Normally around this time (plus or minus a month or two), I usually head back to Japan for a few months. With the Coronavirus outbreak (and so many unknowns regarding its incubation period and transmission) happening in China (and knowing how much air traffic transits between China, South Korea, and Japan), I decided to cancel those plans since it just made more sense to stay away until the situation was better understood.
As it turned out, the virus has continued to spread worldwide with some of the original measures proving to be inadequate (this includes the quarantine measures taken for the Diamond Princess cruise ship where there were no real controls in place to separate actual sick people from everyone else). I understand the Japanese fairly well (being one myself). When dealing with the known, the meticulous procedures and guidelines tend to work to a “T”. However, when having to deal with real time crisis management where being able to think outside the box and making a non-group consensus decision quickly isn’t a strong point, it makes sense (to me) why there was no real containment and why more passengers on the ship ended up contracting the virus (there was no organized method to properly test every passenger first since the original assumption was only if someone showed signs of being sick). Digressing, the last thing I wanted to do was fly into the country (on an enclosed tube) and find myself in a catch-22 situation as health authorities there grappled with the actual details (let alone the situation still not contained in China).
The take away at this time is common sense dictates that large gatherings of people who are also in close proximity to each other, increases the potential for this virus to spread. So some of the prudent measures has been to cancel larger scale events while in some cities with verified cases, to move towards more drastic measures (including self-quarantine, shuttering business operations, or in other cases, asking workers to telework). The ramifications are wide spread across entire supply chains which affect many different industries. The gaming industry is no exception since you have electronics (game consoles for example) as well as worldwide conventions and events that take place which bring people from all over the world to those locations.
PAX East in Boston and the Game Developers Conference (GDC) are two upcoming events where participants have been pulling out due to concerns for the safety of their employees (not only the travel but also the fact that these large events already tend to have their usual minor outbreaks of the common cold or the known strains of influenza). Again, given the fact that this particular strain of virus has yet to be fully understood let alone contained, being prudent makes far more sense since we’re talking about peoples lives (I don’t look at these cancellations as being an over reaction). Sure, there is an economic impact in all of this BUT heading off a potential pandemic makes far more sense at this time.
I made it clear in a shareholder letter to Apple (which is holding their shareholders meeting today on the 26th) that the safety of their supply chain personnel is more important than the ensuing revenue hit that will be taken (this will have an impact on their ability to supply iPhone’s). Yes, I am one of those other type of shareholder who is lobbying for corporations to be mindful of their impact on society (and not just making decisions that try to get the most shareholder value while racing to the bottom to meet that objective).
Companies that make gaming equipment (gaming PC’s, consoles, accessories) are all going to be affected since the supply chain (components and/or manufacturing) goes through China (and if they aren’t able to get the spread of the virus under control over the next few weeks, the global impact from all of this manufacturing being offline will be felt. Supply chain logistics is really its own science with lengthy lead times and a goal of precise time frames (I had to take mandatory courses in operations management and transportation theory as part of my business degree in management information systems since computer technology drives a lot of those back end scheduling processes).
The software development side is less affected except for the above mentioned sort of events and conferences (many of which are PR events) until it hits the manufacturing part (for retail boxed product). Canceling these events aren’t exactly the easiest decision to make (the initial sunk costs) and rescheduling is often times logistically impossible (there’s the scheduling of the hall, the scheduling of the attendees, coordinating with local governments for extra security, coordinating with local business including any tourism authorities to better handle the influx of attendees). In light of this disease outbreak however, it makes a lot more prudent sense to dispense with gatherings of this sort.
As for the effect on the potential production delays of hardware products, they aren’t important in the greater scheme of things since they aren’t necessities (they are luxury goods). What’s important now is containment and getting a more precise understanding of the virus so that better guidelines can be put into place to allow those more affected, to get back to their normal routines while experts work on developing a proper vaccine.
