Gaming

Coronavirus could delay new video games for months to come, warns expert


Final Fantasy 7 Remake’s release has already been affected by the global lockdown (pic: Square Enix)

The games industry is likely to take more of a hit from the coronavirus than many realise, because of a reliance on outsourcing from China.

Although the physical editions of games like Resident Evil 3 and Final Fantasy 7 have been delayed, so far no major game has been delayed completely due to the coronavirus pandemic, but that may not last for long.

The CEO of the Streamline Media Group, Alexander Fernandez, believes the virus has already had a clear and disastrous effect on production of new hardware and game development.

It’s already been theorised that the likes of the PlayStation 5 and Xbox Series X, the next big home consoles, could be pushed back to next year, but Fernandez believes that the effect the coronavirus is having on game development is being grossly underestimated.

In an interview with GamesIndustry.biz, he explained that this is due to how much outsourcing is done to China, where the coronavirus originated.

‘Equivalent to about two thirds of the external development outsourcing supply is located in China – and they’ve been thrown completely out of whack,’ he said.

‘China has been a top destination for years for outsourcing services in video games, primarily driven by its low costs and scale of available talent. This creates what the banking industry refers to as ‘concentration risk’.

‘This term refers to potential risk that takes place when underlying assets, in this case outsourcing partners, are more correlated in portfolios – games in development – and are less diverse and more concentrated – China. It’s another way of saying don’t put all your eggs in one basket.’

Pictured: us when our copy of Resident Evil 3 turns up late (pic: Capcom)

Considering his company has assisted in developing and shipping triple-A titles from some of the biggest names in the industry, such as Microsoft, Sony, and Square Enix, it’s safe to say that Fernandez knows what he’s talking about.

He
added that, because games tend to follow a rigorous plan, the current
disruptions will still be felt long after the crisis is over.

‘I
believe it will take a quarter or two for the extent to become glaringly
obvious through missed dates or development delays. The problem is the havoc
this will cause for public companies and the damage it causes to the entire
value chain.

‘It’s a situation where people need to be able to get projects done, and… [some companies] couldn’t even go into their offices without approval from the Chinese government. And we’re talking about thousands of people – not a couple of hundred. I think we’re going to really start feeling this in Q2, Q3.’

Email gamecentral@metro.co.uk, leave a comment below, and follow us on Twitter.

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