GamesBeat

Microsoft moving into China with new Shanghai-based venture

Hazy Shanghai in China -- which could soon be open to the Xbox.

Above: Hazy Shanghai in China -- which could soon be open to the Xbox.

Image Credit: Nicholas Poon/Wikimedia

Microsoft has a new joint venture that could enable it to bring a game console and media streaming device to mainland China, which currently bans traditional gaming systems.

The company announced the new venture, dubbed E-Home Entertainment Development, is a partnership with Chinese media conglomerate BesTV, according to Chinese website Xinhua (as first spotted by Polygon).The two revealed the new company in a press release sent to the Shanghai Stock Exchange. The two companies invested $237 million into E-Home; Microsoft will hold a 49 percent minority stake, and BesTV will hold 51 percent.

E-Home will develop gaming-related services and will operate in Shanghai’s free-trade zone.

“We can confirm Microsoft is working with BesTV, a subsidiary of the Shanghai Media Group (SMG), to explore new opportunities in Shanghai and China,” a Microsoft spokesperson said in a statement provided to GamesBeat. “We believe there is great market potential and partnership opportunities here and look forward to sharing more details soon.”

China is a massive potential market that PC and mobile free-to-play titles currently dominate. The nation banned traditional gaming consoles from Sony, Microsoft, and Nintendo in 2000 in an effort to protect Chinese youth from violent games.

Microsoft, with this new venture, may have found a way to get its Xbox console into the market. This would put Sony and Nintendo at a disadvantage. Sony doesn’t have an official gaming presence in China. Nintendo only has a special version of its handheld devices currently operating in the country.

“We believe that this year there have been strides in improving trade and the possibility of more open rules for games in China,” Chinese market analyst Lisa Hanson of Niko Partners told GamesBeat in July. “But we think it goes too far to say that if a free-trade zone opens in Shanghai that it will automatically mean that consoles would be included if the manufacturers switch their production facilities to within Shanghai.”

But Microsoft wouldn’t be just manufacturing in China. It is fully partnered with a Chinese business that owns a majority stake in a new company that is native to the country. That is potentially enough to overcome any restrictions.

This isn’t the first time a traditional console manufacturer has found a way into the Chinese market.

Nintendo formed a joint venture in 2002 with Chinese company Wei Yen called iQue. The company released the iQue player that enables gamers in that country to play Nintendo 64 games using a Plug-N-Play-style controller that housed N64-compatible hardware. Players couldn’t buy Nintendo 64 cartridges, but they could have retailers load special memory cards full of games like Super Mario 64.

In addition to gaming content, E-Home will likely offer media-streaming functionality. BesTV holds many Chinese TV rights and could offer that content through its partnership with Microsoft.

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