Game launches worldwide may be delayed due to China’s coronavirus outbreak

The spread of the new coronavirus in China is beginning to disrupt the global video game industry even as it receives a boost from the millions of Chinese players who are spending more time gaming while they are confined to their homes to reduce the risk of contagion.

China is key to the game industry’s supply chain with a third to a half of art creation for Western game developers done in the country, according to Jefferies estimates published in a research note on Tuesday.

The deadly coronavirus, which originated in mainland China and has killed 492 and infected more than 20,000 as of Tuesday, forced the central government to extend the Lunar New Year holiday and impose factory and business shutdowns until February 10 at the earliest in an effort to contain the outbreak.

Millions of Chinese employees began working from home on Monday but soon complained about the low productivity of working remotely after a surge in demand crashed office apps across the country.

Jefferies analyst Ken Rumph said many of the major Western game studios, including Electronic Arts, Ubisoft and Activision Blizzard, have operations in China or outsource to Chinese partners for art creation services. He estimates that if the disruption caused by the virus only lasts for weeks the developers could catch up, but not if it extends to months.

“If shutdowns exceed a month or so, game schedules will be delayed. New consoles may likewise suffer supply issues from a prolonged disruption, ahead of their Fall 2020 planned launches,” Rumph wrote in the note.