Where do the parts
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come from? And if you get them at the prices charging right now and worse prices we're expecting, then how the hell can you even build a console? What console can you afford to build?
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Mandisleep for sponsoring this one and it's such an easy recommendation. Look, I've used to really understand just how serious Sony are with their changing.
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Byebye. Like the video. Do it right now. Takes less than a second. It really helps out the channel and appreciate a lot. Thank you for everyone who likes the video. You are great. Like the video takes less than a second. Thank you.
Speaker A
Business model. We first got to check in. Well, with Framework, they make awesome stuff. I would love Framework Desktop running Linux. Ah, a lovely future and honestly a lovely company.
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Which is why in their usual style, they were very blunt and transparent about just how bad things became for them and how quickly they became bad. They say that one of their suppliers raised costs, quote, far beyond anything they had
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predicted beyond what Framework could actually absorb without putting their ability to operate as a company at real financial risk. You see, Framework had budgeted for a low to mid double-digit percentage increase for the quarter. Not even the year, just the quarter. But the
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real component cost change they had was, quote, more than double that. I have no idea what in financial jargon double-digit increase actually means in this situation by the way of the prior inventory. And of course it's the same everywhere else. Valve's
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engineers told Bloomberg, "Honestly, it's still getting worse. What people are seeing in retail shelves right now from our observations is lagging what we're seeing from a bulk supply by at least 3 to 6 months. But even reaching those shelves is getting harder."
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Research from IDC and Counterpoint suggests that worldwide PC shipments fell by at least 4% year-on-year last quarter. Now on its own, eh, 4%. That number wouldn't really mean that much.
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But the thing is the industry was growing right up until that point. So this is actually a trend flipping.
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He said it. I was actually waiting to hear it because I don't know the statistics but obviously what's in my head is that the trend of owning PCs and buying PCs growing. So a decline of 5% when the graph is probably roughly
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looking like this is a pretty big dip. Okay, this is, by the way, again Bellar is one of the only people I actually legitimately trust to give me, uh, data information and have, uh, you know, looked at it and understand what's happening.
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Okay, I don't even know who else I honestly trust to give me even remotely decent analysis on stuff on the internet, but Bellar is one of them who usually delivers stuff I can agree with. Okay, most people have absolutely no idea that
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you need to factor in how things are going. You know, when things are going down slightly, going down more, not exactly a big deal. When things are going up, up and up like this, and suddenly you have a downturn swing, uh,
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that is significant action, not just a little blip. And it's going to mean significantly fewer devices reaching people. Now, although everywhere, one group who are able to navigate this sometimes are actually manufacturers. They're now shipping cheaper, lower spec units. T
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pushing higher margin topsp spec ones and basically riding surges of panic buying as people are really afraid that like if they don't buy whatever it is they want now, it's just going to get more expensive. So, across manufacturers, we see revenue holding
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up. But those are basically those manufacturers tweaking their existing business model to fit this crisis. But not everyone's able to tweak themselves out of this. Some companies need to change in a deep way. And that's where we go back to Sony. Sony planned to lead
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the charge in this. And if we go back to that interview with the Wall Street Journal with their CEO, the broad framing was that Sony had to change. He called the old Sony a traditional business. Shocking. One that made
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hardware and then sold that hardware and basically made its money that way. to weapons manufacturers. By the way, Sony, please do not send a blender missile in my direction. Thank you very much.
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Wait, traditional businesses are important. I have great respect for these businesses, but at the same time, we need to change. And if that sounds a little bit like a threat to you, well, it probably should. But continuing on on
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the topic of the data center crisis in PS6, well, he said that action has to be taken. Quote, otherwise we cannot survive in this landscape. Now, notice what that change is not. It is not digital only consoles. It is not better
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technology for better games or lower prices to reach more people. Those would all be lovely, but they're not really possible for Sony, it seems. When Sony CEO says survival, he basically doesn't mean avoiding death. What he really means is Sony won't stay a hardware
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company, and they have two levers to pull than most of the industry actually doesn't. Lever number one, make your money somewhere other than your hardware. Obviously for Sony, they've got quite a lot. They now make twothirds of their revenue from basically being an
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entertainment company and a full third is from PlayStation. And that's what they've chosen to lean into. As an example, they actually sold their kind of beloved and respected TV division back in March. And their plan is games, anime, film, and TV, all feeding off
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each other in a lovely self-perpetuating cycle. Tutoi described turning game IP like God of War into a TV show as the flywheel we like to make. And it makes sense, a show. Oh god, I wonder how bad that show is going to be.
