China Lifts Ban on Games Consoles
Just in time for the start of a new console generation, the Chinese government has rescinded a 14-year-old ban on the sale of video game consoles in the country. The temporary ban will allow Sony, Microsoft and Nintendo to sell their consoles in China for the first time since 2000.
The lifted ban does come with a few caveats. China has noted that this is a temporary, experimental move that would be subject to change. It also applies only to those video game consoles manufactured in the Shanghai free-trade zone.
Taiwanese electronics manufacturer Foxconn already manufactures PS4, Xbox One and Wii U consoles and has factories in Shanghai. No one has reported whether their current arrangements with Foxconn would allow any of the big three to immediately start selling their consoles in China. However, none are rushing into the market straight away and will take some time to examine the consumer market and government regulations.
At the moment, the gaming industry in China generates about $13 billion. Two-thirds of the market is dedicated to PC gaming with browser gaming at about 15% and mobile gaming at 14%. There is also a thriving black market for previously illegal consoles in China. One would assume that’s part of the reason why the Chinese government wants to open up the country to consoles.
And while you might ask why the big three wouldn’t immediately jump into China, the Chinese games market is different from what our’s in the west. The most popular games in China are free-to-play so a significant portion of the market isn’t accustomed to buying whole games, just microtransactions. The up-front cost of consoles and games would be the most significant market force that the big three would have to deal with when entering China.
Reuters quoted one Beijing university student as saying, “To purchase a game at 200 or 300 yuan ($33 or $50) is unbearable or unthinkable for a normal player like me.”
So while China presents a big opportunity for console manufacturers, a market that is radically different from what they’re used to in other parts of the world will pose a massive challenge. The question now becomes whether any of the big three will enter China or judge the risk to be too big and let someone else move first.