With ongoing global concern about the potential coronavirus (COVID-19) pandemic, new data from Futuresource Consulting suggests the consumer electronics market could see a 2% to 5% full-year drop in retail value worldwide.
Most consumer electronics products are manufactured in China, the epicenter for the coronavirus, which has seen manufacturing and consumer demand scuttled. The Chinese CE market accounted for 22% of the $1 trillion industry in 2019, according to Futuresource.
At the same time, Johns Hopkins University said more than 100,000 coronavirus cases have been reported globally with the vast majority of infections and deaths (3,015) occurring in China.
“Having already faced disruption in 2019 due to the Sino-American trade war, COVID-19 has further highlighted the risks associated with over-reliance on Chinese manufacturing,” London-based Futuresource said in a statement.
The research firm said while the full effects of coronavirus remain to be seen, short and long-term effects on consumer electronics and media entertainment industries will be significant.
Specifically, supply chain disruption to hardware vendors reliant on Chinese manufacturing will struggle, with delays in the supply chain leading to product delivery difficulties and poor Q1 fiscal performance that could extend into Q2.
Futuresource expects the second half of the year to offset the difficulties with pent-up consumer demand translating into seasonality as opposed to an overall yearly decline.
Meanwhile, digital media platforms such as SVOD, AVOD and transactional are benefiting from the crisis, with digital video, music, and gaming all seeing spikes in engagement, according to Futuresource.
Retail trends toward e-commerce are also accelerating, while collaboration technology and software is also a beneficiary of the crisis. Besides being a short-term effect, this could have implications in the long run, as consumers are likely to continue engaging with these platforms after the virus is contained.
“In a very short time period, COVID-19 has had a disruptive impact on individuals, countries and major companies alike,” Futuresource wrote. “[We] will continue to monitor the progression of the outbreak and provide further updates as the situation develops.”