Xbox lead Phil Spencer says the industry will start to see the impacts of coronavirus in early 2021, as some crucial aspects of video game production have 'basically stopped'

• The video game industry has enjoyed record profits amid the spread of the coronavirus, as millions of people sheltering in place turn to gaming for entertainment.
• Huge game releases like "Animal Crossing: New Horizons" and "DOOM Eternal" enjoyed larger than expected launches, and upcoming games like "The Last of Us: Part II" and "Cyberpunk 2077" have brewed excitement.
• Moreover, new game consoles like Sony's PlayStation and Microsoft's Xbox are expected this holiday season. But the game industry is bound to see an impact from coronavirus — just not yet.
• "Through the summer, early fall? I feel pretty good about those games," Xbox head Phil Spencer told Business Insider in an interview. "Games that were targeting a year from now or beyond? There'll be some impact, but they'll be able to react."
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In March 2020, as the coronavirus began to rapidly spread across the United States, the video game business was having its best month in over 10 years.

Spurred by the extremely shareable "Animal Crossing: New Horizons" from Nintendo and the endlessly replayable "Call of Duty: Modern Warfare" from Activision, millions of people sheltering in place turned to video games for entertainment.

Sales of hardware, software, accessories, and game cards topped $1.6 billion for March — "the highest reported spend for a March month since the $1.8 billion achieved in March 2008," according to The NPD Group's monthly report.

But by March 2021, the industry could start to see the broader effects of the coronavirus. Games planned to launch next year and beyond are most likely to face issues with development that could lead to delays or cancellations.

"Through the summer, early fall? I feel pretty good about those games," Microsoft's Xbox leader Phil Spencer told Business Insider. "Games that were targeting a year from now or beyond? There'll be some impact, but they'll be able to react."

Many of those titles have yet to be revealed, but all blockbuster games take years to make, with hundreds or thousands of people working in offices around the world — something that's become nearly impossible during a global pandemic. Studios outright can't remotely do the motion capture ("mocap") or audio work needed to put the finishing touches on a game.

"Mocap is just something that's basically stopped. We're not going into mocap studios," Spencer told Business Insider. "If you had all your animation captured and you're doing touch up in more individual art production and in areas like textures and other things, you're in a better position. If you're waiting for a lot of either large audio work — when it's with symphonies and other things — or mocap, you're held up right now and you're making progress in areas that you are."

Annual sports franchises like "Madden" and "FIFA" are a good place to start. "It's really in those [types of] games that were trying to finally get all their asset base together in terms of art production that they might have the biggest impact," Spencer said.

One thing that appears to still be on track: Microsoft's next-generation game console, the Xbox Series X, which is scheduled to arrive this holiday season. Spencer is overseeing the launch of the Xbox Series X — his first new Xbox console launch as the head of the Xbox team at Microsoft.

"Even though we're obviously not traveling to China, we feel good about our progress on hardware," Spencer said. "I've got my take-home [console] downstairs and I'm playing on it most nights, and I feel good about the software updates that we're doing."

That doesn't mean launch will be totally unaffected. "From the kind of pomp and circumstance around launches, you might find a time where there's some impact," he said, "some things that were going to launch, and maybe they moved a little bit." Regardless, Spencer remains confident not only in the upcoming Xbox console launch, but in the larger game industry as it struggles to deal with the fallout of a global pandemic.

"I'm pretty confident in the industry's ability to continue a steady flow of games coming out," he said. "There's just a lot of games in production across the industry right now, and I think we're going to be — as an industry — we're going to be fine. I'm bullish on what this means in the long run for games, even if there's a certain impact to a certain launch window for certain titles that we might see."