Beijing - China has temporarily lifted a 14-year-old ban on selling video game consoles, paving the way for Sony, Microsoft and Nintendo to enter the third-largest video game market by revenue.
China’s video game revenues grew by more than a third from 2012 to nearly $14 billion (R149bn) last year, but console makers are likely to face an uphill battle for market share in a country where a whole generation has grown up without a PlayStation, Xbox or Wii and where free games for personal computers (PCs) and mobile devices dominate.
The absence of consoles has left PC games with almost two-thirds of the market, according to data released at the annual China games industry conference last month. Browser gaming accounted for just more than 15 percent and mobile games pulled in nearly 14 percent of revenue, the data showed.
“If Sony and Microsoft want to expand in China they need to think of changing their business model, and study the success of internet gaming market providers where games are free but they charge money from operating games,” said Roger Sheng, a research director at tech research firm Gartner.
China first banned gaming consoles in 2000, citing their adverse effect on the mental health of its youth.
The suspension of the ban would permit “foreign-invested enterprises” to make game consoles within Shanghai’s free trade zone and sell them in China after inspection by cultural departments, China’s top decision-making authority, the State Council, stated.
The statement, posted on the council’s website on Monday, did not give more details and officials were not available to clarify the ruling.
The video game sector has been battered globally by the proliferation of free games on mobile devices, PCs, and on social networking sites. In China, the most popular games are often free to play, with gamers only paying for add-ons such as weapons or extra lives.
For console makers seeking to expand in China, price may be a barrier. More than 70 percent of Chinese gamers earn less than 4 000 yuan (about R7 000) a month, according to Hong Kong-based brokerage CLSA.
The new Xbox One sells for nearly $500 in the US, while Sony’s PlayStation 4 goes for just shy of $400. New games for each console cost about $60.
“To purchase a game at 200 or 300 yuan is unbearable or unthinkable for a normal player like me,” said Yang Anqi, a 23-year-old student at Beijing’s Renmin University, who has played video games for more than a decade.
Nintendo, which makes Wii consoles, said the ruling had changed little from when Beijing said in September last year that it planned to lift the ban.
“We are still not sure exactly what we will be able to do in Shanghai, and thereafter in greater China,” said Yasuhiro Minagawa, Nintendo’s public relations manager in Japan. “Both with hardware and software, there are many things we have to look into and so we can’t say anything concrete.”
Sony was also cautious.
“We do recognise that China is a promising market, and we will continue to study the possibility,” said Satoshi Nakajima, a spokesman for Sony Computer Entertainment, the unit responsible for the PlayStation.
Microsoft was not available to comment. In September, it formed a joint venture with China’s BesTV New Media and invested $237 million in “family games and related services”.
Another possible hurdle for console makers is the availability, albeit illegally, of consoles modified to run pirated games. Such games sell for about $1 each or can be downloaded onto a disc at home.
Paul Carsten for Reuters