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Makes money on its own. It moves a ton of licensed merch. It would drive catalog game sales and you know, all that stuff would pull people into Sony's ecosystem. But this is actually what's going on across the industry. Look at
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what Xbox is doing with its resources. Fallout Wolfenstein COD Blizzard all those studios have trans media productions in place. And even all of those studios are failing hard.
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By the way, Sony's also Sony's entertainment industry part is also failing pretty hot if you haven't noticed.
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Electronic Arts is at it with a Battlefield movie and a Mass Effect series. But the thing is that lever Oh boy, I after Halo, I'm so excited to see a Mass Effect series. I'm sure it's going to be great.
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Only works if you have Don't worry, guys. Don't worry, guys. It's going to be good. I mean, do don't you like the rings of Palmer? be sitting on a huge mountain of intellectual property. Without that, there is another
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strategy and that is simply to change how any of that stuff even gets paid for in the first place. That's the next trend and it worries me. Apple and buy now pay later firm CLA are working to roll out US leasing for all Apple
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devices, not just iPhones. The way it works is a constant monthly payment and at the end of a multi-year term, you can quit, you can upgrade, or you can just buy your Ah, yes, of course. Yearly plans. my
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favorite obviously device outright. So the idea is easier access to paying customers, some lovely guaranteed income. And over in team green, well, we've seen Xbox do the very same with buy now pay later. And back in May, Toki told investors that
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PlayStation was considering quote various simulations, including changing business models. If and when a PS6 launches, you can probably expect way more ways to buy that thing than just dropping, I don't know, $1,000, $1,200.
Speaker A
Yeah. the considering how expensive this stuff is going to get. There's probably going to be payment plans available to buying your PS and shitty Xbox. There's probably going to be literally choose your favorite bank to take a loan from
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option dollars, whatever the hell it'll end up costing. And that strategy extends to the hardware itself. Basically building with whatever components you can actually get. And for a really good example of this, we can just look at Apple. The MacBook Neo was designed to
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use a stockpile of iPhone chips, basically for laptops, and to essentially reset what entry-level pricing could look like. Though, they did have to increase the price of the Neo, likely because of the memory shortage.
Speaker A
Dude, it's an Apple product. This thing probably costs five times more for no reason, like everything Apple related.
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Well, what are we talking about? Entrylevel pricing for Apple, aka mortgage your house, or what is going on here? And if we move from Apple to AMD, we see the exact same thing. There's a brand new 8 gig graphics card with the
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R. Oh, I'm sorry. Right. No one owns anything, so we can't even mortgage houses because we can't afford houses.
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Um, mortgage our rented cars. I guess now would be the Yeah, that sounds about right for modern days. I love owning nothing and being unhappy. X9050, but it's also got a 4 gig OEM only model that was spotted by Tom's Hardware. So,
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what we see is that if these companies have any leverage to lower the cost of entry or to find new money, they're absolutely pulling it. And that of course raises absolutely not. None of these companies are looking to make their stuff cheaper.
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An interesting question. What about everyone who can't? Cuz it kind of turns out that they often do make things that we like. The biggest players in the industry then are not just riding out this crisis. What they're actually doing
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is they're changing how their business models work fundamentally. That's fine for them. And to be clear, the big giants can still get their chips just in lower quantities and for a far, far higher price, which kills their unit
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economics. But obviously, their line will still have to go up. And we all know what that means. It means supplementary income. It means financial tom foolery to sell consoles. And we all know that such foolery never comes back
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to bite us in the ass. And what it'll mean for us is that once the console is in your house, imagine getting a payment plan for your console.
