Microsoft is bringing out the big guns – literally – in its latest battle with Sony. After months of waiting, the software giant has unveiled Titanfall, a futuristic shooting game made exclusively for Microsoft devices. The software, said to boast technological innovations that are “eye-popping” by the New York Times, could help the Xbox One overtake Sony’s Playstation 4 in sales. Prior to the launch of Titanfall, Playstation 4 was outselling Xbox One by almost two to one, says sales tracker NPD Group.
Another battle in the console market is heating up in China. As reported in issue 202, the authorities lifted a 14-year ban on the sale of foreign-made consoles earlier this year. The relaxation of the measure allows foreign-invested enterprises to sell their products in China via factories in Shanghai’s new free trade zone. It’s a move that could give Microsoft and Sony a chance to enter China’s still-undeveloped video game market, says China Economic Net.
The video game market in China – combining software, gaming revenue and devices across different formats including PC-based gaming – is already the third largest. By 2015 it will generate as much as $10 billion in revenues, according to data from PwC. But despite the new rules for the Shanghai zone, there has been more talk than action from foreign suppliers. Microsoft recently added 23 countries to the list of markets selling the Xbox One but China is not one of them. Sony has stayed similarly quiet about when it is going to sell its Playstation in the country.
One reason is that requirements in the new regulations mean that foreign manufacturers must base their factories in the free trade zone. That means firms like Microsoft and Sony cannot simply transfer their existing inventories to China. They may also have decided to wait longer before making further investment. Earlier this year the authorities indicated that the lift on the ban was “temporary”.
Domestic manufacturers are reacting quicker. Telecoms equipment giant Huawei unveiled its first game console at the Consumer Electronics Show in Las Vegas just weeks after the announcement. Its console, called TRON, is expected to launch in the second quarter of this year at a price of around Rmb1,000 ($160.5). The company says it is working with as many as 50 game developers to create content for the console too. Huawei’s rival ZTE, has also announced plans to join the fray. It says it has partnered with domestic online gamer The9 to launch its own console called Fun Box later this month. Xiaobawang, one of the older console makers in China, has partnered with Alibaba’s subsidiary TVOS to release a motion-sensing console that costs about Rmb798, while TV maker TCL is preparing to launch its own console, as well as specialised gaming TVs.
Will any of the new offerings attract much interest? The last time a Chinese manufacturer tried to force its way into the market, it wasn’t a success. In 2012, Lenovo unveiled a home entertainment system and marketed it as a family exercise device or “sports machine” to circumvent the Beijing ban. But it was priced at more than $600, twice the cost of a comparable Xbox, and never took off.
“In the game console market, Chinese companies do not have advantages. They are not capable of competing head-on with international giants in terms of R&D or in the completeness of their industrial chain,” says Xue Yongfeng, an analyst at Analysys.
Console makers will also need to create better content, like Titanfall. BesTV, an arm of the state-owned Shanghai Media Group, has linked up with Microsoft to establish a $240 million joint venture to make more wholesome “family games and related services,” says Xinhua.
Previously the ban on foreign consoles was predicated on protecting young people from more violent games. “At present, European, American and Japanese games tend to involve more violence and bloody content. But that type of content is going to run into trouble with censorship so for foreign companies getting their products sold in China is going to be very difficult,” Zhang Xiaofeng, a Huawei executive, told Global Entrepreneur.
But perhaps the bigger challenge is to win over players from China’s thriving online PC and mobile gaming community, where companies like Tencent have thrived.
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