Editorial: Full of Eastern Promise

For the last thirteen years, China has had a ban in place preventing foreign-funded companies to sell game systems within the country. The ban on video game consoles went into effect in 2000 as a government response to public outcry from parents, who claimed that such forms of entertainment would rot their kids’ brains. Spectacularly failing to work the way it was intended, the move simply redirected the intense interest in gaming among Chinese consumers to the realms of PC and mobile, as well as to the so-called ‘grey market’, where import hardware and software continued to be available. This is perhaps due in no small part to the fact that consoles created by the big three are all manufactured on the Chinese mainland.

The ban has also lead to the rise of casual gaming in China. Many mobile users own more than one phone, and dedicate one to gaming. Last year video game revenue rose by a whopping 35.1% to an estimated $9.24billion. In the US the market was worth $14.8billion with the influence of Sony, Microsoft and Nintendo. Considering that the population of China is roughly four times that of the US, a huge amount of untapped potential is waiting for whoever can dominate the market first. Such a large consumer base could also significantly alter the types of games that we see coming to market. Many are already influenced by Japanese culture, but soon games will be written for the billion-plus Chinese market that may eventually see a Western release.

Video game consoles are perhaps the biggest victim of shameless yet hilarious clones in China, next to RayBan sunglasses and watches. Without the ability to legitimately purchase a console from one of the known companies, many have been turning to the booming fakes market to provide them with something suitably entertaining. Who could forget the PolyStation, the PopStation Portable, or the Chintendo Vii? There is even a knock-off of the PSVita called the iReadyGo Much 3G, an android-based device that could actually be more successful that the the original due to the amount of games available for it.

The reason foreign consoles will soon be allowed into China is due to the creation of a new free trade zone in Shanghai. Under the rules, foreign companies in the trade zone can sell game consoles domestically upon receiving approval from China’s Ministry of Culture. Microsoft may already be preparing to sell its Xbox system to Chinese gamers as earlier this week, the company said it had formed a joint venture with a local Internet TV company in the Shanghai free trade zone. A Shanghai stock exchange filing said the joint venture would focus on developing game-related hardware and software.

It is not currently known if any consoles released in China will be subject to the monitoring system employed to restrict the amount of time that teenagers can spend playing MMOGs. Under current rules, Chinese internet gaming companies must install a program that requires users to enter their ID card numbers. After three hours, players under 18 are prompted to stop and ‘do suitable physical exercise’. If they continue, the software slashes by half any experience points earned in the game and continues to deal out increasingly harsher punishments until players log out. While there are not many MMOs available on the current generation of hardware, there would be nothing stopping the Chinese government from requiring an ID card to be attached to any Chinese accounts. In a worst case scenario, the rules could be expanded to include any game with an online component.

To sum everything up, this new market could potentially be a lucrative source of income for any console manufacturer that can crack through the wall of fake goods that flood the streets, but could require a great deal of investment to change up the way their online services work should the Chinese government decide that teenagers need to play less console games as well. If the big three should succeed, we may soon see odd titles out of China getting a release the way we do from Japan today.

Are you excited to see a new market for video games? Which company would you like to see be successful? Should the government impose restrictions on the consoles (who would be left to play Call of Duty and its ilk)? Let me know in the comments!