China appears to have lifted a long-lived ban on selling video game consoles. If upheld in the initial region of Shanghai and carried out through the rest of the country, the move could remake the balance of power between the PC and game consoles in one of the world’s biggest markets.
The Shanghai free trade zone made the announcement, saying, “Once the content of console verified by the competent department of culture, foreign console company could sell its product in China.” That seems clear enough, but China’s various government entities will all have a say in this policy change, and those bureaucracies have not always agreed.
Microsoft, Sony, and Nintendo have been unable to legally sell their game consoles in China, largely out of the communist government’s concern that games could corrupt youth. The centralized government, with its policies of censorship, favors the PC and educational machines. As a result, the PC dominates the games market in China. Online games on the PC are an $11.9 billion market in China in 2013, according to market researcher Niko Partners.
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If the ban is lifted and commerce can flow freely, the game console makers could get access to China’s market of more than a billion consumers. That market was already attractive enough that Microsoft had plans to create its own education-based game machine, E-Home, with Chinese partner BesTV, a division of the Shanghai Media Group. That console could use Xbox technology. Game console makers would likely have to create joint ventures with Chinese companies to enter the market.
“It’s official and it is all over the news,” said Lisa Cosmas Hanson, the managing director at Niko Partners. “But it’s unclear if it will hold true for the whole market.”
The document is long and it isn’t fully translated as yet. There is a section on liberalization measures. The Ministry of Culture will still likely have to approve game content. Cosmas Hanson said that if you can buy a console in Shanghai, it’s most likely true that you can take that console and use it in other markets in the rest of China.
Online distribution of games will likely be the main way to get games to the consoles, in order to avoid piracy, Cosmas Hanson said.
The ban on game consoles has been in place since 2000. It started out of concern for the corruption of youth, as consoles had no clear educational value. But the online game market on the PC took off instead. The irony is that many consoles have been smuggled into China illegally for years.