Global Game Conventions Scale Back Amid Coronavirus Concerns

The virus may impact the manufacturing of video game hardware across the first half of 2020, as nearly 90 percent of all consoles imported into the U.S. are made in China.

As reported cases of the COVID-19, or coronavirus, outbreak continues to spread across the globe, more and more markets and events are taking precautions against the pandemic, including numerous marquee events in the video game industry.

Over the past few weeks, companies such as Sony, Square Enix, Capcom, EA, Facebook Gaming and Kojima Productions have announced plans to fully skip or significantly limit their presence at annual video game conventions such as this weekend's PAX East in Boston and the upcoming Game Developers Conference (GDC) in San Francisco next month. Each company specifically cited concerns over the coronavirus outbreak as reasoning for their decision.

"The primary thing right now is, we can project how we think supply chains and markets will respond to varying timelines of COVID-19, but no one is quite sure on the timeline of remediation itself," Linn Huang, research vp, devices and displays, at tech market research firm IDC, tells The Hollywood Reporter. "If this goes past May, there will be significant consequences across geos and sectors. Conventions, and all other large public events or services, will be at risk."

Spain's Mobile World Congress (MWC), a trade show for the mobile communication industry held annually in Barcelona, was set to run this week but was canceled due to coronavirus concerns as spread of the disease has been reported in nearby Italy. Meanwhile, San Francisco Mayor London Breed declared a state of local emergency earlier this week in response to the growing pandemic. The GDC, in response, said the convention — scheduled to take place in the city from March 16-20 — is "moving forward as planned."

Meanwhile, Boston Mayor Marty Walsh penned an open letter to Sony CEO Kenichiro Yoshida earlier this week claiming the company's decision to skip PAX East reinforces "harmful stereotypes that generations of Asians have worked hard to dismantle." Sony is headquartered in Tokyo. Walsh's office declined multiple requests for comment on the letter. Sony also declined to comment.

"Sony was a Japan-based company for 95 percent of its history, so implying that this decision may have been the product of stereotyping or worse seems like a big stretch to me," says IDC analyst Lewis Ward. "I read the letter as more of an effort by Boston to hold on to as many other vendors and sponsors as possible for PAX East. Obviously there is a financial advantage to having PAX East be a barn-burner, and this sort of open letter may slow or halt the exodus."

Coronavirus concerns have also hit the world of esports hard. Over the past few weeks, multiple events planned in Asia across leagues for games such as Overwatch, PUBG and League of Legends have been canceled, postponed or moved to areas outside of mainland China.

With various big gaming events on the horizon, such as June's E3 convention in Los Angeles and the launch of next-generation consoles from both Sony and Microsoft over the year-end holiday season, worries over what a wider spread of the virus means for the industry are growing.

Daniel Ahmad, senior analyst at Niko Partners, expects the virus to have an impact on the manufacturing of video game hardware across the first half of 2020, as nearly 90 percent of all consoles imported into the U.S. are made in China.

"If the coronavirus outbreak is contained within the next month or two then we would expect console manufacturers to be able to meet demand for the holiday quarter, both for current-gen consoles and next-gen console launches," says Ahmad. "If manufacturers are unable to operate at full capacity before the end of Q2 2020, we could see an impact on next-gen console launches, with either limited supply or delayed releases becoming the likely outcomes."

Ahmad's comments about a short window to contain the virus echo those made by veteran International Olympic Committee member Dick Pound earlier this week, in which he noted that the planned Olympic Games in Tokyo this summer would be affected if the coronavirus is not contained by May. "In and around that time, I’d say folks are going to have to ask, is this under sufficient control that we can be confident about going to Tokyo or not?" Pound told the Associated Press.

Still, Ahmad does not see an event like E3 being canceled or scaled back in a significant way as a likelihood. "Right now, there isn’t any reason for an event like E3 to be [canceled]," he says. "The organizers will be looking at what happens over the next few months."

Huang is slightly more cautious in his outlook: "If the vector of the virus is still accelerating in May, then show cancellations might be against the backdrop of global recession for the next year or two. I don’t mean to be alarmist, but I started down the COVID-19 rabbit hole two weeks ago, and the news gets scarier."