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That's probably happening. It will somehow be squeezing more money out of you. But think back to Framework and even to the tiny indie company Valve. Their entire problem was leverage and that they didn't have it. As smaller hardware operations, they effectively
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just got demolished. Now Valve make a lot of money. They could probably fund their hardware plans off Counter-Strike loot boxes alone. Framework does not have that luxury though. So, what happens to the rest of the market when all the giants pivot, when they change
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their business model? That's what IDC called out as a trend to watch. Vendor consolidation. That doesn't sound great to me. What it would basically mean is the biggest companies like Apple being able to quote use their scale across
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adjacent business lines including smartphones and servers to secure memory supply and squeeze out smaller competitors. So that's a way in which a market like this really does play to incumbents because sure they could burn a lot of Wait, wait, wait, wait, wait. Did he say
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actually market consolidation previously? Because what he described is more market did he say market consolidation because it's not act this is what he's described it's not actually market consolidation per se it's kind of it's kind of Jason to it and it's more just a basic
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monopoly princip they could lose a lot of money but they could probably tank the hit and the up and cominging competitors well they probably can't and that means that for the rest of the market this is truly existential higher
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costs and lower volumes do hurt today. But the competition that we are likely to lose across loads of these markets, well, that is something that will hurt us for years. And it is what you could essentially call the death of the
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middle. We're probably seeing that in hardware and a lot of these big companies, but of course, you'll be aware of what the death of the middle looks like as a gamer because of AAA games. one of the things that was so
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healthy for the industry, but that as the 2000s turned into the 2010s turned into the 2020s, well, double A's just kind of died. The middle of the market went away. Let's say, no, then for the sake of argument that 2028
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marks the Oh, what is this called? I forgot that this is Let's say then for the Yeah, I I don't remember what this is called. She's hot. But this this was this is kind of a known game, but it's
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not really that beloved. didn't get so many players. Darksiders was it called? I forgot. I have never played it, but I have seen it.
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Sake of argument, the 2028 marks the peak of the crisis. Best case scenario, new production lines spin up and data center demand finally cools. Do component prices go down under that scenario? I don't think you should count on it because by then customers will
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have spent years proving that they will pay more. The survivors will have priced accordingly. The biggest companies can leverage their scale and alternative revenue streams to just get through the problem. What happens to everyone else?
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The upstarts, the luxury brands, the boutique experiments like say the steam machine. I think the big question is how much of that tier of the market survives. Cuz those companies really matter. They put pressure on the giants.
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They drive innovation and if they get big enough, they do drag prices down. a market where only the largest survive.
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When was the last time anything's price went down? Even at this point, oil prices are not exactly going down. Okay.
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And that was the one thing that we all kind of in secret agreed that the prices are going to be kept down sometimes and that's no longer even the case.
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Is a market with less reason to care about hardware as a revenue driver than it kind of has up to now. Well, the crisis may end in 2028 or 2029.
Speaker A
Why would it end in 2028 2028 9? I thought that's just completely false and wrong. We have news, not even news. We just have confirmed information about data centers that are planned ahead for the next 10 years that already have
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[ __ ] funding. This is this is not going to get less expensive. Okay. It's going to get more expensive. It is. And also, if the data centers stop, do you do you think RAM prices are going to go down? I'm sorry,
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but they're not. That's the thing. Prices never go down. It's like taxes never go down. It's not a thing that happens. I mean, we're either riding the gravy train together or we're all we're all crashing and burning. And at this
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point, well, at least I'm riding it. But soon, I mean, at this rate, a lot of people are going to crash and burn because waiting for stuff to get less expensive. Not a great plan. Not a great plan.
Speaker A
So, that's it. Anyway, that was Bill 10 out of 10. Have a nice day. Sony, no disc, no buy. It's too easy. Bye.
Topics:SonyPlayStation 6console shortagesRAM shortagehardware supply chaingaming consolesDDR5 RAM pricedata center demandPC shipments declinenext-gen consoles cost
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